HARARE (Reuters) - Shares in Premier African Minerals plunged 40% on Monday after the company declared force majeure at its Zimbabwe lithium mine, citing a defect at its processing plant.
A Premier statement said the plant could not produce sufficient spodumene concentrate to meet conditions of its offtake agreement with China's Canmax Technologies.
Chinese lithium battery company Canmax last year provided $35 million for the construction of a pilot plant at Premier's Zulu lithium project in exchange for the annual supply of up to 50,000 metric tons of spodumene concentrate.
Premier said it issued a force majeure notice to Canmax on June 25 because milling problems at its recently completed plant had affected production plans. The plant contractor was working to resolve the problem, it added.
"The company is unable to deliver product within the stipulated dates as set out in the agreement," Premier said.
Triggering a force majeure clause in contracts allows certain terms of an otherwise legally binding agreement to be ignored because of unavoidable circumstances.
The two parties are negotiating possible changes to the current agreement, Premier said, adding that Canmax has proposed to convert its $35 million cash injection into debt or shares. Canmax is also a 13.38% shareholder in Premier.
A Canmax representative was not immediately available for comment.
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