Premier African Minerals has raised about £1.2 million to fund the restart of processing at its Zulu Lithium and Tantalum Project in Zimbabwe, but the money will initially finance only a 15-day operating campaign as the company tests whether the plant can achieve stable production.

The AIM-listed miner said on October 5 that it had issued 27.52 billion new shares at 0.00436 pence each to institutional and professional investors, with the net proceeds providing working capital for the planned recommencement of operations at Zulu.

The immediate plan represents a change from Premier’s previous strategy of building a larger run-of-mine stockpile before restarting the processing plant.

Managing Director Graham Hill said the funding “enables us to move directly towards restarting plant operations at Zulu”, adding that the decision marked “a change from our original plan, which was to build a larger ROM stockpile before recommencing processing.”

Hill said progress made during the previous operating period had given the board sufficient confidence to restart the plant using material already available.

“However, the progress achieved during the previous operating period has provided the Board with a basis to proceed with the restart, while maintaining our focus on achieving stable and consistent production of spodumene concentrate,” he said.

Premier now plans to process approximately 13,000 tonnes of ore already sitting on the ROM pad during an initial campaign lasting about 15 days.

Hill said the company believed the best use of its available resources was to process that material and establish whether the plant could perform satisfactorily.

“We believe the best use of the Company’s available resources at this stage is to process the material already on the ROM pad and demonstrate the satisfactory performance of the plant,” he said.

The campaign will focus on four key measures — sustained plant operation, product quality, recoveries and throughput — with the company saying the results will determine whether operations can continue beyond the initial test.

“Our immediate target is an approximately 15-day campaign, during which the principal focus will be on sustained plant operation, product quality and recoveries,” Hill said.

The wording is significant because Premier is not presenting the £1.2 million as sufficient funding for a full-scale restart. Instead, the money is being used to establish whether the plant can operate consistently before the company commits further capital.

Personnel, diesel, reagents and other consumables are being mobilised, while supplier engineers are expected at the site to support operations and further optimise the spodumene flotation plant.

Premier said additional blasted ore remains available within its exploration prospecting area and could be moved to the ROM pad after the initial campaign, but only if the plant performs satisfactorily and sufficient working capital is available.

Hill said the initial campaign could, therefore, become a bridge to a longer operating period.

“Importantly, this approach should provide us with the opportunity to extend operations,” he said.

He added that “additional blasted material remains available within the EPO and may be mobilised to the ROM pad following the initial campaign, subject to satisfactory performance and the availability of working capital.”

The results will also influence Premier’s next funding and operational decisions.

“The results of the campaign will therefore inform subsequent operational and funding decisions, including the potential remobilisation of mining activities and continuation of plant operations beyond the initial 15-day period,” the company said.

That leaves Zulu facing a two-stage test: first, prove that the existing ore can be processed reliably; second, secure enough funding to keep the plant supplied and move back towards mining and sustained production.

Hill said the operational evidence would also be important in discussions with investors and potential funding partners.

“A successful campaign should provide the Board, shareholders and potential funding partners with greater visibility on the operational capability of Zulu and a stronger basis from which to determine the next stage of the project,” he said.

The latest fundraising also substantially increases Premier’s share count. The company has issued 27,522,935,780 new shares, taking its total issued share capital to 77,597,203,602 shares.

The new shares therefore account for about 35.5% of the enlarged share capital, meaning existing shareholders who did not participate in the subscription face substantial dilution.

Premier said the money would principally fund operating expenditure at Zulu, including mining and stockpiling activities, operational personnel, diesel, reagents and other consumables.

It will also be used for “the management of essential creditors at Zulu” and the group’s wider working capital requirements.

The funding comes as Premier continues to try to move Zulu from repeated operational and financing difficulties towards consistent production.

The company has previously highlighted the importance of achieving stable operations at the project, and the latest announcement puts plant performance ahead of immediately rebuilding a larger ore stockpile.

The strategy effectively allows Premier to use the 13,000 tonnes already available as an operational test rather than committing scarce cash to a larger stockpile before the processing plant has demonstrated sustained performance.