Circum Update

Premier African Minerals Limited / Ticker: PREM / Index: AIM / Sector: Mining

For immediate release

15 June 2020

Premier African Minerals Limited

Circum Update

The Board of Premier African Minerals Limited ("Premier" or the "Company") is pleased to provide an update on developments and progress it has received from Circum Minerals Limited ("Circum"), in which the Company holds 5,010,333 shares.

In Summary:

The Board of Circum has reported that a combination of factors in the latter part of 2019 and the effects of Covid-19, has led the Circum Board to decide to execute a new set of strategic objectives to develop its potash asset, set to ultimately ensure that all investors who financially supported Circum so far, are given a better chance to earn the expected returns through a future liquidity event, in the shortest possible time. 

These strategic directions are summarised as follows:

1.   Engagement of a leading Canadian potash consultancy engineering group to update the current definitive feasibility study ("DFS") for an initial smaller capacity of SOP production, later scalable up to 750KT, with   the objective to deliver a preliminary set of figures sometime in October-November of this year.

2.   Upon delivery of the updated DFS re-engage, all the financial institutions with whom debt and      equity funding was being discussed.

3.  Launch of an underwritten, non-transferable Rights Issue ("RI") of non-voting, redeemable    preference shares to finance the working capital needs of Circum until mid-2021. The preference shares are zero coupon shares and are not retractable, thereby are not a liability to Circum until a liquidity event. An additional US$2.5 million RI preference shares are available to third parties.

George Roach, Chief Executive of Premier commented, "The ability to finance an all-in development cost well in excess of US$1.0 billion under present market conditions had become more and more problematic and, in my view, the emergence of Covid-19 was just the final precipitator for Circum's Board to take a very sensible decision. The appointment of the Canadian engineering consultancy firm with their direct experience in potash and specifically in the Danakil basin, coupled to all the very substantial previous work undertaken by Circum, should allow the timelines Circum suggests, to be met.

Similarly, the appointment of a reputable debt advisory boutique and the standing of Circum's major shareholders strongly supports the expectation that the banks and institutions that had shown interest in funding the equity and the debt components for the larger project, would continue to positively engage on the basis of this updated DFS.

Circum shareholders in my view should derive comfort from the underwriting by AMED Funds of the RI that is to being launched, particularly that the terms thereof will see subscribers to the RI effectively securing a right to the future issue of a new class of non-voting redeemable preference share. This is in effect an unsecured interest free bridge loan without recourse other than in in the case of a liquidity event. Should the subscription amount together with a premium thereon not have been repaid or an Initial public offering ("IPO") not have taken place, preference shareholders will be redeemed first at a premium from any other liquidity event.

In summary, assuming that only the fully underwritten US$10 million is raised, the key features of the RI are:-

1.    The funding will be available in tranches, the first tranche being US$2.5 million. The balance will be called when required in tranches. Circum has the right, in the event it secures a more preferable funding, to redeem the preferred shares prior to 31 December 2020 at a premium of 22.5%.

2.    If there is an IPO the outstanding preferred shares would get redeemed for the greater of (i) US$1.00 per preferred share (US$20 million) and (ii) the IPO Price minus 10%.

3.    In the event of any cash distributions by Circum the preferred shares would receive the first payment of US$20 million, the ordinary shareholders would receive the next US$20 million and after that the preferred shareholders would receive 1 ordinary share for each preferred share representing a modest dilution of  approximately 7.4% to existing Circum shareholders and the preferred shares would be cancelled. Given this limited potential dilution, Premier does not currently intend to participate in the RI.

George Roach further commented that Premier's investors should take note that the Danakil Project of Circum is a substantially larger resource than the adjacent deposit in Eritrea owned by Danakali Limited as to 50%, and the market valuation of Danakali Limited is currently approximately US$105 million. The financing arranged by AMED Funds, the single largest shareholder of Circum, and the reduced capex and staged production phases, provides me confidence that Premier will be able to realise on its investment in the not too distant future."

About Circum Minerals Limited

Circum is a private company developing the Danakil Potash Project in north-eastern Ethiopia. With a reported mineral resource of 4.9 billion tonnes at 18.1% KCl (potassium chloride) and seismic data suggesting an overall resource size of 12 to 14 billion tonnes of potash-bearing salt beds, the Danakil Project is one of the world's largest undeveloped potash resources.

For more information on Circum, please visit https://www.circumminerals.com/.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014. The person who arranged the release of this announcement on behalf of the Company was George Roach.

Enquiries:

Notes to Editors:

Premier African Minerals Limited (AIM: PREM) is a multi-commodity mining and natural resource development company focused on Southern Africa with its RHA Tungsten and Zulu Lithium projects in Zimbabwe.

The Company has a diverse portfolio of projects, which include tungsten, rare earth elements, lithium and tantalum in Zimbabwe, encompassing brownfield projects with near-term production potential to grass-roots exploration.

The Company holds 5,010,333 shares in Circum Minerals Limited, the owners of the Danakil Potash Project in Ethiopia, which has the potential to be a world class asset.

Forward Looking Statements:

Certain statements in this announcement are or may be deemed to be forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'' ''could'' "should" ''envisage'' ''estimate'' ''intend'' ''may'' ''plan'' ''will'' or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.  A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward looking statements.

ENDS