RHA Tungsten PEA and Mining Study

Premier African Minerals Limited / Ticker: PREM / Index: AIM / Sector: Mining 28 August 2013 Premier African Minerals Limited (`Premier' or `the Company') Positive Results from RHA Tungsten Preliminary Economic Assessment and Concept Mining Study Premier African Minerals Limited, the AIM quoted multi-commodity naturalresource company with mineral projects located in Western and Southern Africa,is pleased to announce positive results from its recently completed PreliminaryEconomic Assessment (`PEA') and Concept Mining Study (`the Mining Study') atits flagship RHA Tungsten Project (`RHA' or `the Project'), located in theprospective Kamativi Tin Belt in north-west Zimbabwe. * The Mining Study confirms the economic potential of Lode 2A to support a tungsten mining operation with an annual rate of ore production of 192,000 tonnes over a six year Life of Mine * Open pit and underground mine key financials include: * + Low capital cost of US$13.5 million + Operating cost estimated at US$59.30 per Run of Mine (`ROM') tonne + Net Present Value undiscounted and before tax of US$118 million + Internal Rate of Return (`IRR') before tax of 316% * Study based on Initial SAMREC Compliant Resource: * + Inferred SAMREC code compliant resource of 1,093,000 tonnes at a diluted grade of 8.7 kg/t WO3 + Indicated SAMREC code compliant resource of 147,000 tonnes at a diluted grade of 4.7 kg/t WO3 * Premier plan to develop RHA with the aim of recommencing low cost, near term tungsten mining activities in 2014 * Further exploration work planned to upgrade RHA mineral resource and establish limits of economic mineralisation to the SW, NE and in depth The Mining Study was undertaken by independent mining consultants RoyalHaskoning DHV (`RHDHV') (formally Turgis Mining Consultants), with the purposeof determining the economic viability for Premier to re-commence tungstenmining activities at RHA. The successful delineation of an initial SAMREC compliant resource with asignificant grade, combined with the robust results from the PEA and the MiningStudy, adds significant confidence to the economic viability of Premier'sflagship RHA Tungsten Project in Zimbabwe and expectation of moving the Projectinto production in the near-term. The Mining Study indicates a capital cost, inclusive of a 20% contingency ofUS$13.5 million, a pre-tax IRR of 316%, positive cash flow of US$118 million,an undiscounted pre-tax NPV of US$118 million, a mine life of six years and alead time to first production of saleable product of about 10 months frominitiation of the Project. Premier is actively engaged in discussions withpotential off-take partners. The Company is also concluding financing for theProject. There are no other significant issues that need to be addressed beforethe Project can be initiated. The Mining Study proposes mining of Lode 2A, initially from an open pitextending to about 40 metres below surface, followed by underground mining(mechanised continuous retreat long hole open stoping with pillars) to about200 metres below surface, and over a strike length of 300 metres. There areknown extensions to the ore body on both strike and dip, which have not yetbeen included in the Resource statement and were accordingly not considered inthe Mining Study. The Project shows strong promise to be expanded in the future as furtherexploration is conducted on the known remaining mineralised lodes described inthe PEA and the Mining Study. Premier believes that this will add codecompliant resources and extend mine life. The PEA and Mining Study and any reference to economics relates to theoperating subsidiary. The highlights of the Mining Study are set out below for further informationand to view RHA's full Competent Person's Report please visitwww.premierafricanminerals.com: Mine Study Highlights Life of Mine Production 6,791,482 kg WO3 Mine Life 6 years Average Annual Ore Production 192,000 tonnes Project Economics US$20,800/tonne of concentrate (65% WO3)WO3 Sale Price* US$13.5 millionCapital Cost (including 20% contingency) US$59.30/ROM tonneOperating Costs (life of mine) 316%IRR (before tax) US$118 millionNPV (before tax, undiscounted) US$118 millionFree Cash Flow (before tax, undiscounted) Processing Plant Recovery 85% \* The product sale price was based on an ammonium paratungstate (`APT') price ofUS$400/metric ton unit of WO3 Premier acknowledges and respects the