Last checked at 3 Oct 2018 07:00
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 WO₃ (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 WO₃ 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 WO₃ 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 W0₃ 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 45µm 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% WO₃ 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:
Fuad Sillem | Premier African Minerals Limited | Tel: +44 (0)7734 922074 |
Michael Cornish / Roland Cornish | Beaumont Cornish Limited (Nominated Adviser) | Tel: +44 (0) 20 7628 3396 |
Jerry Keen/Edward Mansfield | Shore Capital Stockbrokers Limited | Tel: +44 (0) 20 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 identified 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 reflect 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) WO₃ | 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)WO₄, an ore of tungsten. The ratio of iron to manganese varies; iron-rich wolframite is known as ferberite FeWO₄, manganese-rich wolframite is known as hübnerite MnWO₄ |
"WO₃" | 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