TIDMXTR
RNS Number : 5966W
Xtract Resources plc
19 August 2020
For immediate release
19 August 2020
Xtract Resources Plc
("Xtract" or the "Company")
Manica Gold Hard Rock Mining Contractor Agreement
The Board of Xtract Resources Plc ("Xtract" or the "Company") is
pleased to announce that the Company's wholly-owned Mozambican
subsidiary, Explorator Limitada ("Explorator") has concluded a
mining contractor agreement ("Guy Fawkes Agreement") with Longhau
Tianci Mining Co Ltd ("Longhau" or "Contract Miner") for the
exploitation of the Guy Fawkes hard rock gold deposit at its Manica
mining concession in Mozambique.
Highlights
-- Longhau appointed to mine the Guy Fawkes hard rock gold
deposit for 6 years or until the ore body is depleted or no longer
viable
-- Guy Fawkes Agreement provides for Explorator to receive 20%
of gold production (after settlement by Explorator of the Mining
Production Tax)
-- Explorator will remit 35% of its share of Guy Fawkes gold
production (after applicable expenses and tax) to Mutapa Mining and
Processing LDA, Explorator's existing hard rock collaboration
partner
-- Longhau to commence adit mining and initial underground
development during the processing build phase
-- The processing plant is currently within Mozambique and therefore lead times to be minimised
-- Previously reported SAMREC-compliant Indicated and Inferred
Resource of 1.13Mt @ 1.91g/t Au with potential for additional
upside in several dimensions
Colin Bird, Executive Chairman said: "We are pleased to report
the signing of this agreement, which should provide the opportunity
for incremental cash flow during MMP's Fair Bride construction and
building phase. The Guy Fawkes deposit shows considerable variation
both in mining width and grade, demonstrating propensity for
selective higher-grade mining. Longhau intends to work a portion of
the deposit by open cast methods where drilling indicates that
suitable grades locally can run close to surface. Underground
mining will be selective.
We are currently in discussions in respect of the Boa Esperanza
deposit and look forward to updating shareholders shortly."
Background
On 29 May 2019, the Company announced that it had entered into a
collaboration agreement ("Mutapa Agreement") with Mutapa Mining and
Processing LDA ("MMP") for the mining and mineral processing of the
Company's Manica hard rock gold deposits ("Manica Project") at
Xtract's Manica mining concession licence 3990C in Mozambique.
Under the Mutapa Agreement, the Company had appointed MMP as an
independent mineral processing contractor to conduct hard rock
mining on the Manica Project permitted area comprising the main
deposit at Fairbride, and the three ancillary deposits at Guy
Fawkes, Dots Luck and Boa Esperanza. Construction has yet to
commence on site.
The Company and MMP have subsequently agreed to release the
three ancillary deposits at Guy Fawkes, Dots Luck and Boa Esperanza
from the Mutapa Agreement in order to enable Xtract to appoint
third party mining contractors who might be able to provide early
cash flow pending construction by MMP at Fairbride.
Guy Fawkes Contract Mining Agreement
The Company's wholly-owned Mozambican subsidiary, Explorator,
has therefore today appointed Longhau Tianci Mining Co Ltd
("Contract Miner") who will have the exclusive right to mine the
Guy Fawkes hard rock deposit on the Permitted Area of the Mining
Concession area. The Guy Fawkes Agreement will endure for a period
of 6 years, with rights of early termination either by Explorator
or the Contract Miner.
The Guy Fawkes Agreement is subject to a number of
pre-conditions including the Contract Miner obtaining a gold
trading licence and Explorator securing a mining licence and
environmental licence. The Guy Fawkes Agreement includes
performance targets whereby the Contract Miner will be required to
commission a plant with a minimum throughput of 60 tonnes per day
within 2 months from the date of signing. The throughput tonnage
will be increased to 120 tonnes per day within 3 months of
commencing operations.
Explorator will be responsible for recording the gold
concentrate produced from the permitted area on a daily basis. The
Contract Miner will be responsible for the smelting of the gold
concentrate and delivery of gold dore bars.
Explorator will be responsible for all statutory and legal
requirements regarding the licence and for payment of the Mining
Production Tax of 6%.