Zimbabwean Indigenisation process and hasagreed in principle with the Company's Zimbabwean partner, the NationalIndigenisation and Economic Empowerment Fund that Premier's exploration costswill be reimbursed through a loan account established in the operatingsubsidiary. Premier will manage the Project and the operating subsidiary willbe responsible for development costs. Premier will hold 49% of the operatingsubsidiary. Initial MineralResource Estimate - July 2013 The geological model at RHA focuses on six mineralised lodes (1, 2, 4, 5, 6 and7). These sub-parallel lodes trend northeast-southwest and dip steeply (85°) tothe northwest. The geological model is underpinned by data from historicalunderground channel samples and sections of mined-out and interpreted reefs.The historical data was complemented by the Company's recent trenching anddrilling programmes. Recently, Premier completed a 1,302 metre six holedrilling campaign and more than 258 metres of trenching, further details ofwhich are set out in the announcements of 18 February 2013 and 17 April 2013.The drilling confirmed the presence of numerous quartz-tourmaline veins thatare highly mineralised with wolframite. All holes with the exception of RHADD06 intersected the lodes at depth, enabling a depth extension down to the 750metre level based on geological continuity. The trenching was completed overthe drill hole traces, targeting the expected outcrop of Lode 2. The newtrenches were geologically logged and channel sampled and confirmed theoccurrence of quartz veins with wolframite, which helped locate the outcroppositions of Lode 2 A and B and other reefs. At this time a Resource has been declared only for Lode 2, which covers twoareas (Lode 2A and Lode 2B). The in-situ mineral resource was prepared byindependent consultants CAE Mining Africa, of South Africa (`CAE') and is basedon both the current drilling and trenching data in addition to the historicaldata. The mineral estimates have been prepared in accordance with the SAMRECcode, the South African code for the reporting of exploration results, mineralsresources and mineral reserves. The first mineral resource estimate for Lode 2A is an Inferred SAMREC codecompliant Resource of 1,093,000 tonnes at a diluted grade of 8.7 kg/t WO3, asdefined by boreholes DD02, 03 and 04, over a strike of 300 metres and to the750 metre level. A second SAMREC code compliant Resource of 147,000 tonnes at a diluted grade of4.7 kg/t WO3 in the Indicated category was also defined over an area known asLode 2B. Lode 2B is a 100 metre strike extension to Lode 2A, which occurswithin a 30 metre by 30 metre radius, to the 750 metre level. This estimate hasbeen defined using intersections of veins E to I in borehole DD05 and bychannel sampling results from relevant parts of underground developments on the926 metre, 865 metre and 859 metre levels. It must be noted that this area hasbeen historically mined (to the 859 metre level) and therefore the depleted oreresource from this has been taken into account when compiling this resourceestimate. The SAMREC compliant Resources are summarized below. Lode Resource Volume Tonnes* Density W03(kg/t) Content Classification (m3) (kg WO3/t) (kg WO3) 2A Inferred 382,200 1,093,000 2.86 8.70 9,509,100 2B Indicated 51,400 147,000 2.86 4.68 680,610 Note:Tonnages have been rounded off Concept Mining Study The Mining Study was based on the initial mineral resource defined above forLode 2A only, and did not take into account the existing underground workings,which can access Lodes 3 and 7 to the south of Lode 2A. Nonetheless, RHDHVbelieves that there is a potential opportunity to expand RHA's operations at alater stage to include these underground workings, once further exploration andfeasibility work has been conducted. RHDHV has recommended that Premier conducts further work to upgrade the RHAmineral resource. This work should be based on additional diamond drilling,which is expected to consist of at least 1,300 metres of drilling for 13boreholes. The aim of this work would be to drill out Lode 2A on 50 metrecentres and also establish the limits of the economic mineralisation to the SW,NE and in depth. It is also anticipated that this additional drilling will addto the understanding of the persistent copper (`Cu') anomalous assay resultsthat have been observed at up to 3% Cu apparently in association with the WO3mineralisation. The main