REG - Xtract Resources plc - Final Results
27/06/2024 12:45
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RNS Number : 1901U Xtract Resources plc 27 June 2024
For immediate release
27 June 2024
Xtract Resources Plc
("Xtract" or the "Company")
Audited results for the 12 months ended 31 December 2023
The Board of Xtract Resources Plc ("Xtract" or the "Company") announces its
audited financial results for the 12 months ended 31 December 2023. The 2023
Audited Annual Report and Accounts ("Accounts") are in the process of being
posted to shareholders and will be available together with this announcement
on the Company's website www.xtractresources.com
(http://www.xtractresources.com) .
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(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 the
release of this announcement on behalf of the Company was Joel Silberstein,
Director.
Enquiries:
Xtract Resources Plc Colin Bird, Executive Chairman +44 (0) 203 416 6471
Beaumont Cornish (Nominated Adviser & Joint Broker) Roland Cornish / Michael Cornish / Felicity Geidt +44 (0) 207 628 3369
Email: corpfin@b-cornish.co.uk (mailto:corpfin@b-cornish.co.uk)
Novum Securities (Joint Broker) Jon Bellis/Colin Rowbury +44 (0) 207 399 9427
Beaumont Cornish Limited ("Beaumont Cornish") is the Company's Nominated
Adviser and is authorised and regulated by the FCA. Beaumont Cornish's
responsibilities as the Company's Nominated Adviser, including a
responsibility to advise and guide the Company on its responsibilities under
the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed
solely to the London Stock Exchange. Beaumont Cornish is not acting for and
will not be responsible to any other persons for providing protections
afforded to customers of Beaumont Cornish nor for advising them in relation to
the proposed arrangements described in this announcement or any matter
referred to in it.
Corporate & Operational highlights
· Acquisition of two copper exploration licenses with a further three joint
venture licences acquired via an amended joint venture agreement post
year-end, bringing a total combined licence area of 173,586 hectares in the
highly prospective Western Foreland region of northwestern Zambia
· Xtract entered a phase of exploration in NW Zambia targeting 500Kt of
contained copper either for in-house development or through a strategic joint
venture agreement
· Post year-end, the Company announced the acquisition of up to a 70% JV
interest in an exploration licence over the Silverking prospect in the
prospective Mumbwa district of Zambia, inclusive of two high-grade breccia
pipe deposits that are open both along strike, and at depth, with reported
drill intercepts including 50m @ 5.47% Cu returned from historical exploration
drilling
· Exploration is underway at Silverking with a focus firstly on defining a
Mineral Resource centered around the high-grade pipe-like structures and
secondly, evaluating the substantial area of licence that has never previously
been thoroughly explored
· A revised mining study at the Bushranger copper (gold) project in
Australia, completed by Optimal Mining Solutions Pty gave positive results,
indicating that the Racecourse deposit could be viably mined at copper prices
over $10,000/t and mining rates of over 20mtpa
· Post year end, additional ore pre-concentration studies were initiated at
the Bushranger Project including pre-screening, gravity separation and coarse
particle floatation, with initial coarse particle flotation results conducted
by Novacell appearing promising
· Disposal of Xtract's 23% shareholding in the Manica gold mine project,
allowing disposal of risk as the mine entered the complex ore mining phase,
securing future income to fund exploration activities at the newly acquired
copper projects
· Immediate cash payment of US$3.325m from the disposal of Manica gold
project and up to a further US$15m to be met via staged payments up until 01
March 2027
Financial highlights
· Cash of £0.63m (2022: £0.19m)
· Net assets of £19.89m (2022: £19.68m)
· Other operating income £1.17m (2022: £0.67m)
· Administrative and operating expenses of £1.05m (2022: £1.35m)
Chairman's Statement
Dear Shareholder,
During the period under review and to the time of writing we have been
adjusting the portfolio to align the Company with what we believe to be a
robust suite of assets in a commodity and jurisdiction best able to return
significant shareholder values.
During the year the Manica gold project continued to build up gold production
and stabilise. Overall results suggested that the mine could perform at a rate
of +60kg of gold per month, with varying forecasts for the life of the oxide
resources for which the original plant was designed. Despite a premature and
extended rainy season, the operation continued to perform satisfactorily.
A number of exploration and confirmatory programmes were carried out for
short- term pit design and end of life mine planning. Concurrently,
metallurgical test work was carried out on selected core as a precursor to the
design of the eventual sulphide plant.
