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

For immediate release                                                                                               

27 September 2017

Premier African Minerals Limited

('Premier' or 'the Company')

Unaudited Interim Results for the six months ended 30 June 2017

Premier African Minerals Limited, the AIM quoted multi-commodity mining and resource development Company focused on Southern and Western Africa announces its unaudited interim results for the six months ended 30 June 2017.

EXECUTIVE CHAIRMAN AND CEO'S STATEMENT

The first six months of 2017 were extensively reported as post financial year end events in our annual financial statements and this recital is complementary. Drilling at Zulu Lithium ("Zulu") continues to support our expectation that this project has potential to rank in the top tier of hard rock lithium deposits worldwide. At the same time, resource validation, ongoing underground development and plant improvements are expected to see RHA Tungsten (Private) Limited ("RHA") operating profitably late in Q4 2017. The acquisition of further interests in Circum Minerals Limited ("Circum") has underpinned Premier's underlying asset value.

Some rationalisation of the group seems necessary and in the third quarter of 2017 your board will focus on retention and development of assets that are less cash consuming and more asset value generative. An early example of this is the decision taken in September 2017 to relinquish TCT Industrias Florestais Limitada ("TCT IF") whilst retaining a free carried interest in the limestone deposit.

Zulu Lithium

Ongoing drilling and some early assay results indicate good continuity in the main zone ore body where our initial resource statement that covered some 35% of the known mineralisation, describes greater than 20 million ton grading at 1,06% Li2O. Our declared exploration target within this main zone is 60 to 80 million tons and this ongoing work within the main zone lends credence and raises expectations for improved tonnages in future resource statements. At the same time, ongoing drilling has discovered new major areas of pegmatite bodies and current work indicates that this is massive with the potential to double the overall size of the exploration target. We await assays and the results of ongoing resource modelling.

A preliminary economic assessment has been commissioned and results are expected in the latter part of this year.

We confirm that we have received interest in Zulu from a number of different parties with which we have ongoing discussions regarding their possible involvement in the project, however we believe that Zulu's size and scale make it potentially analogous to other world-class spodumene/pegmatite deposits and hence we are reviewing the best development strategy for the project, with a view to looking to concluding a negotiation when the PEA is completed.  

RHA Tungsten Mine

Various RNS statements during the period under review and subsequently, have described developments at RHA. The commitment to conclude the ongoing upgrades is supported by significant recent price increases in Tungsten concentrates. Further changes to the front end crushing circuit are necessary to allow full utilisation of the X-Ray sorting capacity and the expectation remains that this should be completed by end Q4 2017 and that RHA can the operate profitably. In the interim, a review of the previously declared resources has been undertaken and this results in an increased level of grade and contained metal in the underground and at least 10 years of potential production only from underground mining at the rate of 12,000 ton per month. Perhaps the most significant development from the recent price increases in wolframite concentrates is that RHA is now projected to operate profitably from as low a tonnage as 4500 ton per month from underground ore at projected grades. Mineralisation remains open on strike and at depth, and together with metal contained in the open pit, assures RHA of production for many years to come.

TCT IF

The Board concluded that TCT IF's forestry interests were not material in the ongoing development and strategy of the Group. The timber industry was affected earlier this year by a country-wide suspension of timber cutting and export licences in Mozambique for un-processed timber of over 125 mm in diameter. TCT IF's forestry interests are relatively small scale and have underperformed against budget in the first half of the year, and overall are expected only to be break-even for the year as a whole. On 20 September 2017 the Board announced that the Company had executed a binding letter of understanding for the sale by Premier of its 52% interest in TCT. The Company will retain a 50% interest in the limestone deposit following completion of the disposal

Other Zimbabwe Projects

Premier holds claims to a number of other prospective projects in Zimbabwe. These include Tinde Fluorspar, Globe multi-element and graphite and Rare Earth Elements at Katete. Whilst RHA and Zulu are taking centre stage in this period under review, these other projects remain potentially attractive.

Togo and West Africa Operations

Our operations in West Africa remain largely dormant at this time. It is likely that we will discontinue operations in Togo in the near future unless there is some resolution to the ongoing issues with the Ministry of Mines.

Board and Management Changes

I am pleased to report that Bruce Cumming has rejoined our technical team to provide support and to both expedite and assure quality of exploration activities at Zulu and resource validation at RHA. Mr. Cumming was an integral part of the early development of Premier and his expertise will greatly add to our resource development.

Funding

During the six months ended 30 June 2017 the Company issued the final tranche of the Darwin Loan notes raising some $523,000. By February 2017, the Company had received notices of conversion for the redemption of all the outstanding loan notes. In addition, during period the Company raised some $4.011 million through equity subscriptions.

