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UPDATE - Premier African eyes February for RHA underground start

Last updated: 14:43 18 Jan 2016 GMT, First published: 08:43 18 Jan 2016 GMT

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Premier will spend US$406,000 gaining access to the 870 level.

-- adds broker comment --

Premier African Minerals (LON:PREM) says plans to access the 870 underground level at its RHA tungsten mine in Zimbabwe are on track, with commissioning set for February.

A revised resource estimate for RHA is also due in the coming days, George Roach, chief executive, said.

Premier will spend an estimated US$406,000 gaining access to the 870 level.

After February, the aim is to process approximately 32,000 tonnes of run of mine ore at an average grade of 6.20 kg/t to produce 249 tonnes of concentrate at 63% WO3 over six months.

First production and positive operating cash flow from RHA before capital expenditure and working capital are now expected in spring 2016.

Mining started on the 926 level at RHA in November and processing will use ore that has been extracted and is currently being stockpiled.

Roach said:  "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.

“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 now anticipate RHA to generate positive operational cash flow during the course of spring 2016.

“The company also anticipates a liquidity event in relation to its interest in Circum Minerals Limited during 2016.

“These two events should significantly strengthen the company's balance sheet.”

SP Angel added that the need to accelerate underground production arose from higher than originally planned throughput of ore from the open-pit operations depleting the surface ore.

Weakness in the price of tungsten concentrate has also increased the  pressure even though RHA mine is achieving approximately 79% recoveries of tungsten trioxide.

Share were little changed at 0.38p.

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