REG - Xtract Resources plc - Zambian Exploration Licence Joint Venture

Xtract ResourcesAnnouncement

03/04/2024 13:00

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RNS Number : 1886J  Xtract Resources plc  03 April 2024

 

For immediate release

3 April 2024

Xtract Resources Plc

("Xtract" or the "Company")

 

Zambian Exploration Licence Joint Venture

 

The Board of Xtract Resources Plc ("Xtract" or the "Company") is pleased to
announce that the Company on 2 April 2024 entered into an option and joint
venture agreement ("Agreement") with Oval Mining Limited ("Oval"), who are
acting in cooperation with Cooperlemon Consultancy Limited
 ("Cooperlemon"),the advisory Company, to earn-in up to a 70% interest in the
Silverking copper mine and accompanying exploration licence 26673-HQ-LEL
("Silverking") covering an area of approximately 81.7km(2) located in the
Mumbwa District of the Central Province of Zambia.

 

Highlights

·    Silverking mineralisation is characterised by deep levels of intense
oxidation, breccia, vein and stockwork hosted copper mineralisation and is
distinguished by high-grade supergene enrichment, also diagnostic of the
nearby Kitumba deposit.

·    The former Silverking open pit and underground mine extends to a
mining depth of only 70m and based on underground mapping and historic diamond
and reverse circulation ("RC") drilling is believed to remain open both
down-dip and along strike.

·    Historic Peak Silverking reported drill intercepts including 50m @
5.47% Cu in borehole SVKRC002 from 55m to 105m depth. The hole stopped in
mineralisation. Mineralised intercepts peaked at 52.2% Cu over a 1m drilled
interval.

·    A wide-spaced geochemical soil survey supplemented by magnetic and IP
ground geophysical surveys undertaken by Glencore identified a number of high
priority targets warranting follow-up.

·    In particular a second breccia pipe located 800m from the main
Silverking mineralised body was identified and has not been explored. Evidence
at surface suggested possible stockwork or disseminated copper mineralisation
between the two breccia pipes.

·    Xtract's proposed exploration work will focus on testing the depth
extension of the Silverking breccia pipe, the nearby pipe and general licence
exploration.

 

Colin Bird, Executive Chairman said "This agreement is consistent with the
Company's stated mission of acquiring exploration resources which have
significant copper showings, considerable upside potential and occur in
proximity to current or potential mines. Silverking certainly satisfies all of
the criteria, and we are excited about the prospects for a future discovery."

 

Background to Silverking geology, location and prospectivity

Mining in the Mumbwa district and in particular the Karenda area for Pb, Zn,
Cu and Ag commenced pre-1964 and the small-scale mining of Silverking preceded
the discovery of major copper deposits in the region. A combined study by the
Zambian and Japanese governments in the mid-1980's reflected the presence of
high-grade Cu mineralisation and the recognition that the region may host
large copper deposits.

 

In 2012, Glencore International through their local company Mopani Copper
Mines commissioned an exploration programme over part of the current
Silverking Licence. Soil geochemistry, ground IP and magnetic geophysical
surveys and both diamond and RC drilling were undertaken.

 

An area of only 2.68km(2) coincident with the main Silverking breccia pipe was
subject to detailed surveys by Glencore with the balance of the Licence at
that time covered by a wide-spaced (200m traverses and 50m interval sample
points) survey that could easily have missed both the known breccia pipes at
Silverking.

 

Ground magnetic surveys identified a relationship between both underlying soil
geochemical anomalies and artisanal pits and underground workings. These
observations were backed up further association with IP anomalies. The
original geophysical data requires further modelling and Xtract will provide
all available information to its external geophysical consultant with a view
to generating a more refined suite of targets for follow up.  In addition,
historic exploration opined that a high IP resistivity response could be a
function of high silica content related to stockwork and quartz vein
mineralisation which may represent a lower-grade bulk tonnage halo around the
high-grade breccia pipes.

