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[Ferro-Alloys.com]Premier African Minerals Ltd (LON:PREM) revealed it was on the brink of profitable underground operations at its RHA tungsten mine in Zimbabwe.
The miner expects positive operational cash flow from the site, before capital expenditure and working capital, when first ore from the 870 level is processed and crushing circuit upgrades are installed.
Re-equipping the existing vertical shaft has taken longer than originally expected but is nearly complete and and ore will arrive at surface during this month (April), Premier said.
The total cost of the crushing circuit upgrade is expected to be less than US$100,000 and take less than two weeks to install and commission once all components are on site.
Chief executive George Roach told investors: "I am pleased to report that Premier has dramatically reduced fixed expenditure at RHA and we remain confident that as and when 870 ore is processed at the grades indicated, and through-put and recovery meet design criteria, RHA will operate profitably."
A huge step
Speaking to Proactive, he said this achievement would be a 'huge step" for the miner.
"Premier has come from really a small exploration and development companyinto one that has truly transitioned.
"I would like to think it’s the first of other projects that will go down the same route."
In January, the firm told investors the plan was to process around 32,000 tonnes of run of mine ore at an average grade of 6.20 kg/t to produce 249 tonnes of concentrate at 63% over six months.
Roach said its target now was actually a little better, with the firm aiming to achieve 8,000 tonnes of run-of-mine (ROM) from underground per month.
"We need to get that material onto the surface. That confirms grade. And we need to put it through the plant with a crushing circuit in place. That confirms throughput."
Quicker than envisaged..
He added that the firm was actually quicker by a year in going underground than had been originally planned.
Earlier, Roach had said: "RHA was always planned, in the longer term, to be an underground mine. Unforeseen developments during the initial open pit operations led the company to accelerate the move to underground mining."
The strategy change meant the company had to pay for overheads for an extended period without recourse to cash flow generated from the open pit and finance substantial additional debt generated by RHA.
House broker Shore Capital provides a re-cap
"PREM originally envisaged an initial small (22-month) open pit to fund underground development."
Unfortunately, it noted, given falling tungsten prices and higher-than-planned unit costs due to poor yields, the firm decided to temporarily suspend the open pit and accelerate underground development instead, on the basis that underground ore should enjoy better margins as its better grade.
"A plan was therefore developed involving the initial mining of the adit-accessible 926 level while the vertical shaft was re-equipped and production infrastructure on the deeper 870 level put in place; capex was estimated at c.US$0.4m.
Over the next 6 months or so, we are expecting c.48kt of run-of-mine ore grading 6.2kg/t WO3 (based on the historical non-code-compliant resource, supported by chip sampling) to be mined, yielding c.374t of 63% WO3 concentrate."
Meanwhile, Northland, which has a 'speculative buy stance' said: "Premier African Minerals is continuing to move towards commercial underground production at the RHA Tungsten project, though the re-equipping of the vertical shaft at the RHA has taken longer than expected but is now nearing completion."
Having been higher in early deals, shares eased 3.85% to 0.625p.
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- [Editor:Sophie]
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