design parameters applied to the design and schedule of the mine arelisted below: * Mining will incorporate an open pit to 40 metres below surface (`BS') followed by underground mining to the 750 metre level, which is approximately 200 metres BS; * The primary access system for the underground mining will be a trackless decline with the portal positioned to the north of the open pit; * Lode 2A is made up of a series of narrow steeply dipping veins that were found to be collectively economic over a mining width of some six metres and is confined to mining the ore body over a strike distance of 300 metres and depth of ± 200 metres BS; * There are known extensions to the east not included in the Mining Study; * The underground mining will be mechanised, using small teams for the development, stoping and rock handling; * Assuming Lodes 3-7 provide positive results following exploration drilling, it is anticipated that payable zones will be extracted by hand held conventional mining to augment extraction from the Lode 2A mechanised operation; * It is proposed to employ contractors for both the open pit and underground mining phases; * Processing will be mainly gravity separation following manual waste sorting ahead of the mill. A processing recovery of 85% was used for the Mining Study; * The site is accessible via the main Bulawayo-Victoria Falls tar road and 23 km of gravel road to the mine; * Electrical power will be available from a Zimbabwe Electricity Supply Authority (ZESA) power line; * Water will be imported from a borehole in Lukhosi, which is about 20 km west of the mine site; * Processing plant construction is expected to take approximately nine months; and will include a floatation circuit for Cu concentrate recovery. * Saleable product could be available some 10 months after commencement of operations. Capital Costs In terms of capital costs, a summary is provided below indicating a totalupfront capital cost of US$13.5 million which includes a 20% contingency. Thecapital definition was for the plant and infrastructure only. Mining capitalforms part of the mining contractors' rates and is accounted for in theoperating cost. The accuracy of the estimates is within ±40%. Description Capital Cost (US$ million) Mining 0 Processing 3.9 Surface Infrastructure 7.3 Contingency @ 20% 2.2 Total 13.5 Operating Costs The operating cost estimate is shown in the table below. The average life ofmine operating cost is estimated to be US$59.30 per life of mine ("LOM") tonne. Description Operating Costs (US$ / tonne) Mining & engineering 44.4 Processing 3.7 Environment 0.8 Management Services 8.6 Transport/Freight 1.8 Total 59.3 Financial Evaluation Production is expected to start in year one and continue for six years andproduction of 192,000 ore tonnes per annum (16,000 ore tonnes per month) isexpected to be reached within the first 12 months of operation. The financialevaluation schedule over the life of the mine is shown in the table thatfollows. Note that the values presented in the table have been rounded. Year LOM 1 2 3 4 5 6 Mined Tonnes 904 48 192 192 192 192 88 (t`000) 65% WO3 Concentrate 8,881 472 1,887 1,887 1,887 1,887 864 (tonnes) Revenue 184.7 9.8 39.2 39.2 39.2 39.2 18.0 (US$ million) CAPEX 13.5 13.5 (US$ Million) OPEX 53.6 5.1 11.9 11.1 11.3 9.7 4.6 (US$ million) Pre Tax Free Cash 117.7 -8.7 27.4 28.2 28.0 29.5 13.4Flow (US$ million) The sensitivity of the Project to the price of APT was undertaken and isreported as follows. Note that an APT price of US$400/mtu was the basis for theproduct price used in the evaluation of the Project. APT price (US$/mtu) Undiscounted NPV (US% millions) 300 72 350 95 400 118 450 141 500 163 RHA Additional Information Intermittent small-scale mining has been conducted at RHA and the adjacent Tungmine (which Premier has an option to acquire) located 5 km away. Between 1931and 1979 the mines jointly produced 1,247 tonnes of WO3 in wolframiteconcentrate at an average concentrate grade of 65% WO3. RHA occupies a low ridge, which is approximately 850 metres long, 300 metreswide and stands about 80 meters above its surroundings. Historic mine workingsare in the form of adits, open pits, caved stopes, trenches, roads and rockdumps that occupy the surface. Tailings dumps are located on the north andsouth sides of the ridge. Previous mine development was almost entirely carriedout during the 1930s where the mine was developed