 

The general conclusion from the historic exploration was that the two defined
breccia pipes both remain open at depth and along strike and that all other
geochemical and geophysical anomalies also remain open in a number of
directions.

 

Exploration over the carbonate-hosted lithology led to follow-up drilling by
Glencore in 2012 and an RC programme of 8 holes completed for a total of 987
metres. RC holes were designed to test the strike extension of the main
Silverking breccia pipe and are reported to have intersected narrow low-grade
Cu mineralisation in addition to 50m @ 5.47% Cu in borehole SVKRC002 from 55m
to 105m depth. An in-house review of the historic drilling strategy by Xtract
has concluded that the drillhole location and orientation was not optimised
and did not fully reflect the relationship between magnetic high-low anomalism
and underlying geochemistry. The historic diamond drilling programme was
confined to a single drillhole per anomaly probably reflecting a strategy
targeting a Tier 1 deposit which did not take into consideration the
orientation or apparent down-dip and down-plunge high-grade supergene nature
of mineralisation in the local area and therefore could easily have missed
significant mineralisation potential.

 

An in-house non-JORC (2012) resource estimate by an external contract
geological company was commissioned by Glencore in 2012 ("Non-Compliant
Resource"). The Non-Compliant Resource reported an estimate of 268,971 tonnes
at 2.7% Cu at a 0.5% Cu cut-off for the main Silverking breccia pipe only.
Shareholders should note that as the Non-Compliant Resource was not prepared
to any acceptable AIM Standard, no reliance can be placed on the Non-Compliant
Resource and it is therefore only illustrative. The down-dip and strike
extensions of the known pipes and other anomalies (geochemical and
geophysical) remain largely untested as does the balance of the Licence where
only broad-based reconnaissance-type exploration has been undertaken.

 

Silverking is located immediately adjacent to the Kitumba deposit in which the
Chinese Sinomine Resource Group announced a major investment to acquire a 65%
interest in March 2024.

 

Joint Venture Agreement

Xtract has entered into a joint venture agreement with Cooperlemon in relation
to the Silverking Project and Licence. Under the joint venture agreement ("JV
Agreement"), Xtract has agreed the following key terms.

 

Xtract has an option period of 18 months to earn an initial 51% in the Licence
provided Xtract spends US$500,000 in exploration over the period. The joint
venture will then be formally established between Xtract and Cooperlemon.
Xtract may withdraw at any time during the option period but will lose its
right to earn 51% in the Licence. Should Xtract withdraw during the option
period, then any technical information regarding the property generated during
that period shall become the property of Cooperlemon. On completion of the
earn in period, or as such other time as Xtract has spent US$500,000, Xtract
may then advise Cooperlemon of its intention to increase its interest in the
Licence to 70% by agreeing to spend a further US$1,000,000 over two years on
exploration and development of the Licence, subject to Cooperlemon's  right
to maintain its interest in the Licence through an option to earn back up to
70% by participating in such ongoing expenditure.

 

In the event that an inferred resource in excess of 300,000 tonnes of
contained copper is reported, then Xtract's beneficial interest shall remain
at 70% or if different, its respective interest at the date of the resource
estimate. If an inferred resource of greater than 500,000 tonnes of contained
copper is reported, then any subsequent sale of the project to a third-party
will result in an equal share of the disposal proceeds between the parties,
after costs of disposal but such costs to exclude the actual cost of the
resource discovery - Cooperlemon will not be responsible for any exploration
costs, but will be responsible for any costs incurred during the disposal
process, to include local taxes and legal fees.

 

If the exploration programme demonstrates that the Licence cannot support an
inferred  resource of 300,000 tonnes or more, then the parties by mutual
agreement may elect to commence a small mining project. In the event, that a
small mining project is developed then Xtract's interest in the project will
be 70%. If a small mine is developed, Xtract will be responsible for funding
the entire project and will not recover from Cooperlemon any share of costs.