The structure of our agreement with MMP was such that we had little
contribution to the design of any future plant and also, underground mine
design, which inevitably any future sulphide extension will require. The board
of Xtract announced on the 24 January 2024, that they had entered into an
agreement to dispose of Xtract's 23% net profit share interest for a
consideration of up to US$15million in cash in regular staged payments. At the
time of writing the disposal proceeds are being received and the arrangement
is proceeding satisfactorily.
The disposal of the Company's interest in Manica, facilitated Xtract's
aspirations to commence a small mining campaign together with the key
objective of acquiring high potential copper exploration ground. Since the
disposal we have acquired a number of licences with a focus on the
north-western region of Zambia. Our focus on this area, is based upon the
premise that the highly productive Congolese-style copper mineralisation that
hosts world class copper deposits and is prevalent in the DRC extends through
parts of NW Zambia and continues into neighbouring Angola. The geological
architecture necessary for the formation of Kamoa-type high-grade copper
deposits occurs within the Western Foreland domain in NW Zambia and Xtract is
among several companies actively seeking Kamoa-Kakula type mineralisation in
the region. The Company is also exploring the Fold and Thrust Belt located
immediately east of the projected Western Foreland boundary hosts Kolwezi-type
mineralisation, characterised by lower grade bulk tonnage type targets
occurring closer to surface or as rafts of mineralisation in a tectonically
disturbed terrane. We are currently carrying out fieldwork to determine the
optimum site for our first drilling programme, which we expect to commence
during the 3rd quarter of 2024.
Our first acquisition was announced on 24 August 2023 and recently on 31 May
2024, we announced that we had entered into an addendum to that agreement,
which added a further three exploration licences to the Zambia portfolio.
A further post balance sheet event, announced in early April 2024, was the
joint venture agreement with Oval Mining Limited to earn up to a 70% interest
in the Silverking copper mine and accompanying exploration licences.
Silverking's licence is located immediately adjacent to the Kitumba deposit,
which has recently been the subject of M&A activity involving Sinomine
Resource Group acquiring a 65% interest in the mine. Historic drilling at
Silverking has returned high grade copper intercepts including but not limited
to 50m at 5.47% Cu. Two breccia pipes were identified by previous exploration
and both structures remain open along strike and at depth. A large part of the
exploration licence remains untested to any degree and in addition to
evaluating the potential for lower grade stockwork or disseminated
mineralisation in the halo around the pipes and the depth and strike
extensions, work will be undertaken to test the balance of the area under
licence before completing a mineral resource estimate.
On 6 November 2023, we announced the results of the initial Bushranger pit
optimisation and financial study on the Racecourse prospect in New South
Wales, Australia, which contains 1.1million tonnes of Cu equivalent estimated
in accordance with JORC 2012. The study concluded that the project has the
potential to be economically mined at a mining rate of 20Mtpa or greater and
at copper prices US$10,000 per tonne and above. The study demonstrated quite
clearly that ore upgrade has potential and project economics could be improved
by further pre-concentration test work.
We have commissioned a phase 2 pre concentration test programme, aimed at
specific techniques to further assess the benefits and contribution of
pre-concentration prior to main plant treatment. This work is currently in
progress and the test work results will be released during the third quarter
2024 and if considered appropriate further financial and technical
optimisation will be carried out.
The Bushranger project is open-ended in several directions and the Ascot
section has yet to be defined. If one takes a global view of copper
exploration projects, the Bushranger project is well placed in that it is open
ended to further discovery, located in a very favourable jurisdiction. The
project economics, whilst currently marginal, have the potential to be
favourably rerated if the forecasted Cu price is attained and appears
sustainable.
The board took the decision to dispose its interest in a pure gold project to
be part of the exciting fundamentals for copper in the coming decade.
We were always convinced that the demand fundamentals were present and that
motivated our decision for copper focus. What took us completely by surprise
was the supply side fundamentals recent deterioration. The media is reporting
on an almost daily basis the failure of existing mines to achieve forecasted
results and governmental actions closing down existing capacity. Chile appears
to be underperforming in copper production, with a major copper mining company
suffering a closure set back in Panama and a general Latin-American disdain
for copper mining. This together with a general global lack of new projects
and projects under development, suggests a fearful future for copper supply.
Analysts are suggesting a 20% shortfall for the supply against demand, which
will inevitably derail mankind's third world development together with
renewable energy and EV aspirations.
Despite the volatile copper prices there is still a push-pull debate among
those who make the forecast and those who make the decision for new copper
mine capacity. In the face of the stark fundamentals, it is difficult to
understand how any logical thinking person can be so negative as to predict
falling copper prices.
