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Premier African says study recommends solution mining for Danakil

Last updated: 00:06 19 Mar 2014 AEDT, First published: 01:06 19 Mar 2014 AEDT

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A preliminary investigation into how the potash resource at Danakil in Ethiopia might best be mined has suggested solution mining said Premier African Minerals (LON:PREM).

Premier African has a 42% stake in Canada-listed firm AgriMinco (CSV:ANO), which has a 30% stake and is developing the project in partnership with Danakil Corporation. It amounts to a 12.6% net interest attributable to Premier.

The study, carried out by German consultant K-UTEC Salt Technologies, selected solution mining as the method of choice, as the Danakil resources are too deep for an open pit mining method (200-400 metres).

Mining by conventional underground method was discounted due to the weak Bischofitite Member located between the upper and lower mineralised zones and the perceived risk of flooding.

Exploitation of this was considered uneconomic due to high energy and water consumption and as such a 10 metre cut-off thickness for the Bischofitite unit has been defined.

The Danalil project has a total indicated NI 43-101 resource of 708.8 mln tonnes at an average grade of 19.49% potassium chloride (KCL). Two mining methods were defined, SolMIn1 and SolMin2, at an annual rate of 2 Mt of sulphate of potash (SOP).

Bruce Cumming, AgriMinco's chief executive, said: "Whilst the results are encouraging, they must be seen against the backdrop of uncertainty that AgriMinco continues to face due to the difficulties experienced in attempting to raise additional finance and the existing debt burden the company carries. 

“We continue to focus our efforts on completion either of a capital raise or a corporate transaction," he said.

AgriMinco has to contribute 30% of expenditure in excess of aagreed free carry by 7 April and 30% of the exploration budget in the next fiscal year or face dilution.

The combined cash call for the first fiscal quarter and the historic excess is expected to be of the order of US$2m and the budget for the next twelve months, of which AgriMinco's share to avoid dilution is 30%, is expected to be US$20m."

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