 

The management and compliance (statutory and regulatory) of the Silverking
licence will be the responsibility of Cooperlemon.

 

 

Further information on the Licence

Licence No: 26673-HQ-LEL, which comprises 7,840 hectares and expires on 30
August 2025, is held by Oval. The licence is located west of Lusaka in the
Central province of Zambia. Oval has agreed with Xtract to be bound by the
terms and the conditions of the JV Agreement with Cooperlemon (who is acting
on Oval's behalf) as though they were a party to the Joint Venture Agreement.

 

Other

Further information is available from the Company's website which details the
company's project portfolio as well as a copy of this announcement:
www.xtractresources.com

 

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").

 

The person who arranged for the release of this announcement on behalf of the
Company was Colin Bird, Executive Chairman and Director.

 

 

 Xtract Resources Plc                               Colin Bird,          +44 (0)20 3416 6471

                                                    Executive Chairman   www.xtractresources.com (http://www.xtractresources.com)

 Beaumont Cornish Limited                           Roland Cornish       +44 (0)207628 3369

 Nominated Adviser and Joint Broker                 Michael Cornish      www.beaumontcornish.co.uk (http://www.beaumontcornish.co.uk)

                                                    Felicity Geidt

 Novum Securities Limited                           Jon Bellis           +44 (0)207 399 9427

 Joint Broker                                       Colin Rowbury        www.novumsecurities.com

 

 

 

Qualified Person:

Colin Bird: The technical information contained in this announcement has been
reviewed, verified, and approved by Colin Bird, C.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.

Forward Looking Statements

Certain statements in this announcement are or may be deemed to be forward
looking statements. Forward looking statements are identified by their use of
terms and phrases such as ''believe'' ''could'' "should" ''envisage''
''estimate'' ''intend'' ''may'' ''plan'' ''will'' or the negative of those
variations or comparable expressions including references to assumptions.
These forward-looking statements are not based on historical facts but rather
on the Directors' current expectations and assumptions regarding the Company's
future growth results of operations performance future capital and other
expenditures (including the amount. Nature and sources of funding thereof)
competitive advantages business prospects and opportunities. Such forward
looking statements reflect the Directors' current beliefs and assumptions and
are based on information currently available to the Directors. A number of
factors could cause actual results to differ materially from the results
discussed in the forward-looking statements including risks associated with
vulnerability to general economic and business conditions competition
environmental and other regulatory changes actions by governmental authorities
the availability of capital markets reliance on key personnel uninsured and
underinsured losses and other factors many of which are beyond the control of
the Company. Although any forward-looking statements contained in this
announcement are based upon what the Directors believe to be reasonable
assumptions. The Company cannot assure investors that actual results will be
consistent with such forward looking statements.

Notice

Beaumont Cornish Limited ("Beaumont Cornish"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority, is acting
as nominated adviser to the Company in connection with this announcement and
will not regard any other person as its client and will not be responsible to
anyone else for providing the protections afforded to the clients of Beaumont
Cornish or for providing advice in relation to such proposals. Beaumont
Cornish has not authorised the contents of, or any part of, this document and
no liability whatsoever is accepted by Beaumont Cornish for the accuracy of
any information, or opinions contained in this document or for the omission of
any information. Beaumont Cornish as nominated adviser to the Company owes
certain responsibilities to the London Stock Exchange which are not owed to
the Company, the Directors, Shareholders, or any other person.

 

Glossary

 

 "Ag"         Silver
 "Breccia"    Rock fragmented into angular components.
 "Cu"         Copper
 "IP"         Induces Polarisation - A method of ground geophysical surveying which employs
              the passing of an electrical current into the ground to test for indications
              of conductive metallic sulphides.
 "Pb"         Lead
 "Supergene"  Descriptive of a mineral deposit, weathering or alteration formed by
              descending solutions
 "Zn"         Zinc

 

ENDS

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