It is apparent that geopolitical tension is at a 30 year high with potentially
more to come and that factor could mitigate world growth and development, but
if you believe in a bright new future then copper can only outperform against
all other metals.
The recently aborted BHP bid for Anglo-American Corporation would not, had it
have been successful, produce any more copper. It would have resulted in new
ownership of current assets but no new copper, either in exploration or
development. Only the majors have the financing power to develop tomorrow's
copper mines and their threshold appears to be 1million tonnes of contained
copper for a viable project. In my opinion, they need to lower the bar, since
these projects do not currently exist. Over the last three years, I have been
known to quote "the day of the small miner is back". I firmly believe that
this is the case and modest projects previously challenged by grade, location
or financing may have a role to play in the short to midterm future. Hence the
reason for your company embarking on the mission to identify smaller projects
which can be developed quickly in favourable jurisdictions.
In essence, the Company is pursuing the copper mission aggressively in the
knowledge that successful exploration will lead either to a mine which can be
developed by ourselves or if big enough will be much sought after by the
majors.
The perfect storm is brewing for copper and your company is well placed to
take advantage.
I would like to thank my fellow directors and management with their untiring
and well-focused efforts during a very active and volatile period, which has
refocused and transformed the Company.
Colin Bird
Executive Chairman
26 June 2024
Consolidated Income Statement
For the year ended 31 December 2023
Note Year ended Year ended
31 December 31 December
2023 2022
£'000 £'000
Continuing operations
Revenue from gold sales - -
Other operating income 1,173 667
Operating and administrative expenses
Direct operating (6) -
Other operating (198) (122)
Administration (844) (1,227)
(1,048) (1,349)
Project expenses
(322)
(1,416)
Operating loss (197) (2,098)
Other gains and (losses) - -
Finance (cost)/income 9 25 150
(Loss) before tax 5 (172) (1,948)
Taxation 10 (1) (1)
(Loss) from continuing operations (173) (1,949)
Discontinued operations
Profit from discontinued operations 808 120
Profit/(Loss) for the year 635 (1,829)
Attributable to:
Owners of the Company 635 (1,829)
Net (loss) per share
Basic and diluted earnings per share loss from continuing operations (0.02) (0.22)
attributable to owners of the Company (pence)
11
Basic and diluted earnings per share loss attributable to owners of the 11 0.09 (0.22)
Company (pence)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Group
Year ended Year ended
31 December 31 December
2023 2022
£'000 £'000
Profit/(Loss) for the year 635 (1,829)
Other comprehensive income:
Items that may be reclassified subsequently to profit and loss - -
Exchange differences on translation of foreign operations (431) 343
Other comprehensive (loss)/income for the year (431) 343
Total comprehensive income/(loss) for the year 204 (1,486)
Attributable to:
Equity holders of the parent 204 (1,486)
Consolidated and Company Statements of Financial Position
As at 31 December 2023 Group Company
Note As at As at As at As at
31 December 31 December 31 December 31 December
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Non-current assets
Intangible assets 13 8,191 19,418 12 80
Property, plant & equipment 14 46 40 - -
Loans to group companies - - 8,011 9,637
Investment in subsidiary 15 - - 1,291 9,823
Other financial assets 16 - - - -
8,237 19,458 9,314 19,540
Current assets
Trade and other receivables 17 1,163 1,342 1,213 1,443
Inventories 18 - 123 - -
Loans to group companies - - - -
Cash and cash equivalents 630 192 608 51
1,793 1,657 1,821 1,494
Non-current assets held for sale and assets of disposal groups 11,898 - 9,963 -
Total assets 21,928 21,115 21,098 21,034
Current liabilities
Trade and other payables 20 486 759 219 183
Other loans 20 50 50 50 50
Current tax payable 20 - 312 - -
536 1,121 269 233
Liabilities of disposal groups 1,506 - - -
Net current assets/(liabilities) 1,257 536 1,552 1,261
Non-current liabilities
Environmental rehabilitation provision 21 - 312 - -
Loans from group companies 20 - - 11,591 11,553
Total liabilities 2,042 1,433 11,860 11,786
Net assets 19,886 19,682 9,238 9,248
Equity
Share capital 22 4,975 4,975 4,975 4,975
Share premium account 71,978 71,978 71,978 71,978
Warrant reserve 23 - 304 - 304
Share-based payments reserve 23 2,106 2,121 2,106 2,121
Fair Value reserve 23 - - - -
Foreign currency translation reserve 23 220 651 - -
Accumulated losses (59,393) (60,347) (69,821) (70,130)