Consideration and Payments
In consideration for the appointment, the Contract Miner will
retain 74% in gold for services provided, and Explorator will
retain 26% of all gold production, amounting to 20% after payment
by Explorator of the applicable Mining Production Tax of 6%.
After deduction of applicable expenses and costs and tax
incurred by Explorator, Xtract has agreed with MMP to split the net
cash flow 65% in Explorator's favour (with 35% due to MMP).
Other
The Contract Miner will be responsible and liable for any
rehabilitation of the mining concession to the extent mined by the
Contract Miner as required under the relevant mining laws. The
Agreement contains an indemnity from the Mining Contractor to
Explorator and further customary terms and conditions (including
termination).
Project Technical Summary
Guy Fawkes is a near-vertically dipping Archean Greenstone Belt
Orogenic Gold deposit occurring within the 10km long west-northwest
trending Mutamborico shear zone in western Mozambique. It sits in a
multi-deformed quartz vein stockwork zone hosted within
meta-sedimentary mafic lithologies. Gold is associated with
non-refractory arsenopyrite-pyrite sulphide mineralisation.
The project was mined historically since 1893 and was one of the
largest of a series of hard-rock gold mines in the district, with
total production of almost 16,000oz Au reported.
A 2016 technical report commissioned by Xtract estimated a
SAMREC Code (2009) compliant Indicated and Inferred Mineral
Resource of 1.13Mt @ 1.91g/t Au (ca. 70,000 oz. contained gold), as
reproduced in the table below:
Guy Fawkes Total Mineral Resource
Mineral Resource Category Tonnes Au Au Au
Mt g/t kg koz
@ 0.5g/t Open Cut and 1.5g/t Underground
Measured - - - -
------- ----- ------ ------
Indicated 0.908 1.82 1,648 52.98
------- ----- ------ ------
Total M&I 0.908 1.82 1,648 52.98
------- ----- ------ ------
Inferred 0.225 2.30 519 16.68
------- ----- ------ ------
Total Measured, Indicated
and Inferred 1.133 1.91 2,167 69.66
------- ----- ------ ------
@ 0.5g/t Au Open Cut
Measured - - - -
------- ----- ------ ------
Indicated 0.718 1.69 1,216 39.09
------- ----- ------ ------
Total M&I 0.718 1.69 1,216 39.09
------- ----- ------ ------
Inferred 0.060 1.43 86 2.76
------- ----- ------ ------
Total Measured, Indicated
and Inferred 0.778 1.67 1,302 41.86
------- ----- ------ ------
@ 1.5g/t Underground
Measured - - - -
------- ----- ------ ------
Indicated 0.190 2.27 432 13.89
------- ----- ------ ------
Total M&I 0.190 2.27 432 13.89
------- ----- ------ ------
Inferred 0.165 2.62 433 13.92
------- ----- ------ ------
Total Measured, Indicated
and Inferred 0.356 2.43 865 27.81
------- ----- ------ ------
Notes:
1 Orebody volume estimated from digital wireframe.
2 Source: 2016 Mineral Resource estimation carried out by Mr L.
Hope of Minxcon (NHD (Econ Geol.), Pr.Sci.Nat.) under
supervision of and verified by Mr U Engelmann, as Competent
Person of the report, with an effective date of 8 June 2016.
3. The Inferred Mineral Resources have a large degree of
uncertainty as to their existence and whether they can be
mined economically or legally.
4. Only Mineral Resources lying within the legal boundaries are reported.
5. Mineral Resources would be inclusive of Mineral Reserves (no
Mineral Reserves were declared).
6. Mineral Resources are declared at cut-offs shown in the table
above and a gold price of US$1,466 per oz.
7. No Geological losses are accounted for.
8. All figures are in metric tonnes.
9. 1 kg = 32.15076 oz.
10. Explorator is the operator and owns 100% of the Manica gold
project such that gross and net attributable mineral resources are
the same.
The resource utilised data from several phases of diamond and RC
drilling by various operators along a strike length of 1.35km, and
the cut-off grade was based on a gold price of US$1,466/oz.
The estimate did not include ore within sub-parallel lenses to
the northwest, further strike extent to the southeast or additional
depth continuations below 220 metres from surface, mainly due to
limited drilling density. In addition, drilling suggests that there
are potentially pockets of high-grade ore near surface.
