18th Jan 2016 10:23
LONDON (Alliance News) - Premier African Minerals Ltd Monday said an updated implementation plan for the underground mining element of the RHA tungsten project in Zimbabwe supports its decision to investigate and accelerate underground development.
The study has shown it would cost the company around USD406,000 to implement further underground mining operations at the project for six months, which would lead to positive operational cashflow from the project from spring this year.
Premier African began mining underground at the project in November last year, limited to the 926 adit access level. The implementation plan Monday has extended the plan to the 870 and 856 lower adit access levels.
An adit is an entrance to an underground mine which is horizontal or nearly horizontal, where minerals can be extracted at the lowest convenient level. Adits also are used to explore for mineral veins.
RHA's implementation plan announced Monday will lead to the processing of approximately 32,000 tonnes of run of mine ore at an average grade of 6.20 kilogrammes per tonne to produce 249 tonnes of concentrate at 63% tungsten trioxide over a six month period from February 2016.
The company said it remains on track to equip the vertical shaft hoist at the operation and begin commissioning the underground mining operation in February.
"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," said Chief Executive George Roach.
"This change in strategy has resulted in the need to finance company overheads for an extended period without recourse to cash flow generated from the open pit and finance substantial additional debt generated by RHA. We have been successfully extracting and stockpiling ore from underground since late November 2015, and we now anticipate RHA to generate positive operational cash flow during the course of spring 2016," he added.
Premier now anticipates that the update to the RHA resource statement will be released before the end of this month.
In addition, Roach said the company anticipates a liquidity event in relation to its interest in Circum Minerals Ltd sometime in 2016, which will significantly strengthen the company's balance sheet during the year.
Premier African holds a 2% stake in Circum Minerals, but the company has previously said the projected future value of its holding in Circum exceeds its own market cap. Premier African has said its holding in Circum gave it confidence it could deal with its own "debt burden" moving forward.
Premier African shares were trading up 5.3% to 0.395 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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