Equity attributable to equity
holders of the parent 19,886 19,682 9,238 9,248
Total equity 19,886 19,682 9,238 9,248
The financial statements of Xtract Resources Plc, registered number 5267047,
were approved by the Board of Directors and authorised for issue. As permitted
by Section 408 of the Companies Act 2006, the income statement of the parent
company is not presented as part of these financial statements. The parent
company's loss for the financial year is disclosed in Note 3. It was signed on
behalf of the Company by:
Joel Silberstein
Director
26 June 2024
Consolidated Statement of Changes in Equity
Group
Share Capital Share premium account Warrant reserve Share based payments reserve Fair value Foreign currency translation reserve £'000 Accumulated losses Total Equity
£'000 £'000 £'000 £'000 reserve £'000 £'000
£'000
Note
As at 1 January 2022 4,973 71,684 467 1,874 - 308 (58,646) 20,660
As at 31 December 2016 3,355 -
Comprehensive income
Comprehensive income
Loss for the year - - - - - - (1,829) (1,829)
Forex currency translation
differences - - - - - 343 - 343
Total comprehensive
Total comprehensive
income for the year - - - - - 343 (1,829) (1,486)
Transactions with owners
Issue of shares 23 2 259 - - - - - 261
Issue of shares
Share issue costs - - - - - - - -
Issue of share options 23 - - - 247 - - - 247
Expiry ofwarrants 23 - - (128) - - - 128 -
Exercise of warrants 23 - 35 (35) - - - - -
As at 31 December 2022 4,975 71,978 304 2,121 - 651 (60,347) 19,682
As at 31 December 2016 4,955 -
Comprehensive income
Comprehensive income
Profit for the year - - - - - - 635 635
Forex currency
translation difference - - - - - (431) - (431)
Total comprehensive
Total comprehensive
income for the year - - - - - (431) 635 204
Transactions with owners
Issue of shares 22 - - - - - - - -
Issue of shares
Share issue costs - - - - - - - -
Expiry of share options 23 - - - (15) - - 15 -
Expiry of warrants 23 - - (304) - - - 304 -
Exercise of warrants - - - - - - - -
As at 31 December 2023 4,975 71,978 - 2,106 - 220 (59,393) 19,886
As at 31 December 2016 4,955 -
Statement of Changes in Equity
Company
Share Capital Share premium account Warrant reserve Share based payments reserve Fair value reserve Foreign currency translation reserve £'000 Accumu-lated losses Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
£'000
Note
As at 1 January 2022 4,973 71,684 467 1,874 - - (68,920) 10,078
Other Comprehensive income
Other Comprehensive income
Loss for the period - - - - - - (1,338) (1,338)
Other comprehensive income - - - - - - - -
Total comprehensive
Total comprehensive
income for the year - - - - - - (1,338) (1,338)
Issue of shares 23 2 259 - - - - - 261
Issue of shares
Share issue costs - - - - - - - -
Issue of share options 23 - - - 247 - - - 247
Expiry of warrants 23 - - (128) - - - 128 -
Exercise of warrants 23 - 35 (35) - - - - -
As at 31 December 2022 4,975 71,978 304 2,121 - - (70,130) 9,248
As at 31 December 2016
Other Comprehensive income
Other Comprehensive income
Loss for the period - - - - - - (10) (10)
Other comprehensive income - - - - - - - -
Total comprehensive
Total comprehensive
income for the year - - - - - - (10) (10)
Issue of shares 22 - - - - - - - -
Issue of shares
Share issue costs - - - - - - - -
Expiry of share options 23 - - - (15) - - 15 -
Expiry of warrants 23 - - (304) - - - 304 -
Exercise of warrants - - - - - - - -
As at 31 December 2023 4,975 71,978 - 2,106 - - (69,821) 9,238
As at 31 December 2017
Consolidated and Company Cash Flow Statement
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2023 2022 2023 2022
Note £'000 £'000 £'000 £'000
Net cash generated from/(used in) operating activities 24 1,209 (2,530) 255 (948)
Investing activities
Acquisition of subsidiary undertaking - - - -
Acquisition of intangible fixed assets 13 (57) (2,868) - (191)
Acquisition of tangible fixed assets 14 (44) (27) - -
Loans advanced to group companies - - 244 (3,360)
Net cash used in investing activities (101) (2,895) 244 (3,551)
Financing activities
Proceeds on issue of shares - 261 - 261
Repayment of loans from group companies - - 58 34
Proceeds from borrowings - 50 - 50
Net cash from financing activities - 311 58 345
Net increase/(decrease) in cash and cash equivalents 1,108 (5,114) 557 (4,154)
Cash and cash equivalents at beginning of year 192 5,389 51 4,205
Cash disclosed as part of disposal group (770) - - -
Effect of foreign exchange rate changes 100 (83) - -
Cash and cash equivalents at end of year 630 192 608 51
Significant Non Cash movements
Notes to the Financial Statements
The financial information set out in this announcement does not constitute the
Company's statutory is derived from the financial statements for the year
ended 31 December 2023 and period ended 31 December 2022.
