TIDMPREM
RNS Number : 7663C
Premier African Minerals Limited
03 October 2018
Premier African Minerals Limited / Ticker: PREM / Index: AIM /
Sector: Mining
For immediate release
3 October 2018
Premier African Minerals Limited
RHA Technical Report and Development Plan
Premier African Minerals Limited ("Premier" or the "Company") is
pleased to announce the results of a Technical and Economic
Assessment ("Technical Study") on the RHA Tungsten Mine ("RHA") in
Zimbabwe. The Study has been prepared in compliance with the
guidelines of SAMREC by independent South African mine planning
consultants, Bara Consulting (Pty) Limited ("Bara Consulting").
The Technical Study was undertaken by Premier to evaluate the
options for re-establishing production at RHA and to provide
independent assessment of the Company's conclusions related to
returning RHA to production. The Technical Study was limited to ore
blocks in the underground area nearing completion of development at
the time of shutdown of RHA in January 2018 and does not review
life-of-mine economics that would be associated with the previously
declared gross underground inferred resource of 1.325 million
tonnes grading at 4.72kg/t WO (as announced on 15 September 2017).
Neither does this study examine the potential benefit of
reprocessing high-grade historic tailings either on stand-alone
basis or combined with the simultaneous reopening of mining
operations. Inclusion of historic tailings has been examined by
Premier independent of Bara Consulting and further details are set
out in this announcement.
The following two scenarios have been evaluated by Bara
Consulting in the Technical Study:
- Underground production at a production rate of 6,000 to 7,000 tonnes per month; or
- Underground and open pit mining at a production rate of 6,000
tonnes per month and 34,000 tonnes from the open pit, with a plant
processing rate of 40,000 tonnes per month.
At this time, Premier will only consider the first option as a
basis for re-commencing production at RHA.
Underground Operations
The RHA tungsten mine has a significant underground operation,
which is currently under care and maintenance. Over the last couple
of years, the Company has invested in developing the resources on
strike as well as the associated infrastructure, such as upgrading
the shaft, as well as the installation of additional surface plant
including XRT sorting. In order to achieve the 6,000 tonne per
month run rate, and bring the underground mine back into
production, the Company has identified a number of capital costs,
which are set out in Table 1 below.
Table 1. Underground Mining Capital Cost
Capital Costs US$ ('000)
Resource Drilling and Resource Upgrade 268
-----------
Resource Optimisation and Mine planning 10
-----------
Contractor mobilisation 36.8
-----------
Vertical shaft extension 300
-----------
Vertical shaft infrastructure upgrade 450
-----------
Total Underground Mining Capital Cost 1,064
-----------
Note:
(i) Source: Bara Consultancy Technical Study 2018
The cashflow model for the underground mining set out in the
Technical Study shows that this scenario results in a positive
pre-tax cash flow of US$0.616 million over the initial 15-month
period. The peak funding requirement is US$1.657 million in month
four, and the underground mine is expected to become cashflow
positive in month five. A summary of the results of the cash flow
model results is set out in Table 2 below:
Table 2. Underground Mining Cash Flow Summary Months 1 to 15
RHA - Revenue Unit Value
Gross value of Sales US$ 6,091.387
---- ---------
Royalty rate % 3.5
---- ---------
Royalty paid US$ 213,199
---- ---------
Operating Cost
---- ---------
Mining US$ 2,868,772
---- ---------
Diamond drilling
---- ---------
Processing US$ 309,508
---- ---------
Administrative US$ 276,954
---- ---------
Labour US$ 823,331
---- ---------
Transportation US$ 93,714
---- ---------
Total C1 operating cost US$ 4,287,963
---- ---------
Royalty US$ 251,574
---- ---------
Total C3 Operating Cost US$ 4,501,161
---- ---------
Capital Cost
---- ---------
Mining Capital US$ 1,064,875
---- ---------
Plant Capital US$ 305,000
---- ---------
Infrastructure US$ -
---- ---------
Total Capital Cost US$ 1,369,875
------------------------ ---- ---------
Cash flows
---- ---------
EBITDA US$ 1,416,666
---- ---------
Pre-Tax Cash Flow US$ 616,666
---- ---------
Notes:
(i) Source: Bara Consultancy Technical Study 2018;
(ii) Mining input parameters used in the cash flow model are
based on numbers provided by the RHA technical team and independent
contractor mining service providers;
(ii) The cash flow summary covers the period of 15 months from
re-commencement of operations of underground operations including a
month of rehabilitation for the underground mine and three months
of development prior to commencement of stoping.
The cashflow model uses an Ammonium Para tungstate ("APT")
product price of US$300 per mtu (metric tonne unit) which compares
to a current price of approximately US$275-290 per mtu. This
amounts to US$30.0 per kg of contained WO in concentrate. The sales
terms currently achieved and planned in the cash flow model
includes payment of 65% of the APT price to RHA. In addition, the
following off-site costs are included in the cash flow model: (1)
Royalty of 3.5% of gross sales value; and (2) Transport cost from
the mine to Durban at US$3,780 per 20 tonne container.
