19th Jun 2014 10:09
LONDON (Alliance News) - Premier African Minerals Ltd saw its shares slide Thursday after it said it was going to have to repeat metallurgical studies on its RHA tungsten project in Zimbabwe, delaying a mining study update for the site.
In a statement, the company said it had completed the initial mineralogical and metallurgical studies on which the RHA mining study update is being based. The mineralogical study indicated a high grade concentration and anticipated recoveries of about 88%, it said, but the metallurgical study sample showed recoveries of about 60%, below its expectations.
It said the metallurgical study sample grade was assessed using a composite of all boreholes, including those parts of the ore-body that will not be mined.
"Additional metallurgical test work is now being undertaken, using new underground material samples, so as to enable optimisation of the tungsten crushing and milling processes," the company said in a statement.
Premier said it now expects to complete the updated mining study for the site in August as long as it completes the additional metallurgical work on time. It will include updated geology and mineral resources to include measured and indicated resources as well as inferred, an evaluation of the geotechnical environment at the property, and the resultsthe two rounds of metallurgical test work.
"Whilst I am frustrated that the metallurgical studies need to be repeated, a satisfactory result will significantly strengthen our confidence in the project," Chief Executive George Roach said in a statement.
On a more positive note, the company said it has commissioned a further review of potentially low capital cost, near-term production alternatives for the RHA project. The original mine study suggested an initial open pit approach and then development of a decline for future underground mining. The alternative approach under review contemplates an immediate start of mining using the existing underground development and shaft system, and construction of the plant at the historic site, it said.
"If the alternative mining approach is adopted, production could commence from as soon as the early part of next year at a reduced mining rate with expansion taking place progressively thereafter. The alternatives under review anticipate that Premier would finance this without the need to raise further equity," it said.
Last month, the company said its stake in the Danakil potash project in Ethiopia to Circum Minerals Ltd for cash and shares after Circum exercised an exclusive option to buy it. That meant it wouldn't have to repay a USD2.5 million net bridging loan it had with Circum. It also got 2 million Circum shares, valued then at about USD1.4 million, and was set to get USD1 million payments on the 15 of each of July, September and November 2014 and January 15, 2015.
"Following completion of the Circum/Agriminco transactions, the company now has the funding to contemplate the low capex, near-term production alternatives for RHA," Roach said in the statement Thursday.
Earlier in May, Premier African's shares had jumped after it revealed a significant increase in the tungsten metal resource estimate for the RHA project.
However, the stock was down 18.2% at 0.9 pence Thursday morning, the third-biggest decline on the AIM All-Share index.
By Steve McGrath; [email protected]; @SteveMcGrath1
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