Financial statements for the year ended 31 December 2023 and period ended 31
December 2022 will be delivered in due course. The auditors have reported on
those accounts; their report was (i) unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006 in respect of the
accounts for 2022.
Whilst the financial statements from which this preliminary announcement has
been derived are prepared in accordance with International Financial Reporting
Standards ("IFRS") and applicable law, this announcement does not itself
contain sufficient information to comply with IFRS. The Annual Report,
containing full financial statements that comply with IFRS, are in the process
of being sent out to shareholders.
Selected notes from the financial statements are set out below without
amendment to the note reference. The full notes are contained in the Audited
Annual Report and Accounts
1. General information
Xtract Resources Plc is a Public Company limited by shares incorporated in
England and Wales under the Companies Act 2006. The address of the registered
office is 7/8 Kendrick Mews, South Kensington, London, SW7 3HG. The nature of
the Group's operations and its principal activities are set out in the
Strategic Report on pages 5 to 21.
The financial statements are presented in pounds sterling (£) which is the
functional currency of the Company Foreign operations are included in
accordance with the policies set out in note 3. These annual financial
statements were approved by the board of directors on 26 June 2024.
2. Adoption of new and revised Standards
Basis of accounting
The consolidated annual financial statements have been prepared in accordance
with UK-adopted international accounting standards and in conformity with the
Companies Act 2006. The consolidated annual financial statements have been
prepared on the historical cost basis, as modified by financial assets
measured at fair value through other comprehensive income. The principal
accounting policies are set out below.
On 31 December 2020 IFRS as adopted by the European Union were brought into UK
law and became UK-adopted international accounting standards with future
changes being subject to endorsement by the UK Endorsement Board.
The financial statements of the Company have been prepared in accordance with
Financial Reporting Standard 101 "Reduced Disclosure Framework" ('FRS 101')
and the requirements of the Companies Act 2006. The Company will continue to
prepare its financial statements in accordance with FRS 101 on an ongoing
basis until such time as it notifies shareholders of any change to its chosen
accounting framework.
In accordance with FRS 101, the Company has taken advantage of the following
exemptions:
• Requirements of IAS 24, 'Related Party Disclosures'
to disclose related party transactions entered into between two or more
members of a group;
• the requirements of paragraphs 134(d) to 134(f) and
135(c) to 135(e) of IAS 36 Impairments of Assets;
• the requirements of IFRS 7 Financial Instruments:
Disclosures;
• the requirements of paragraphs 10(d), 10(f), 16,
38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D and 111 of IAS 1 Presentation of
Financial Statements;
• the requirements of paragraphs 134 to 136 of IAS 1
Presentation of Financial Statements;
• the requirements of paragraphs 30 and 31 of IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
2. Adoption of new and revised Standards
New and amended standards adopted by the Group
The most significant new standards and interpretations adopted, none of which
are considered material to the Group, are as follows:
Application date of standards
Ref Title Summary (periods commencing)
IFRS 17 Insurance Contracts Establishes new principles for the Annual periods
recognition, measurement, beginning on or
presentation and disclosure of after 1 January
insurance contracts issued, reinsurance 2023.
contracts held and qualifying
investment contracts with discretionary
participation features issued.
IAS 12 Deferred Tax related to Assets Introduces an exception to clarify that Annual periods
and Liabilities arising from a the 'initial recognition exemption' beginning on or
Single Transaction does not apply to transactions that after 1 January
give rise to equal taxable and 2023.
deductible timing differences.
IAS 8 Changes in Accounting Clarifies how to distinguish changes Annual periods
Estimates and Errors: Definition in accounting policies from changes beginning on or
of Accounting estimates in accounting estimates. after 1 January
2023.
New standards and interpretations not yet adopted
Unless material the Group does not adopt new accounting standards and
interpretations which have been published and that are not mandatory for 31
December 2023 reporting periods.
No new standards or interpretations issued by the International Accounting
Standards Board ('IASB') or the IFRS Interpretations Committee ('IFRIC') have
led to any material changes in the Company's accounting policies or
disclosures during each reporting period.
