Premier African Minerals (LON:PREM) expects to start to generate cash and profits from its RHA tungsten mine by the end of 2015, about six months later than originally planned.
The miner added it had turned down a US$2.4mln offer for its shares in potash developer Circum, which it said has a fair value currently of US$4mln and significant medium-term potential.
Premier is owed US$11mln by RHA and has US$4mln of debt on its own book.
RHA is expected to start rental payments and begin to pay down the debt to Premier from the start of 2016.
A decision has also been taken to start underground development at RHA immediately through mining of accessible faces and developed and un-developed stopes on the 926 level.
Underground mining is expected to reduce RHA's overall production costs from an anticipated USD89 per mtu.
At current APT pricing and after discount, RHA receives approximately USD125 per mtu. The exact payment is varied dependent on contained deleterious material and final concentrate grade.
That price implies good margins, said house broker Shore Capital despite the recent weakness in the price of the metal.
RHA has supplied initial shipments of 20 tons and has been paid 90% of the purchase price,
George Roach executive chairman said: “We look forward in the medium term to significant developments as RHA moves to steady state and underground production commences, with first ore deliveries expected late October 2015.
“In the short term, RHA remains dependent on Premier, but when this changes, Premier expects to see significant loan repayment.”
Roach has also agreed to provide a US$0.3mln unsecured bridging loan directly to RHA while production ramps up.
Once RHA is up and running fully, Premier said it will turn to the Zulu Pegmatite (lithium) prospect, also in Zimbabwe.
Bulk samples are being collected here and metallurgical test work is expected before the end of the second quarter.
Losses in the half year to June were US$2.2mln (US$1.06mln profit).