TIDMXTR
RNS Number : 0186X
Xtract Resources plc
25 August 2020
For immediate release
25 August 2020
Xtract Resources Plc
("Xtract" or the "Company")
Additional Manica Gold Hard Rock Mining 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 an
additional mining contractor agreement ("Boa Esperanza Agreement")
with Longhau Tianci Mining Co Ltd ("Longhau" or "Contract Miner")
for the exploitation of the Boa Esperanza hard rock gold deposit at
its Manica mining concession in Mozambique.
Highlights
-- Longhau appointed to mine the Boa Esperanza hard rock gold
deposit for 6 years or until the ore body is depleted or no longer
viable
-- Boa Esperanza 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 Boa Esperanza 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
-- Previously reported SAMREC-compliant Inferred Resource of 143,000 tonnes @ 0.77g/t Au
-- Shallow drill intercept of 15.45m @ 1.35g/t Au highlights
potential for higher grade ore shoots
-- Further gold potential along sparsely drilled structural extension to the west-northwest
Colin Bird, Executive Chairman said: "I am pleased to report the
conclusion of negotiations and signing of the Boa Esperanza
agreement with Longhau. Boa Esperanza has had only limited drilling
and as such the contractor plans to open the veins progressively
and follow the vein and ore shoot. This approach is common to this
type of ore body and it is not unusual for mines to still be in
production for many years after their original ore estimate. This
new agreement provides the Company with another potential source of
cash flow concurrent with the Guy Fawkes agreement. We are also
pleased to report that the previous onerous Covid-19 lockdown
protocols in South Africa have been reduced and we are confident
that border restrictions will be lifted to allow the importing of
machinery from South Africa to Mozambique."
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 subsequently agreed to release the ancillary
deposits at Guy Fawkes 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 and on 19 August 2020 the Company entered into
an agreement with Longhau to mine the Guy Fawkes hard rock
deposit.
Boa Esperanza Contract Mining Agreement
The Company's wholly-owned Mozambican subsidiary, Explorator,
has today additionally appointed Longhau Tianci Mining Co Ltd
("Contract Miner") who will have the exclusive right to mine the
Boa Esperanza hard rock deposit on the Permitted Area of the Mining
Concession area. The Boa Esperanza Agreement will endure for a
period of 6 years, with rights of early termination either by
Explorator or the Contract Miner.
The Boa Esperanza 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 Boa Esperanza 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, in respect of the stripped
material up to a depth of 30 meters, the Contract Miner will retain
84% in gold for services provided, and Explorator will retain 16%
of all gold production, amounting to 10% after payment by
Explorator of the applicable Mining Production Tax of 6%.
Thereafter, 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
Boa Esperanza is a steeply north-dipping Archean Greenstone Belt
Orogenic Gold deposit occurring within the 10km long west-northwest
trending Mutamborico shear zone in western Mozambique. It lies
within a complex area of sheared and tectonised Banded Iron
Formation ("BIF") and quartz veining. Gold is associated with
disseminated pyrite mineralisation which is oxidised near
surface.
The project was mined historically since at least 1936, with
total production of 4,800oz Au reported from two small open pits
and underground workings.
Limited exploration drilling has been undertaken, with 12 holes
for which records are available, totalling about 1,000m in all.
Four of these holes completed in 2003 using diamond core drilling,
intersected mineralisation of note, including BED001 which
intersected a zone of 15.45m @ 1.35g/t Au from 38.15m downhole, and
BED002 which intersected 31.48m @ 0.76g/t Au from 49.95m downhole,
including 5.15m @ 1.97g/t Au.
A 2016 technical report commissioned by Xtract estimated a
SAMREC Code (2009) compliant Inferred Mineral Resource of 143,000
tonnes @ 0.77g/t Au, as detailed in the table below:
Boa Esperanza Total Mineral Resource
Mineral Resource Category Tonnes Au Au Au
Mt g/t kg koz
@ 0.5g/t Less 20% Mine Depletion
Measured - - - -
------- ----- ---- -----
Indicated - - - -
------- ----- ---- -----
Total M&I - - - -
------- ----- ---- -----
Inferred 0.143 0.77 111 3.55
------- ----- ---- -----
Total Measured, Indicated
and Inferred 0.143 0.77 111 3.55
------- ----- ---- -----
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 drilling at Boa Esperanza, as well as underground sampling,
indicates that there are potentially pockets or shoots of
higher-grade ore within the overall resource. Also, the Duque gold
workings, located 5km along strike to the west-northwest, suggests
potential for additional discoveries beneath scree and overburden
cover where the zone has been only sparsely drilled or remains
untested by drilling.
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
"Au" Gold
"Banded Iron Formation Chemical sedimentary rock composed of finely
(BIF)" alternating layers of silica and iron oxide,
iron silicates or iron carbonates
"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
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
"mineralisation" Process of formation and concentration of
elements and their chemical compounds within
a mass or body of rock
"open pit" The main type of mine designed to extract
minerals close to the surface
"ore body" A solid and fairly continuous mass of ore
"ore shoots" High-grade mineral zones, usually occurring
as steeply-dipping zones along veins or faults
"orogenic" Pertaining to mountain building events in
the Earth's history
"overburden" Material such as soils and gravels deposited
over bedrock, typically deposited by rivers,
ice sheets or on the sea floor.
"oz" Ounce
"pyrite" Iron sulphide mineral, FeS(2)
"quartz" A mineral composed of silicon dioxide, SiO(2)
"SAMREC Code" The South African Code for the Reporting of
Exploration Results, Mineral Resources and
Mineral Reserves
"scree" A mass of small loose stones that form or
cover a slope on a mountain
"shear zone" Plane of failure in faulted body of rock
"stockwork" A large-scale ramifying series of fissures
filled with mineralized material
"tectonised" A rock modified by a process resulting from
the deformation of the earth's crust
"vein" A mineral-filled fracture or fault in a rock
ENDS
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END
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