The most significant new standards and interpretations to be adopted in the
future are as follows:
Application date of standards
(periods commencing)
Ref Title Summary
IFRS 16 Lease Liability in a Sale Specifies requirements relating to measuring Annual periods
and Leaseback the lease liability in a sale and leaseback beginning on or
transaction after the date of the transaction. after 1 January
2024.
IAS 1 Presentation of Financial Changes requirements from disclosing 'significant' Annual periods
Statements and IFRS Practice to 'material' accounting policies and provides beginning on or
Statement 2 - Disclosure of explanations and guidance on how to identify after 1 January
Accounting Policies material accounting policies. 2024.
IAS 1 Presentation of Financial Clarifies that only those covenants with which Annual periods
Statements: Classification of an entity must comply on or before the end of beginning on or
Liabilities as Current or the reporting period affect the classification of a after 1 January
Non-Current and Non-Current liability as current or non-current. 2024.
Liabilities with Covenants Date
IAS7 Supplier Finance Arrangements The Amendments complement the existing 1 January 2024
IFRS7 disclosure requirements in IFRS Accounting
Standards and are aimed at providing users of
financial statements with information to assess
the effect of supplier finance arrangements on
an entity's liabilities, cash flows and exposure
to liquidity risk
There are no other IFRSs or IFRIC interpretations that are not yet effective
that would be expected to have a material impact on the Company.
The directors are evaluating the impact that these standards will have on the
financial statements of the Group.
3. Significant accounting policies
Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Company and entities controlled by the Company (its subsidiaries). These
consolidated financial statements are made up for the year ended 31 December
2023.
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
The results of subsidiaries acquired or disposed of during the period are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Where
necessary, adjustments are made to the financial statements of subsidiaries to
bring the accounting policies used into line with those used by the Group. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Business combinations
The group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred to the former
owners of the acquire and the equity interests issued by the group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition
date. The group recognises any non-controlling interest in the acquire on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
acquiree's identifiable net assets.
Where applicable, the consideration for the acquisition includes any asset or
liability resulting from a contingent consideration arrangement, measured at
its acquisition-date fair value. Subsequent changes in such fair values are
adjusted against the cost of acquisition where they qualify as measurement
period adjustments (see below). All other subsequent changes in the fair value
of contingent consideration classified as an asset or liability are accounted
for in accordance with relevant IFRSs. Contingent consideration is classified
either as equity or as a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value, with changes in
fair value recognised in profit or loss.
Where a business combination is achieved in stages, the Group's
previously-held interests in the acquired entity are re- measured to fair
value at the acquisition date (i.e. the date the Group attains control) and
the resulting gain or loss, if any, is recognised in profit or loss. Amounts
arising from interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are reclassified to
profit or loss, where such treatment would be appropriate if that interest
were disposed of.
The acquiree's identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition under IFRS 3 as amended, are
recognised at their fair value at the acquisition date.
If the initial accounting for a business combination is incomplete by the end
of the reporting period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see
below), or additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the amounts recognised as
of that date.
The measurement period is the period from the date of acquisition to the date
the Group obtains complete information about facts and circumstances that
existed as of the acquisition date and is subject to a maximum of one year.
Going concern
The operations of the Group have been financed through operating cash flows as
well as through funds which have previously been raised from shareholders. As
at 31 December 2023, the Group held cash balances of £0.63 million and an
operating profit has been reported.
On 24 January 2024, the Company announced that it had agreed terms for the
disposal of the Manica Gold Project with its Mozambique partner, MMP. The
Share Purchase Agreement in relation to the sale by the Company of its entire
interests in the project for a consideration of up to US$15 million in cash in
regular staged payments by the Buyers over the period to 1 March 2027.
The Directors anticipate net operating cash inflows for the Group for the next
twelve months from the date of signing these financial statements.
The Directors have assessed the working capital requirements for the
forthcoming twelve months and have undertaken assessments which have
considered different scenarios based on exploration spend on its exploration
projects in Zambia and Australia until June 2025.
Upon reviewing those cash flow projections for the forthcoming twelve months,
the directors consider that the Company is not likely to require additional
financial resources in the twelve-month period from the date of approval of
these financial statements to enable the Company to fund its current
operations and to meet its commitments. The Group will continue to monitor
corporate overhead costs on an ongoing basis.
The Directors therefore continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
Parent only income statement
Xtract Resources Plc has not presented its own income statement as permitted
by section 408 of the Companies Act 2006. The loss for the year ended 31
December 2023 was £11k (2022: loss £1,338k).