The net proceeds from the funding initiatives have been used to provide expansion capital at RHA, to support the exploration and development activities at the Zulu Lithium and Tantalum project and to provide general working capital for the Company.

Outlook

Prospects for RHA have improved considerably with the recent improvement in Tungsten pricing and provided the limited additional capital to deal with final underground development and plant modifications is available over the next two months, revenues will flow as projected from Q4 this year.

We expect developments from Circum minerals and remain confident that this investment will be profitable for shareholders.

Zulu has potential to develop into a company maker and we look forward to results as they become available in the near future.

I would like to take this opportunity to thank our shareholders, directors, advisers and consultants for their continued support, commitment and confidence in Premier.

George Roach

Executive Chairman and CEO

27 September 2017

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.

This announcement contains inside information for the purposes of Article 7 of EU Regulation No. 596/2014 on market abuse.  Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

For further information please visit www.premierafricanminerals.com or contact the following:

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

EXPRESSED IN US DOLLARS

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

EXPRESSED IN US DOLLARS                                                                             

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

EXPRESSED IN US DOLLARS

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

EXPRESSED IN US DOLLARS

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.    GENERAL INFORMATION

Premier African Minerals Limited ('Premier' or 'the Company'), together with its subsidiaries (the 'Group'), was incorporated and domiciled in the Territory of the British Virgin Islands under the BVI Business Companies Act, 2004. The address of the registered office is Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin Islands.  Premier's shares were admitted to trading on the London Stock Exchange's AIM market on 10 December 2012.

The Group's operations and principal activities are the mining, development and exploration of mineral reserves, primarily on the African continent.  The presentational currency of the condensed consolidated interim financial statements is US Dollars.

2.    BASIS OF PREPARATION

These unaudited condensed consolidated interim financial statements for the six months ended 30 June 2017 were approved by the board and authorised for issue on 26 September 2017. 

The basis of preparation and accounting policies set out in the Annual Report and Accounts for the year ended 31 December 2016 have been applied in the preparation of these condensed consolidated interim financial statements.  These interim financial statements have been prepared in accordance with the recognition and measurement principles of the International Financial Reporting Standards ("IFRS") as endorsed by the EU that are expected to be applicable to the consolidated financial statements for the year ending 31 December 2017 and on the basis of the accounting policies expected to be used in those financial statements. 

The figures for the six months ended 30 June 2017 and 30 June 2016 are unaudited and do not constitute full accounts. The comparative figures for the year ended 31 December 2016 are extracts from the 2016 audited accounts.  The independent auditor's report on the 2016 accounts was not qualified but included an emphasis of matter - Carrying Value of Property, Plant and Equipment and Going Concern, and an emphasis of matter - Identification and Valuation of Intangible Assets Acquired Business Combination.

Going concern

The Directors have prepared cash flow forecasts for the period ended 31 December 2018, taking into account forecast operating cash flow and capital expenditure requirements for its RHA Tungsten mine, exploration activities at Zulu, operating cash flows at TCT, available working capital and forecast expenditure for the rest of the Group including overheads and other development costs.  The forecasts include additional funding requirements which the directors believe will be met.

3.    SEGMENTAL REPORTING

Segmental information is presented in respect of the information reported to the Directors.

The RHA Tungsten Mine segment derives income primarily from the production and sale of wolframite concentrate. All other segments are primarily focused on exploration and on administrative and financing segments.

For the purposes of the current period, segmental information has been changed to separately report the revenue generating segments of RHA that operates the RHA Tungsten Mine and TCT IF. 

Segmental results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

*Represents 100% of the results and financial position of RHA Tungsten (Private) Limited ("RHA") whereas the Group owns 49%.

**Represents 100% of the results and financial position of TCT Industrias Florestais Limitada ("TCT IF") whereas the Group controls 52%.

4.    TAXATION                          

There is no taxation charge in the six months ended 30 June 2017 (Nil for both the six months to 30 June 2016 and year ended 31 December 2016). As the group is an International Business Group, the British Virgin Islands imposes no corporate taxes or capital gains tax. However, the Group may be liable for taxes in the jurisdictions of the underlying operations.

To date, the Group has incurred tax losses however a deferred tax asset has not been recognised in the accounts due to the unpredictability of future profit streams.

5.    LOSS PER SHARE              

The calculation of loss per share is based on the loss after taxation attributable to the owners of the parent divided by the weighted average number of shares in issue during each period.