on 30 metre levels from the945 metre level to the 859 metre level, by means of horizontal adits into thesides of the ridge, and a single vertical shaft down to the 845 metre level.Some open pitting also occurred on the western part of the deposit. During the mid to late 1970s Falconbridge Ltd (which is now part of Xstrata),trading as Blanket Mines in Zimbabwe, carried out underground geologicalmapping and extensive channel sampling on the accessible parts of theunderground workings, principally on the 926, 865 and 859 levels. At RHA, the known mineralised lodes and veins occur within an envelope thatextends over a strike of approximately 400 metres with a maximum width of 150metres. The lodes are thought to converge to the east of the property. Thelodes strike approximately northeast-southwest paralleling the regional trendof Kamativi Inlier. The host country-rock comprises high-grade, stronglyfoliated biotite schists and paragneisses of the Precambrian Dete Inlierbelonging to the Tshontada Formation. The formation trends north-east on aregional scale, paralleling the trend of the Kamativi Inlier and dips steeplyto the north-west. The tungsten mineralisation occurs in quartz veins and shear zones, within asequence of quartz-tourmaline and pelitic schists that may be associated withgranite intrusions. High metamorphic grades with localised partial melting arealso evident. The schists also show that extreme deformation has occurred andmylonite bands are common. The association of quartz veins with tourmalineschists form distinct lodes, which were exploited by historic mining at RHA.These lodes are steeply dipping to the northwest at 80o to90o. Seven lodes wereexploited in the past. The tungsten mineral of primary economic interest is wolframite (Fe,MnWO4),with minor amounts of scheelite (CaWO4). The only other mineral of possibleeconomic significance is chalcopyrite (CuFeS2). The wolframite occurs aseuhedral crystals, laths and clusters that may be up to 50 mm by 30 mm in size.This very coarse grain size is characteristic of the quartz vein-hostedtungsten mineralization. Qualified Person The technical information contained in this announcement has been prepared andreviewed by Robert Ingram BSc, C.Eng., Pr.Nat.Sci., FGSSA, MSEG, and Alexanderdu Plessis PrEng, BSc(Eng), MSc(Eng), CertEng, FSAIMM, who are the appointedconsultants to Premier African Minerals Limited. Professor du Plessis is also adirector of the Company. Mr Ingram is registered with The South African Councilfor Natural Scientific Professions (SACNASP) Registration Number 400057/92, andProfessor du Plessis with the Engineering Council of South Africa (ECSA)Registration Number 950232. They are satisfied with the accuracy and precisionof this release by Premier African Minerals Limited. **ENDS** For further information please visit www.premierafricanminerals.com or contactthe following: Pamela Hueston Premier African Minerals Limited Tel: +44 (0) 755 778 3855 Tony Rawlinson Cairn Financial Advisers LLP (Nomad) Tel: +44 (0) 207 148 7900 Jerry Keen Shore Capital Stockbrokers Limited Tel: +44 (0) 207 408 (Broker) 4090 Edward Mansfield Shore Capital Stockbrokers Limited Tel: +44 (0) 207 408 (Broker) 4090 Felicity Edwards St Brides Media & Finance Ltd (PR) Tel: +44 (0) 20 7236 1177 Charlotte Heap St Brides Media & Finance Ltd (PR) Tel: +44 (0) 20 7236 1177 About Premier Premier African Minerals Limited is a multi-commodity exploration anddevelopment company focussed in Southern and West Africa. As well as itsshareholding in TSX quoted Agriminco, the Company has a diverse portfolio ofmulti-commodity projects which includes tungsten, rare earth elements (`REE'),gold, lithium, tantalum and uranium in Zimbabwe and Togo, which span frombrownfield projects with near-term production potential to grass-rootsexploration. Premier plans to create value by implementing defined explorationand development programmes to prove-up resources with a view to futureproduction and/or forming strategic alliances and completing corporatetransactions to maximise shareholder value. Premier is a controlling party to TSX-V listed Agriminco (TSX-V: ANO), holding120 million shares representing 42% of Agriminco. See www.agriminco.com. Inaddition, Premier's Katete REE project in Zimbabwe has the potential to bedeveloped as an open pit mine. The project, which spans 3,750 ha, has returneda peak result from trenching of 14.6% TREO.