TIDMXTR
RNS Number : 2649F
Xtract Resources plc
19 February 2018
For immediate release
19 February 2018
Xtract Resources Plc
("Xtract" or the "Company")
Manica Hard Rock Collaboration Agreement
The Board of Xtract Resources Plc ("Xtract" or the "Company") is
pleased to announce that the Company has today concluded a further
collaboration agreement ("Joint Venture and Collaboration
Agreement" or "Agreement") with Omnia Mining Ltd ("Omnia") for the
exploitation of the hard rock gold deposits at Xtract's Manica
mining concession in Mozambique other than the Fair Bride project,
which remains under the sole control and management of Xtract.
Highlights of the Agreement
-- All Xtract's Manica hard rock occurrences (other than Fair Bride) included.
-- Omnia to utilise its new hard rock processing plant (capable
of processing 400k tonnes per annum).
-- Xtract will carry out the initial investigation on potential
targets. Costs of further exploration work will be shared equally
between Xtract and Omnia.
-- Any hard rock occurrences that meet the agreed target hurdle
rate of return of 25% will be mined and the benefits shared on a
50:50 basis.
Colin Bird, Executive Chairman said: "The Agreement provides
Xtract with access to a new fully installed and operational
processing plant able to extract gold from ore types available in
the Manica Area. Within the partners concession areas, there exists
numerous hard rock occurrences most of which have undergone
limited, superficial or no exploration. The Agreement provides
Omnia with the Company's mining and processing expertise and gives
the Company the opportunity for a fast track hard rock operation. A
number of hard rock occurrences within the Company's concession
area have demonstrated that they could well be suited for the
Omnia's processing plant. Apart from the plant, Omnia have an
existing camp, warehouse and maintenance facilities to support the
planned operation.We look forward to working with Omnia on this
Agreement as well as our existing collaboration with them on the
alluvial mining."
Collaboration and Joint Venture Mining Agreement
Background
The Joint Venture and Collaboration Agreement has been entered
into today by the Company and the Company's wholly-owned
subsidiary, Explorator Limitada ("Explorator"), (the "Group"), and
Omnia Mining Ltd. As previously announced on 8 February 2018, the
Company signed a new agreement with Omnia for the exploitation of
Xtract's alluvial gold deposits at its Manica mining conssesion in
Mozambique and the new additional Agreement extends the Company's
collaboration with Omnia.
The objective of the Agreement is to investigate explore and
evaluate all hard rock exploration targets within the Manica
concession (excluding the Fair Bride Project) with the aim of being
able to convert these targets into a joint mining operation with
Omnia which already has, as described further below, a hard rock
processing plant (free gold only) in an adjacent concession under
its control.
The Agreement explicitly excludes the Fair Bride Project in
respect of which on 28 February 2017, the Company announced that it
had completed the Definitive Feasibility Study for an open pit
operation. Fair Bride will be developed separately by the
Company.
The Group will provide technical personnel capable of evaluating
the hard rock gold potential of the Omnia concession and
surrounding areas for mutual development and will be solely
responsible for all exploration and future mining on all target
areas.
Omnia currently has a gold processing plant installed within its
adjacent concession which has a capability to process free gold.
The Omnia plant is unable currently to process fine gold which
requires liberation by combination of floatation and cyanidation.
Omnia will manage and operate all the processing of the mining
mineral approved and delivered through Explorator to Omnia's
processing plant.
Key terms of the Joint Venture and Collaboration Agreement
The terms of the Joint Venture and Collaboration Agreement are
as follows:
-- All gold recovered from the processing plant in the operating
phase, will be split on a 50:50 basis between the Company and
Omnia.
-- Omnia will manage and control the processing plant and all
the processing costs will be for their account.
-- The Fair Bride Project on Explorator's concession (and
feasibility study) is excluded from the Agreement.
-- The Company will advise, manage and control all mining and
mining operations and will be responsible for all mining related
costs.
-- All hard rock gold occurrences (excluding the Fair Bride
Project), if any, will be supplied to Omnia's Processing Plant
provided that the development of these occurrences results in an
internal rate of return which exceeds 25%: If the return is lower
than the 25% hurdle, the parties can agree in writing to continue
mining these occurrences.
-- Transport cost of the mining mineral will be split between
the Company and Omnia on a 50:50 basis.
-- There will be a steering committee to manage the joint
venture project and the committee will consist of two members
appointed by the Company and two members appointed by Omnia.
The Joint venture project will be implemented in five phases as
described further below.
Phase 1 - Desktop study
The Company will be engaged to carry out a thorough desktop
study on all information available for all the potential targets
with the work to be completed no later than the 20 February 2018.
Once the study has been completed, the Company will have the to
continue onto phase 2. Should the Company not wish to proceed to
phase 2, the Company will then issue Omnia a report containing all
of its findings and the associated raw data.
Phase 2 - Exploration Phase
The work in this stage will include but not be limited to ground
geophysical prospecting, mapping, trenching and resource
estimation. Should the results of this programme continue to
demonstrate a potential mining project with mining targets, the
parties will then agree to progress on a shared basis irrespective
of the source of the gold to be mined. This programme to be
completed by no later than 15 April 2018. Should the Company elect
not to proceed at its sole election then all data and conclusions
drawn from this programme will be supplied to Omnia.
Phase 3 - Drilling
It is envisaged that drilling will be carried will only be
carried out in order to identify and confirm mining targets. If the
projects are considered suitable for progressing at the Company's
sole election then the parties will agree to the following
programme of building a suitable geological model. The initial
budget shall not exceed US$100,000 split equally between the
Company and Omnia. Should the results of this modelling and
financial study indicate a project with an internal rate of return
of more than 25% then the parties will agree to advance the project
to development. This phase to be completed by no later than 15
August 2018. Should the Company at its sole election elect not to
continue then all information generated will be supplied to Omnia
together with the associated raw data.
Phase 4 - In house feasibility
All targets that have passed the internal rate of return
benchmark in Phase 3 above will be included in an in-house
feasibility study to be completed by the Company. Should the
parties require an external feasibility study to finance a bigger
operation, the Company and Omnia would then be responsible for
arranging finance for the external feasibility study on an equal
basis.
Metallurgical test work will be performed to identify if any
upgrading of Omnia's processing plant is required. The parties will
complete the in-house feasibility study of the processing plant to
determined that there is sufficient mineral at the correct cut-off
grade with an overall internal rate of return exceeding 25%. All
the hard rock gold occurrences with a 25% hurdle internal rate of
return will be included for future development. This phase is to be
completed by no later than 15 September 2018.
Phase 5 - Development
Modifications to Omnia's processing plant will only be done if
the mining material can't be processed or the modifications will
increase the recovery percentage. The agreed modifications, which
will be financed by the Company, include but not be limited to the
addition of a floatation plant and cyanide circuit, together with
carbon collection. Both parties will agree in writing before any
acquisition of new equipment and Omnia will repay a total of 50% of
these total modification costs to the Company out of future
cashflow.
Should the project proceed to development the Company will be
responsible for mining and Omnia will be responsible for
processing.
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.
Enquiries:
Xtract Resources Colin Bird, Executive +44 (0)20 3416
Plc Chairman 6471
Michael Cornish
Roland Cornish +44 (0)207628
Beaumont Cornish Felicity Geidt 3369
Email: corpfin@b-cornish.co.uk
+44 (0)207 382
Beaufort Securities Jon Belliss 8300
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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