On June 26th, it was reported that Premier African Minerals' stock price plummeted by 40% on Monday, after the company announced that its Zimbabwean lithium mine had encountered force majeure due to defects in its processing plant.
A statement from the State Council said that the plant could not produce enough Spodumene concentrate to meet the conditions of the off take agreement with Canmax Technologies in China.
Canmax, a Chinese lithium battery company, provided US $35 million last year to build a pilot plant in Premier's Zulu lithium project in exchange for the supply of up to 50000 tons of Spodumene concentrate annually.
The Prime Minister stated that on June 25th, it issued a force majeure notice to Canmax due to grinding issues at its recently built factory affecting production plans. The company added that factory contractors are working hard to solve the problem.
The company is unable to deliver products within the agreed date, "the Prime Minister said.
The force majeure clause in the triggering contract allows certain clauses in other legally binding agreements to be ignored due to unavoidable circumstances.
The Prime Minister stated that the two sides are currently negotiating possible modifications to the existing agreement, and added that Canmax has proposed to convert its $35 million cash injection into debt or stocks. Camax also holds 13.38% of Premier's shares.
Representatives of Canmax were not immediately available for comment.
Premier stated that they are reconsidering their exclusive partnership with Canmax, and the company has received contact from competitors of lithium processing companies in China and Europe, indicating a deepening disagreement between the two companies.
So far, Premier has refused to conduct a thorough review of these methods due to the agreement with Canmax. However, in the context of ongoing discussions with Canmax regarding the revised agreement, the Prime Minister will now engage with other interested parties