Shares of Premier Africa Minerals plunged 40 percent on Monday after the company declared force majeure at its Zimbabwe lithium mine, citing defects in its processing plant.
A statement from Premier said the plant was unable to produce enough spodumene concentrate to meet the conditions of its off-take agreement with China's Canmax Technologies.
Chinese lithium battery company Canmax last year provided $35 million to build a pilot plant at Premier Africa Mining's Zulu lithium mine in exchange for an annual supply of up to 50,000 tonnes of spodumene concentrate.
Premier said it had issued a force majeure notice to Canmax on June 25 as a milling issue at its recently built plant affected production schedules. The factory contractor is working to fix the problem.
"The company is unable to deliver the product within the agreed date," the statement said.
Premier said the two sides were in talks over possible changes to the existing agreement and that Canmax had proposed to convert its $35 million cash injection into debt or equity. Canmax also holds a 13.38 per cent stake in Premier.
Premier said it was reconsidering its exclusive partnership with Canmax after receiving approaches from Chinese and European rivals, hinting at a growing rift between the two companies.