Further details are available from the Company's website which
details the company's project portfolio as well as a copy of this
announcement: www.xtractresources.com
This announcement contains inside information for the purposes
of Article 7 of EU Regulation No. 596/2014 on market abuse. The
person who arranged for the release of this announcement on behalf
of the Company was Colin Bird, Director.
Enquiries:
Xtract Resources Plc Colin Bird, +44 (0)20 3416 6471
Executive Chairman www.xtractresources.com
Beaumont Cornish Limited Roland Cornish +44 (0)207628 3369
Nominated Adviser and Michael Cornish www.beaumontcornish.co.uk
Joint Broker Felicity Geidt
Novum Securities Limited Colin Rowbury +44 (0) 207 399 9427
Joint Broker www.novumsecurities.com
Qualified Person:
Information in this announcement relating to the exploration
works has been reviewed by Edward (Ed) Slowey, BSc, PGeo, a
consultant to Xtract. Mr Slowey is a graduate geologist with more
than 40 years' relevant experience in mineral exploration and
mining, a founder member of the Institute of Geologists of Ireland
and is a Qualified Person under the AIM rules. Mr Slowey has
reviewed and approved the geological content of this
announcement.
Qualified Person:
In accordance with AIM Note for Mining and Oil & Gas
Companies, June 2009 ("Guidance Note"), Colin Bird, CC.ENG, FIMMM,
South African and UK Certified Mine Manager and Director of Xtract
Resources plc, with more than 40 years' experience mainly in hard
rock mining, is the qualified person as defined in the Guidance
Note of the London Stock Exchange, who has reviewed the technical
information contained in this press release.
TECHNICAL GLOSSARY
The following is a summary of technical terms:
"Archean" The oldest of the two divisions of the Precambrian
Era; older than 2,500 million years ago
"arsenopyrite" An iron arsenic sulphide, FeAsS
"Au" Gold
"cut-off" The grade above which samples are included
in a mineral resource or reserve
"diamond drilling" Drilling method which obtains a cylindrical
core of rock by drilling with an annular bit
set with diamonds
"Greenstone Belt" Zones of variably metamorphosed mafic to ultramafic
volcanic sequences with associated sedimentary
rocks that occur within Archaean and Proterozoic
cratons between granite and gneiss bodies
"Indicated Mineral That part of a Mineral Resource for which
Resource" quantity, grade (or quality), densities, shape
and physical characteristics are estimated
with sufficient confidence to allow the application
of Modifying Factors in sufficient detail
to support mine planning and evaluation of
the economic viability of the deposit
Inferred Mineral That part of a Mineral Resource for which
Resource quantity and grade (or quality) are estimated
on the basis of limited geological evidence
and sampling. Geological evidence is sufficient
to imply but not verify geological and grade
(or quality) continuity. It is based on exploration,
sampling and testing information gathered
through appropriate techniques from locations
such as outcrops, trenches, pits, workings
and drill holes
"mafic" Containing or relating to a group of dark-coloured
minerals, composed chiefly of magnesium and
iron, that occur in igneous rocks
"meta-sedimentary" A metamorphosed sediment
"mineralisation" Process of formation and concentration of
elements and their chemical compounds within
a mass or body of rock
"open cut" The main type of mine designed to extract
minerals close to the surface; also known
as open pit
"orogenic" Pertaining to mountain building events in
the Earth's history
"oz" Ounce
"pyrite" Iron sulphide mineral, FeS(2)
"quartz" A mineral composed of silicon dioxide, SiO(2)
"RC drilling" A reverse circulation drilling method in which
the sample is brought to the surface inside
the drill rods, thereby reducing contamination
"refractory" Having a very high melting point
"SAMREC Code" The South African Code for the Reporting of
Exploration Results, Mineral Resources and
Mineral Reserves
"shear zone" Plane of failure in faulted body of rock
"stockwork" A large-scale ramifying series of fissures
filled with mineralized material
"sulphide" A metallic compound of sulphur
"vein" A mineral-filled fracture or fault in a rock
ENDS
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
AGRPLMMTMTBBBJM
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