Existing Resource estimates in the underground areas of RHA
(excluding any open pit resources) indicates a mine life greater
than 10 years. In this return to production scenario, the mine life
modelled was limited to an initial 15 months of mining, including a
month of rehabilitation for the underground mine and three months
of development prior to commencement of stoping. The reason for
this limit at this time is that the results of drilling underway at
present will guide the future underground development and mining
rate. The initial WO production is modelled to amount to 2,700 mtu
per month from underground mining and the company will
incrementally increase to a steady state of production of 6,000
tonnes in month 14. The Company is currently undertaking a
comprehensive drilling programme which is likely to significantly
expand the declared resource as well as increase the resource
confidence in the underground mine.
RHA has a gravity processing plant on site with a capacity of
40,000 tonnes per month. The plant processing parameters used in
the cashflow model are based on historical performance with some
revision because of planned plant upgrades (the cost of which is
included in the estimates of plant capital costs set out in Table 2
above). The parameters used in the cashflow model are based on a
95% sorter recovery, 75% overall plant recovery and a 63%
concentrate grade which have been achieved.
Following the Technical Study, the Company believes that the
underground production scenario is the most viable option at this
time given the declared underground Resource. Results from the
drilling programme presently underway at RHA may influence this
decision and should that be the case, a further announcement will
be made. The Company believes that simultaneous reprocessing of
historic tailings may further reduce peak funding as determined in
the Technical Study and this is discussed below.
George Roach, Premier's CEO, commented: "This technical and
economic assessment of RHA demonstrates a technically viable
restart basis for the project. Whilst we have faced challenges in
the past at RHA, we believe that we have a solid plan to
de-bottleneck the underground operation and meet the mine run rates
to enable RHA to operate profitably. We have commenced the
underground drilling programme and so far, have intersected visual
mineralisation over excellent drill widths and we look forward to
reporting the results when we receive assays.
In addition, we are making good progress with the discussions
with the relevant authorities in Zimbabwe to finalise the ownership
structure of RHA and we would like to re-establish production from
the underground mine as soon as this is concluded."
Underground Operations and tailings Reprocessing Combined
Operations
The potential simultaneous processing of tailings, in
combination with underground ore as described in the Bara
Consulting Technical Study, has been additionally examined
internally by the Company and has not yet been independently
reviewed by Bara Consulting. The Company has previously processed
750 tons of historic tailings and has based its evaluation on this
experience.
RHA has a sizable historic tailings deposits built up during
historic production in the 1970s. The Company undertook an
assessment to determine the W0 resources contained in the tailings
and conducted a comprehensive sampling programme to determine the
size fraction, grade and potential; in-situ resource. The results
of the sampling programme concluded that 86.1% of the material was
above 45um which is a suitable size for gravity concentration.
Based on the Company's internal estimate that development cost
associated with the re-processing of the tailings amount to
US$17,000, the Company has estimated that it can produce from the
tailings a tonne of concentrate containing 59% WO for approximately
US$145/mtu. At an APT selling price of US$300 mtu, the incremental
profit on re-processing the tailings will in the first 15 month
period of underground operations be US$149,193.
Considering these favourable economics, the Company has
concluded that it should combine the reprocessing of these tailings
with underground mining operations as and when they recommence.
Qualified Person
The Technical Study, was led by Clive Brown a director and
principal engineer of Bara Consulting. He has read and confirmed
that this news release fairly and accurately reflects the contents
of the Technical Study. He has approximately 26 years' experience
in the mining industry. This time has been split between production
work in conventional and mechanised mines, project work and
consulting. He has been involved in a significant number of large
pre-feasibility and feasibility studies and has also been involved
in the project management and implementation of several projects.
Clive Brown holds the following qualifications and
affiliations:
-- Degree in Mining Engineering from the University of Witwatersrand (Bsc. Eng. (Mining));
-- Registered as a Professional Engineer (Pr. Eng.) with the
Engineering Council for South Africa; and
-- Fellow in good standing of the Southern African Institute of Mining and Metallurgy.
Gerard Evans, Resource Geologist for Premier African Minerals,
has reviewed and confirmed the statements related to open pit and
underground resources set out herein. Gerard Evans has 27 years'
experience in mining industry specialising in resource geology and
holds a B.Sc Hons degree in geology from the University of the
Witwatersrand. He is registered member of SACNASP (400015/08), GSSA
and GASA.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014. The person who arranged for
the release of this announcement on behalf of the Company was
George Roach, Director.
Enquiries:
Premier African Minerals Tel: +44 (0)7734
Fuad Sillem Limited 922074
Michael Cornish / Beaumont Cornish Limited Tel: +44 (0) 20
Roland Cornish (Nominated Adviser) 7628 3396
--------------------------- -----------------
Jerry Keen/Edward Shore Capital Stockbrokers Tel: +44 (0) 20
Mansfield Limited 7408 4090
--------------------------- -----------------
Notes to Editors:
Premier African Minerals Limited (AIM: PREM) is a
multi-commodity mining and natural resource development company
focused on Southern Africa with its RHA project in Zimbabwe.
