25th Aug 2015 07:51
LONDON (Alliance News) - Premier African Minerals Ltd on Tuesday said it has completed the modifications to the process plant at the RHA tungsten project in Zimbabwe which has improved the plant throughput but also increased its costs.
Back in July, the company said it would modify the plant in order to capitalise on excess capacity on the crushing circuits.
The modifications were designed to improve efficiency of the crushing circuits and allow better utilisation of the surplus capacity on the downstream concentration circuits, which would lead to an increase in the percentage of higher-grade fines concentrate over the coarse concentrate, with a "probable" overall increase of total tonnage of concentrate produced.
On Tuesday, the company said it has finished modifying the plant and also replaced the tailings discharge system to allow the plant to cope with the increased capacity due to the modifications made.
Prior to the modifications, the plant was rejecting up to 40% of the ore as it was too large, forcing the company to stockpile it.
"The modified plant now accepts the design tonnage into the recovery circuits. Fine tuning and optimisation is continuing, both as we explore the upper tonnage limits of the plant in excess of 16 tonnes per hour and seek to achieve consistent material flow through the recovery circuits," said the company.
Now that the plant accepts the ore, it has begun processing its stockpile which it expects to process within the next week before continuing to use ore from the mine.
"We expect that as and when concentrate production reaches the design output of the plant, RHA will operate profitably," it added.
Premier African said it can now produce a product with a grade anywhere between 50% to 70% tungsten trioxide, but the company said due to the fall in prices, it believes it should focus on lower-grade material.
The company said the tungsten price has fallen to around USD203 per metric tonne unit and the company said it makes net proceeds of between USD130 to USD120 per unit once discounts have been taken off for its offtake partners.
Compounding the fall in prices, Premier African said the cost per metric tonne unit is now higher than its forecast of USD89 per unit because of the modifications made to the plant.
"The company's analysis indicates that at the current pricing levels of APT, the financial returns are potentially improved by targeting output at the lower grade as any penalty for any lower grade concentrate is more than offset by the benefits of lower production costs and a greater tonnage of concentrate produced," it said.
"With the additional cost and process plant delays discussed above, and particularly with expedited pit development, RHA's short run production costs have risen in excess of USD89 but are expected to fall in due course as the benefits of higher processed tonnages and higher recoveries flow through," it added.
"We are currently in discussions with our off-take partners in this regard," it added.
The RHA project is operated by Premier African with a 49% stake.
Premier African shares were down 20% to 1.55 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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