Premier African Minerals Ltd on Wednesday said it will buy an initial 52% interest in Mozambique-based TCT Industrias Florestais Ltd, which owns a substantial limestone deposit in the Sofala province.

Premier has raised GBP1.1 million through the issue of 146.7 million shares at 0.75 pence each to help fund the acquisition and for exploration costs. The total acquisition consideration amounts to USD2.1 million.

26% of the stake is being bought for USD1.1 million from Transport Commodity Trading Mozambique Ltd and will be paid in four tranches of either cash or shares. The remaining 26% is being bought from GAPI Sociedade de Investimentos SA for USD1.0 million and will be paid in five tranches, the first in cash and the other four in either cash or shares.

Premier has also entered into a memorandum of understanding with TCTM, GAPI and other TCT shareholders, under which Premier has agreed to fund the limestone exploration programme and TCT’s operations through a loan of up to USD1.0 million.

Premier has the right to convert amounts provided under the loan into equity as and when it totals USD1.0 million, and when it is converted Premier’s maximum interest in TCT will increase to 68%.

“This is a particularly attractive acquisition both in the upside potential from development of the limestone and the allied operating natural resource business of TCT that is expected to positively impact cash flows and mitigate normal exploration and mineral development risk,” Chief Executive George Roach said in a statement.

“At the same time, an existing market and available infrastructure significantly adds to the early development potential of the deposit. This, together with developments at RHA where recommissioning of the vertical shaft remains on target for completion this month, adds substantially to Premier’s future,” he added.

Shares in Premier were trading down 16% at 0.860 pence on Wednesday morning.

Source: London South East