[Ferro-Alloys.com] Premier African Minerals is gearing up for profitable tungsten production in

Demand for tungsten could pick up in coming years

Some operational adjustments have been required at the RHA tungsten project in Zimbabwe, owned by Premier African Minerals Limited. Of that chief executive George Roach makes no bones when he talks of a “protracted optimisation period.”

But the issues arising from the requirement that sorting screen sizes be adjusted upwards will be resolved imminently.

“The new mesh screens will be installed and operative by 12 September,” he says.

“And that will hopefully put us in a position that will show that we can produce profitably, even at the current depressed prices.”

RHA went into production earlier this year and according to the latest market update, targeted throughput has now been set at 8,000 tons per month at a grade of 6kg per month and with recoveries running at 80%.

According to Premier African’s studies RHA should run profitably  with recoveries at 70% and a tungsten price of US$180 per metric tonne unit. Current tungsten prices are running roughly at that level, according to data compiled by broker SP Angel, and these represent historic lows.

Accordingly, if RHA can be made to work at these prices, once the anticipated upswing comes, the margins will be considerable.

And Roach is upbeat that such an upswing is on the way, even if it won’t be immediate.

“The demand and supply curves are increasing,” he says. “There’s an expectation that prices will increase. The fundamentals from a selling price perspective are sound.”

That’s all to the good, but the short-term re-jigging of RHA has meant that the company has had to go into the market and secure short-term financing in the form of a £3.5 mln loan-note instrument from Darwin Strategic.

Premier has already drawn on £1.75 mln worth of the facility and can prevail upon Darwin at certain specific dates for two remaining tranches of £875,000 if it so wishes. The money is repayable in tranches from February and although it has aroused some discussion amongst investors, Roach emphasises the utility of the facility.

“This puts us in quite a good position financially,” he says. “The Darwin notes are not convertible till 1 February and even then there will only be a limited number on a monthly basis.”

What’s more, he says, the debt owed by the local Zimbabwean subsidiary to Premier in relation to money put into RHA far exceeds the market capitalisation of the company. So structurally speaking, Roach is confident that Premier is in a good position.

What needs to happen now is for RHA to come back on stream, and for the cashflow to start coming in.

And Premier has other strings to its bow too. The company is also comfortably astride the largest lithium pegmatite body in Zimbabwe, what Roach calls “potentially a huge mineralised body.”

It’s also got assets in Mozambique and a stake in Circum Minerals, a private company which has promised a liquidity event sometime soon.

“All in all I think it’s pretty exciting,” says Roach.

He’s got a tungsten project that’s getting ship-shape, huge lithium upside in a lithium market that’s booming and wider exploration potential too.

If the tungsten price starts to move, things will really start to come together.”

• [Editor:Jiang Li Juan ]