As the Group incurred a loss for the year, there is no dilutive effect from the share options and warrants in issue or the shares issued after the reporting date.

6.    INTANGIBLE EXPLORATION AND EVALUATION ASSETS

Exploration and evaluation assets at 30 June 2017 relate to the Zulu Lithium and Tantalite Project located in Zimbabwe and the provisional valuation of the limestone licence in Mozambique (2016: Zulu Lithium and Tantalite Project only).

During the period $180,000 (year to 31 December 2016: $276,000 and period to 30 June 2016: $46,000) was capitalised to the Zulu Lithium and Tantalite Project.

Exploration work conducted on Zulu during the period indicated that both lithium and tantalum recovery may be a viable option. The Group views this project as strategic and exploration work will be continued in the future, cash flow permitting.

The group acquired a limestone licence as part of the TCT acquisition.  The value of this asset has been estimated on a provisional basis because management are assessing the geological potential of the license and determining an appropriate valuation method.

7.    OTHER INTANGIBLE ASSETS

During the year ended 31 December 2016, within the TCT acquisition, a forestry concession was acquired, which has been provisionally valued at $1,022,000.

The forestry concession is being amortised over the expected life of the concession.

8.    INVESTMENTS

During the period the fair value of the investment in Circum decreased by $1 million.

Premier's investment in Circum Minerals Limited ('Circum') is classified as an available-for-sale investment and as such is required to be measured at fair value at each reporting date. As Circum is unlisted there are no quoted market prices. In previous years the fair value of the Circum shares was derived using the most recent placing price.  During July and August 2017 the company acquired further investments in Circum at an acquisition price of $1.50 per share.

9.    Property, plant and equipment

10.  LOAN NOTES AND DERIVATIVE FINANCIAL LIABILITIES

Loan notes

On 23 August 2016, the Company entered into an agreement with Darwin whereby Darwin could subscribe for a total of £3.5 million in convertible loan notes in which the Company would receive 90% of the par value of the notes. The loan notes were to be issued in three tranches on fulfilment of certain milestones. The notes would redeem 12 months from the subscription date unless repaid or converted. 

The gross amount of the loans issued can be converted between 105% and 100% of principal into ordinary shares at 90% of the traded share price when certain conditions are met. This conversion option represents a derivative liability of the company that is separately presented on the statement of financial position and fair valued through profit or loss. The directors have concluded that the value of the conversion option is not material and accordingly there is no value presented above.  

During the period under review the Company issued a further $ 523,000 of loan notes. Darwin has converted all outstanding loan notes into equity during the period under review.

The loan notes were secured by a put option held by the loan note holder that would require George Roach to purchase the shares held in Circum at $2 per share represented a guarantee given by the director.

Warrant liabilities

The Darwin instruments were issued with warrants equal to 30% of the aggregate par value of the loan notes issued on each of the relevant issue dates with the right to purchase one newly issued ordinary share for each warrant. The warrants have an exercise price of 125% of the initial market price and can be exercised within three years and 7 days of the issue date. During the period under review Darwin were issued 42,857,143 warrants on the drawdown of the loan notes.

11.  BORROWINGS

Borrowings comprise loans from a related party and a non-related party.

1)         On 15 September 2015, George Roach provided a US$300,000 loan direct to Premier for the use at RHA Tungsten (Pty) Limited ("RHA"). The loan is unsecured and accrues interest at a rate of 3% per annum. As at 28 March 2017, the loan and accrued interest totalled US$ 309,457. On 28 March 2017 the Company announced that it had amended the terms of the existing loan agreement ("Loan") with George Roach through the grant of conversion rights. The Board granted conversion rights in respect of the Loan, which can now be converted into new ordinary shares at a price of 0.5p per new ordinary share.

2)         As announced on 27 April 2015 the Company had entered into a two year US$250,000 loan facility with AgriMinco Corp. ("Loan Facility"). On 19 January 2017, Premier and AgriMinco agreed to settle the Loan Facility, subject to TSX Exchange approval, whereby the outstanding amount owed by Premier under the Loan Facility (amounting to US$260,922.39 including accrued interest) would be offset by the historic amounts owed by AgriMinco (amounting to US$195,578.88). The net balance owed by Premier amounted to US$65,343.51 and Premier agreed to repay AgriMinco in four equal instalments of US$12,335.88 from 15 March 2017, with an initial amount of US$16,000 on execution of the settlement agreement.