The Company has a diverse portfolio of projects, which include
tungsten, rare earth elements, lithium and tantalum in Zimbabwe,
encompassing brownfield projects with near-term production
potential to grass-roots exploration. In addition, the Company
holds 5,010,333 shares in Circum Minerals Limited ("Circum"), the
owners of the Danakil Potash Project in Ethiopia, which has the
potential to be a world class asset. Premier also has an interest
in Arc Minerals that has a number of mineral assets in Europe and
Africa.
Forward Looking Statements:
Certain statements in this announcement are or may be deemed to
be forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe"
"could" "should" "envisage" "estimate" "intend" "may" "plan" "will"
or the negative of those variations or comparable expressions
including references to assumptions. These forward-looking
statements are not based on historical facts but rather on the
Directors' current expectations and assumptions regarding the
Company's future growth results of operations performance future
capital and other expenditures (including the amount. nature and
sources of funding thereof) competitive advantages business
prospects and opportunities. Such forward looking statements re ect
the Directors' current beliefs and assumptions and are based on
information currently available to the Directors. Many factors
could cause actual results to differ materially from the results
discussed in the forward-looking statements including risks
associated with vulnerability to general economic and business
conditions competition environmental and other regulatory changes
actions by governmental authorities the availability of capital
markets reliance on key personnel uninsured and underinsured losses
and other factors many of which are beyond the control of the
Company. Although any forward-looking statements contained in this
announcement are based upon what the Directors believe to be
reasonable assumptions. The Company cannot assure investors that
actual results will be consistent with such forward looking
statements.
Glossary of Technical Terms
"APT" Abbreviation for Ammonium Paratungstate
(Fe, Mn) WO chemical composition of wolframite
-----------------------------------------------------------
"Indicated Resource" that part of a Mineral Resource for which tonnage,
densities, shape, physical characteristics,
grade and mineral content can be estimated
with a reasonable level of confidence. It is
based on exploration, sampling and testing
information gathered through appropriate techniques
from locations such as outcrops, trenches,
pits, workings and drill holes. The locations
are too widely or inappropriately spaced to
confirm geological and/or grade continuity
but are spaced closely enough for continuity
to be assumed
-----------------------------------------------------------
"Inferred Resource" that part of a Mineral Resource for which tonnage,
grade and mineral content can be estimated
with a low level of confidence. It is inferred
from geological evidence and sampling and assumed
but not verified geological and/or grade continuity.
It is based on information gathered through
appropriate techniques from locations such
as outcrops, trenches, pits, workings and drill
holes that may be limited or of uncertain quality
and reliability
-----------------------------------------------------------
"kg/t" abbreviation for kilogramme per tonne
-----------------------------------------------------------
"Measured Resource" is that part of a mineral resource for which
quantity, grade or quality, densities, shape,
and physical characteristics are so well established
that they can be estimated with confidence
sufficient to allow the appropriate application
of technical and economic parameters, to support
production planning and evaluation of the economic
viability of the deposit. The estimate is based
on detailed and reliable exploration, sampling
and testing information gathered through appropriate
techniques from locations such as outcrops,
trenches, pits, workings and drill holes that
are spaced closely enough to confirm both geological
and grade continuity
-----------------------------------------------------------
"Mineral Resource" concentration or occurrence of diamonds, natural
solid inorganic material or natural fossilized
organic material including base and precious
metals, coal, and industrial minerals in or
on the Earth's crust in such form and quantity
and of such a grade or quality that it has
reasonable prospects for economic extraction.
The location, quantity, grade, geological characteristics
and continuity of a mineral resource are known,
estimated or interpreted from specific geological
evidence and knowledge
-----------------------------------------------------------
"Mineralisation" presence of a target mineral in a mass of host
rock
-----------------------------------------------------------
"mtu" Abbreviation for metric tonne unit
-----------------------------------------------------------
"SAMREC" South African Code for Reporting of Mineral
Resources and Mineral Reserves
-----------------------------------------------------------
"Tungsten" metallic element known also as wolfram with
the chemical symbol W and atomic number 74
-----------------------------------------------------------
"wolframite" mineral name for iron-manganese tungstate;
(Fe,Mn)WO , an ore of tungsten. The ratio of
iron to manganese varies; iron-rich wolframite
is known as ferberite FeWO , manganese-rich
wolframite is known as hübnerite MnWO
-----------------------------------------------------------
"WO " tungsten oxide
-----------------------------------------------------------
"XRT technology" X-ray sorting technique where specific mineral
(e.g. wolframite) bearing rock can be separated
from specific mineral-poor rock and other impurities.
This upgrades in metal terms the material feed
to the plant energy and lowers the tonnage
of rock requiring processing which results
in substantially improved the economics for
mineral processing operations.
-----------------------------------------------------------
ENDS
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