Foreign currencies
The individual financial statements of each Group Company are maintained in
the currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each Group Company are
expressed in Pound Sterling, which is the functional currency of the Company,
and the presentational currency for the consolidated financial statements.
In preparing the financial statements of the individual companies,
transactions in currencies other than the entity's functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the
dates of the transactions. At each balance sheet date, monetary assets and
liabilities that are denominated in foreign currencies are retranslated at the
rates prevailing on the balance sheet date. Non-monetary items carried at fair
value that are denominated in foreign currencies are translated at the rates
prevailing at the date when the fair value was determined. Non-monetary items
that are measured in terms of historical cost in a foreign currency are not
retranslated.
Foreign currency differences arising on retranslation into an entity's
functional currency are recognised in profit and loss.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the exchange rates
at the date of transactions are used. Exchange differences arising, if any,
are recognised in other comprehensive income and accumulated in equity.
On the disposal of a foreign operation (i.e. a disposal of the Group's entire
interest in a foreign operation, or a disposal involving loss of control over
a subsidiary that includes a foreign operation, loss of joint control over a
jointly controlled entity that includes a foreign operation, or loss of
significant influence over an associate that includes a foreign operation),
all of the accumulated exchange differences in respect of that operation
attributable to the Group are reclassified to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate. The Group has elected to treat goodwill and
fair value adjustments arising on acquisitions before the date of transition
to IFRSs as Sterling denominated assets and liabilities.
Taxation
The tax expense comprises current and deferred tax.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where the Company's subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or
from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
year when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Intangible assets
Land acquisition rights and mine development costs
The costs of land acquisition rights in respect of mining projects and mine
development are capitalised as intangible assets. These costs are amortised
over the expected life of mine to their residual values using the
units-of-production method using estimated proven and probable mineral
reserves.
Intangible exploration and evaluation expenditure assets
The costs of exploration properties and leases, which include the cost of
acquiring prospective properties and exploration rights, are capitalised as
intangible assets. Exploration and evaluation expenditure is capitalised
within exploration and evaluation properties until such time that the
activities have reached a stage which permits a reasonable assessment of the
existence of commercially exploitable reserves. Once the Company has
determined the existence of commercially exploitable reserves and the Company
decides to proceed with the project, the full carrying value is transferred
from exploration and development costs to mining development. Capitalised
exploration and evaluation expenditure is assessed for impairment in
accordance with the indicators of impairment as set out in IFRS 6 Exploration
for and Evaluation of Mineral Reserves. In circumstances where a property is
abandoned, the cumulative capitalised costs relating to the property are
written off in the year. Capitalised exploration costs are not amortised.
Property, plant and equipment
Tangible fixed assets represent mining plant and equipment, office and
computer equipment and are recorded at cost, net of accumulated depreciation.
Depreciation is provided on all tangible fixed assets at rates calculated to
write off the cost or valuation of each asset on a straight-line basis over
its expected useful life, which is calculated on either a fixed period or the
expected life of mine using the unit of production method, as appropriate.
The average life in years is estimated as follows:
Office and computer equipment 3-10
Plant and machinery 7-15
Until they are brought into use, fixed assets and equipment to be installed
are included within assets under construction and are not depreciated.
The cost of maintenance, repairs and replacement of minor items of tangible
fixed assets are charged to the income statement as incurred. Renewals and
asset improvements are capitalised. Upon sale or retirement of tangible fixed
assets, the cost and related accumulated depreciation are eliminated from the
financial statements. Any resulting gains or losses are included in the income
statement.
Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. An
intangible asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its
carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset in prior years. A reversal of an impairment loss
is recognised as income immediately, unless the relevant asset is carried at a
revalue amount, in which case the reversal of the impairment loss is treated
as a revaluation increase.
Financial instruments
Classification
The Group classifies its financial assets in the following categories: at
amortised cost including trade receivables and other financial assets at
amortised cost, at fair value through other comprehensive income. The
classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at
initial recognition.
Trade receivables
Trade receivables are amounts due from customers for goods sold or services
performed in the ordinary course of business. They are generally due for
settlement within 30 days and are therefore all classified as current. Trade
receivables are recognised initially at the amount of consideration that is
unconditional, unless they contain significant financing components, in which
case they are recognised at fair value. The group holds the trade receivables
with the objective of collecting the contractual cash flows, and so it
measures them subsequently at amortised cost using the effective interest
method.
Fair values of trade receivables
Due to the short-term nature of the current receivables, their carrying amount
is considered to be the same as their fair value.
