Premier African Minerals Ltd (LON:PREM) has provided an update to investors regarding a proposed increase to its stake in MN Holdings, the owner of the Otjozondu manganese mining project.

In a statement, the company reaffirmed the basis for its proposed purchase of a further 7% interest in MN Holdings for US$700,000. The proposed transaction will see the company’s stake in MN Holdings rise to 19%.

“Premier’s proposed additional purchase is based exclusively on the independent valuation for further plant and equipment that MNH has purchased as set out in the announcement dated 4 December 2019,” the company said.

READ: Premier African Minerals buys further 7% stake in Otjozondu

The company noted that the proposed purchase is priced at the identical valuation used in an earlier purchase, and, it does not factor in any other project valuation or trading value, in spite of confirmation that volumes of Manganese lump ore out of Otjozondu are anticipated up to 5,600 ton per month at an average grade of approximately 34% Mn.

“At this level of export and on the basis of ruling prices and terms, this equates to circa 190,400 dmtu.  Gross revenue is determined by future selling price. The most recent sale was for a shipment of 1,405 ton of lump ore and the price per dmtu was US$5.00,” Premier African added in the statement on Tuesday.

in a statement announcing the planned deal on May 6, Premier African’s chief executive, George Roach had said: “MNH has further confirmed their existing dividend policy is to distribute cash surpluses after provisions for tax, royalties, expansion and appropriate reserves on a quarterly basis. This further proposed increase in our holding in MNH is based on the same valuation formula applied to our initial acquisition.”

“Nevertheless, this does represent a more significant stake in what we expect to be a cash-generative asset supportive of group overheads in the near future and comes on the back of a sharp increase in the price for manganese,” Roach added.

Otjozondu, located in a well-known and established manganese district, spans some 1,367 square kilometres and the project is presently known to have 114 kilometres of strike, of which only 14 kilometres has been explored to the extent that resources can be estimated.

Open-pit mining is ongoing and processing is done via a crush screen and jig plant.