It will cost about $1.06-million to bring Aim-listed Premier African Minerals’ 49%-owned RHA underground tungsten mine, in Zimbabwe, back into production.

The mine was put under care and maintenance late in 2017 amid cash flow constraints.

Premier, subsequently, appointed South African mine planning consultants Bara Consulting to undertake a technical and economic assessment of the mine to evaluate the options for restarting production and to provide an independent assessment of the company's conclusions related to returning the mine to production.

Premier on Wednesday said Bara Consulting had identified two possible scenarios for returning the mine to production, with the first involving underground production at a rate of 6 000 t a month to 7 000 t a month.

The second option involves underground production at a rate of 6 000 t a month and openpit mining at a rate of 34 000 t a month.

Premier said the first underground production scenario would be the most viable option at this point, given the mine’s declared underground resource.

The total underground mining capital cost of $1.06-million includes $268 000 for resource drilling and upgrades; $10-million for resource optimisation and mine planning; $36.8-million for contractor mobilisation; $300-million for extending the vertical shaft; and $450-million for upgrading the vertical shaft infrastructure.

The mining capital costs, along with plant capital costs of $305 000, will bring the total capital cost to $1.37-million.

Premier noted that the cashflow model for the first option will result in a positive pre-tax cash flow of $616 000 over the initial 15-month period, with the mine to become cash flow positive in month five.

Meanwhile, the company stated that the study undertaken by Bara had shown that peak funding of $1.66-million would be needed in month four. However, internal studies undertaken by Premier, but not yet reviewed by Bara, had shown that the peak funding requirement could potentially be reduced if Premier reprocesses historic tailings simultaneously to underground mining.

Premier has, therefore, decided that it should combine the reprocessing of the tailings with underground mining operations once mining restarts.

“While we have faced challenges in the past at RHA, we believe that we have a solid plan to de-bottleneck the underground operation and meet the mine run rates to enable RHA to operate profitably.

“We have commenced the underground drilling programme and, so far, have intersected visual mineralisation over excellent drill widths and we look forward to reporting the results when we receive assays,” commented CEO George Roach.

He added that Premier was making good progress with discussions with the relevant authorities in Zimbabwe to finalise the ownership structure of RHA.

Premier is seeking to increase its interest in RHA to 90%.