The shares of Premier African Minerals Ltd (LON: PREM) fell 5.56% after unveiling plans to raise £1 million to fund a definitive feasibility study of its Zulu Lithium mine in Zimbabwe.
The mining company’s CEO, George Roach, explained that the fundraising activity was intended to cushion its operations, funded so far by its resources.
Premier African Minerals is set to issue 625 million new ordinary shares priced at 0.16p each as part of the discounted share placement to raise the £1 million.
The miner has made significant progress in advancing the Zulu lithium project, including upgrading and repairing the roads leading to the mine, hiring local staff and experienced engineers to operate the project, among other similar activities.
PREM shares have been trading sideways for a few weeks now as investors wait for positive announcements from the company to fuel the next rally. While today’s announcement resulted in a dilution for current shareholders, we did not get a massive selloff in PREM shares.
The Company has a diverse portfolio of projects, including tungsten, rare earth elements, lithium and tantalum projects in Zimbabwe. These projects range from brownfield projects with near-term production potential to grass-roots exploration.
Premier African Minerals prospects are quite bullish given that its projects are focused on battery metals such as lithium and tungsten, whose demand has risen significantly in the recent past, with the trend being expected to continue for the next decade.
However, none of its projects is at the production stage; hence, investors might have to wait for a while before the company can start generating revenues. The stock is best suited for long-term investors who want to reap the benefits of owning shares in a lithium producer.
From a technical perspective, PREM shares are trading at a support level and could rally higher at any minute. Swing traders could establish bullish positions now and exit them once the price reaches its prior highs.
Premier African Minerals share price.
PREM shares dropped 5.56% to trade at 0.17p, falling from Wednesday’s closing price of 0.18p.
