Oliver Kazunga, Senior Business Reporter
AIM-listed Premier African Minerals has signed an agreement with the National Indigenisation and Economic Empowerment Fund that will see the Government advancing US$6 million for production to commence at the RHA Tungsten project in Hwange this year.
Premier holds 49 percent interest in the Matabeleland North-based RHA Tungsten mine while Government controls the remaining 51 percent threshold.
The listed-mining concern said it was pleased to report the signing of the new management agreement with the National Indigenisation and Economic Empowerment Fund (NIEEF), a move that is expected to see RHA Tungsten Private Limited brought back into production without any further financing requirement from Premier.
Premier chief executive officer, Mr George Roach, said: “While it has been a long haul, I am very pleased to be able to report that we have signed a new legally binding agreement with NIEEF that includes a funding undertaking of US$6 million for RHA.
“Use and application of these funds is expected to see RHA back in production later this year and allows for required upgrades that are expected to result in major operating cost reductions including electricity grid connection.
“Premier retains ownership of the plant and equipment and is reappointed as the manager for a further five years with renewal thereafter.”
The investment from NIEEF will be structured as share capital and Premier will simultaneously capitalise an equivalent amount from its existing loan account.
“In my opinion, this represents both an equitable solution and a good time for the Zimbabwean Government to invest directly in this project.
“RHA has been significantly de-risked over the past four years and is now an operation that is better understood. We have agreed a provisional implementation process with NIEEF and I expect to provide further guidance thereafter,” said Mr Roach.
The new management agreement replaces the old management agreement that had been entered into on September 23, 2013.
Under the management agreement, Premier’s 100 percent-owned subsidiary ZimDiv Holdings Limited was appointed as the manager for a five-year period.
The manager has full authority and responsibility for the day-to-day operations of RHA.
Premier said: “The manager will conduct the operations at RHA in accordance with the general terms and conditions of the management agreement and the approved budget and shall report directly to the board of RHA”.
It said the RHA board will agree on the management fee that would include a performance-related adjustment, which requires first concentrate shipment within 100 days of receipt of the new investment.