12.  SHARE CAPITAL

Authorised share capital

At the AGM held on 22 April 2017, the shareholders approved the increase in authorised share capital to 7 billion (31 December 2016: 4 billion and 30 June 2016: 2 billion) ordinary shares of no par value.                                                   

Reconciliation to balance as stated in the consolidated statement of financial position    

13.  EVENTS AFTER THE REPORTING DATE

13.1      Increases in investment in Circum

13.1.1    On 18 July 2017, the Company announced that it had agreed to acquire an additional interest of 649,333 shares in Circum (representing 0.7 per cent of the issued share capital of Circum) at a value of US$1.50 per Circum share for an aggregate consideration of $974,000. The Company has satisfied the consideration due through the issue of new ordinary shares of 0.1 pence each at the previous day's closing bid price for an aggregate consideration of $987,000 (£757,967).

13.1.2    On 31 July 2017, the Company agreed to purchase an additional interest in Circum of approximately 1% for a cash consideration of approximately $1,294,998.

13.1.3    On 9 August 2017, the Company announced that it had agreed to acquire an additional interest of 416,667 shares in Circum (representing 0.5 per cent. of the issued share capital of Circum) at a value of $1.50 per Circum share for an aggregate consideration of $520,833.75. Following completion of the Purchase, Premier's holding in Circum will amount to 4,101,999 Circum shares in aggregate, representing 4.2 per cent, of issued share capital of Circum. The Company has satisfied the consideration due through the issue of new ordinary shares of 0.1 pence each at the previous day's closing bid price for an aggregate consideration of $625,000 (£481,250.39).

13.1.4    On 23 August 2017, the Company announced that it had agreed to acquire an additional interest of 908,334 shares in Circum, (representing 1 per cent. of the issued share capital of Circum) at a value of US$1.50 per Circum share for an aggregate consideration of US$1,362,501.00. Following completion of the Purchase, Premier's holding in Circum will amounted to 5,010,333 Circum shares in aggregate, representing 5.2 per cent, of issued share capital of Circum. The Company has satisfied the consideration due through the issue of 236,166,840 new ordinary shares at the previous day's closing bid price for an aggregate consideration of $1.4 million (£1.1 million).

13.2       Funding - Loan Agreement, Subscription and Equity Sharing Agreement

13.2.1    On 31 July 2017, the Company announced a new $2.9 million loan agreement, direct subscription for new ordinary shares to raise $6.3 million (£ 4.8 million) before costs and $4.3 million (£3.3 million) equity sharing agreement.

13.3       Exercise of warrants and Issue of Equity

13.3.1    On 21 August 2017, the Company announced that Darwin Capital Limited ("Darwin"), which was awarded 3,559,479 warrants to subscribe for new Ordinary Shares as announced on 15 September 2015, had issued a notice of exercise in respect of the entire warrant deed at the adjusted exercise price of 0.26p per new Ordinary Share for total a consideration of £9,254.65. The Company has issued 3,559,479 new Ordinary Shares to Darwin.

13.4.    Disposal of Premier's 52% Interest in TCT IF

13.4.1  On 20 September 2017, the company executed a binding letter of understanding ("LoU") with Amire Glory Limited ("Buyer") for the sale by Premier of its 52% interest in TCT IF for a value of US$2.1 million (before settlement of the Vendor Consideration). The consideration will be satisfied through the transfer by Premier of all rights and obligations held under the public deeds for the assignment of quotas to acquire its 52% interest in TCT IF from the Vendors. The Buyer will therefore assume Premier's responsibility to settle the Vendor Consideration of US$2.1 million and on completion of the Disposal, Premier will have no further liabilities or obligations to the TCT Vendors. Net of the settlement of the Vendor Consideration the net proceeds retained by Premier is nil.

The Buyer has further agreed to establish a Mozambique-registered Company ("NewCo") which will hold its interest in TCT IF's limestone deposit exploration licence and Premier will be granted a 50% interest in NewCo. The Buyer will be responsible for NewCo's initial exploration costs of up to a maximum of US$200,000 ("Exploration Spend") unless otherwise agreed in writing with Premier. Following such Exploration Spend, the shareholders in NewCo will be responsible for any further funding of NewCo pro rata to their interests in NewCo. Premier will be appointed the manager of NewCo (and retain oversight therefore of the exploration and development of limestone project).

The Buyer intends to develop a portfolio of Mozambican forestry tourism and agricultural interests and has further granted Premier the right to participate in any fund raise whether by way of private placement, offer to the public or offer to shareholders of the Buyer or otherwise to the total value of 10% of the proposed fund raise (this right will lapse following the admission of all or any of the shares in the Buyer, to trading on a market for listed securities operated by a recognised investment exchange or should Premier fail to participate in a fund raise).