Premier African Minerals soars on massive Zimbabwe resource upgrade, agrees Ethiopia bridging loan

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By Zimbabwe Investor on May 2, 2014. No Comments

Shares in Premier African Minerals (LON:PREM) soared after it announced a significant increase in resources at the RHA tungsten project.

Resource tonnage at the Zimbabwe project, where Premier is the operator and has a 49% stake, increased by 152% to 2.7mln tonnes at a composite grade of 8.7 kilograms per tonne (kg/t) tungsten oxide (WO3).

The measured and indicated resource has been upped by a staggering 957% to 1.55mln tonnes at a composite grade of 8.0 kg/t WO3, while there is 1.2mln tonnes at a composite grade of 9.7kg/t WO3 in the inferred category.

Previous resource estimate totalled 1.24mln tonnes, of which the inferred resource was put at 8.70kg/t and the indicated resource at 4.68kg/t.

The new numbers allow for a revision and updating of Premier’s mining study, while the new resource has further defined the ore body and has described a new mineralised Lode 1 system that is expected to significantly increase the open pit component of the mine plan.

“This resource upgrade, coupled to completion of the mineralogical and metallurgical studies, deals with the main requirements identified in our mining study. We look forward with confidence to finalisation of the updated study and, subject to finance, the commencement of mine construction,” said company chief executive, George Roach.

The miner said it is engaged in further discussions with potential off-take partners, while it is also talking to debt finance providers who have indicated a willingness to invest in Zimbabwe.

Shares shot up by almost two-thirds to 1.14p in the wake of the announcement.

Meanwhile, Premier African Minerals has agreed a bridging loan to fund its option over 30% of the Danakil potash project in Ethiopia, which could also see it sold on.

In March, Premier agreed an option to buy Canada-listed AgriMinco’s 30% interest in Danakil, which is held in a subsidiary called Madalore.

Circum Minerals is providing the US$2.5mln bridging loan, which is interest free and runs until the end of 2014.

Circum owns the remaining 70% of Danakil and is also being granted an option to buy Mandalore from Premier at a price equivalent to the bridging loan in cash or shares.

Premier needs approval from both the Toronto Venture Exchange and disinterested shareholders in Agriminco to exercise its option with a special meeting scheduled for 8 May.

Cicrum can exercise its option once approval is received and until 5 June.

In aggregate, Premier will pay an estimated C$4.9 mln (£2.65 mln) which would cover the cancellation for no consideration of its 42% shareholding in AgriMinco, the settlement of AgriMinco debt obligations up to C$1.5 mln and the issue to AgriMinco of new Premier shares equal to $1mln.

George Roach said: “Closing the transaction would significantly assist Premier in advancing its Zimbabwe projects, in particular bringing RHA Tungsten closer to production, and this together with the retained interest in Circum has significant potential benefit for all our shareholders.”

– Proactive Investors