A trip to Premier African Minerals PLC’s (LON:PREM) RHA site in Zimbabwe has eased concern over water availability at the tungsten mine said Shore Capital.
“In 2015, water availability was an issue of significant concern to us, with the on-site dam at a very low ebb.
“The situation improved markedly in 2016, but we were nevertheless very pleasantly surprised to see just how full the dam had become by the time of our latest visit.
Water from boreholes, underground dewatering and return water from processing are now expected to be able to sustain RHA’s operations going forward, with the dam relegated to backup status added Shore.
Grades may also come in higher than expected as inferred resources are grading at 2.4kg/t against 1.5kg/t for the indicated.
At the time of Shore’s visit, RHA was on track for processing operations to recommence in March, with throughput targeted to reach 7,500mtu/month and 10,000mtu/month in the second and third quarters.
At 7,500mtu/month, the miner expects to generate cash of US$0.2m/month even at current subdued tungsten prices.
This estimate is based on what Premier believes to be very conservative assumptions in relation to ore grades and initial XRT (x-ray sorter performance of 82% recovery at 5% mass pull).
But Premier believes that XRT sorter recoveries could be as much as 95% (albeit at a higher mass pull of 10%)m, reported house broker Shore.
This alone could increase production to 10,000mtu/month and push gross cash generation up to US$0.5mln.