Other financial assets at amortised cost
Classification of financial assets at amortised cost
The group and parent company classify its financial assets as at amortised
cost only if both of the following criteria are met:
• the asset is held within a business model whose
objective is to collect the contractual cash flows; and
• the contractual terms give rise to cash flows that
are solely payments of principle and interest.
Other receivables
These amounts generally arise from transactions outside the usual operating
activities of the group. Interest could be charged at commercial rates where
the terms of repayment exceed six months. Collateral is not normally obtained.
The non-current other receivables are due and repayable within three years
from the end of the reporting period.
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
These are initially and subsequently recorded at fair value.
Financial assets at fair value through other comprehensive income
Classification of financial assets at fair value through other comprehensive
income
Financial assets at fair value through other comprehensive income (FVOCI)
comprise an investment held. These are carried in the statement of financial
position at fair value. Subsequent to initial recognition, changes in fair
value are recognised in the statement of other comprehensive income.
Financial liabilities
Trade and other payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Loans to/(from) Group companies
These include loans to and from subsidiaries are recognised initially at fair
value plus direct transaction costs.
Loans to Group companies are classified as financial assets at amortised cost.
Loans from Group companies are classified as financial liabilities measured at
amortised cost.
Inter-company loans are interest bearing.
Cash and Cash Equivalents
Cash and cash equivalents in the statement of financial position comprise cash
at banks and on hand and short term highly liquid deposits with a maturity of
three months or less.
Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the
Statement of Financial Position when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net
basis or realise the asset and settle the liability simultaneously. The
legally enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the company or the counterparty.
Inventory
Inventories consist of the Company's share of gold dore bars produced by the
Alluvial Mining Contractors, which have been smelted and are available for
further processing. All inventories are valued at the lower of cost of
operations and net realisable value. Costs include cost, which are closely
related to the overall alluvial operations including monitoring and
compensation costs. Net Realisable value is the estimated future sales price
of the product the Company is expected to realise after the product is
processed and sold less costs to bring the product to sale. Where inventories
have been written down to net realisable value, a new assessment is made in
the following period. In instances where there has been change in
circumstances which demonstrates an increase in the net realisable value, the
amount written down will be reversed.
Share-based payments
Goods or services received or acquired in a share-based payment transaction
are recognised when the goods or as the services are received. A corresponding
increase in equity is recognised if the goods or services were received in an
equity- settled share-based payment transaction or a liability if the goods or
services were acquired in a cash-settled share- based payment transaction.
When the goods or services received or acquired in a share-based payment
transaction do not qualify for recognition as assets, they are recognised as
expenses.
For equity-settled share-based payment transactions the goods or services
received and the corresponding increase in equity are measured, directly, at
the fair value of the goods or services received provided that the fair value
can be estimated reliably.
If the fair value of the goods or services received cannot be estimated
reliably, or if the services received are employee services, their value and
the corresponding increase in equity, are measured, indirectly, by reference
to the fair value of the equity instruments granted.
Vesting conditions, which are not market, related (i.e. service conditions and
non-market related performance conditions) are not taken into consideration
when determining the fair value of the equity instruments granted. Instead,
vesting conditions which are not market related shall be taken into account by
adjusting the number of equity instruments included in the measurement of the
transaction amount so that, ultimately, the amount recognised for goods or
services received as consideration for the equity instruments granted shall be
based on the number of equity instruments that eventually vest. Market
conditions, such as a target share price, are taken into account when
estimating the fair value of the equity instruments granted. The number of
equity instruments are not adjusted to reflect equity instruments which are
not expected to vest or do not vest because the market condition is not
achieved.
If the share-based payments granted do not vest until the counterparty
completes a specified period of service, Group accounts for those services as
they are rendered by the counterparty during the vesting period, (or on a
straight-line basis over the vesting period).
If the share-based payments vest immediately the services received are
recognised in full.
Employee benefits
Short-term employee benefits
The cost of short-term employee benefits, (those payable within 12 months
after the service is rendered, such as paid vacation leave and sick leave,
bonuses, and non-monetary benefits such as medical care), are recognised in
the period in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the
employees render services that increase their entitlement or, in the case of
non- accumulating absences, when the absence occurs.
The expected cost of profit sharing and bonus payments is recognised as an
expense when there is a legal or constructive obligation to make such payments
as a result of past performance.
Share-capital and equity
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Incremental costs
directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Share Capital
Share capital represents the amount subscribed for shares at nominal value.
Share Premium
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax
benefits.
Share-Based Payment Reserve
The share-based payment reserve represents the cumulative amount which has
been expensed in the statement of comprehensive income in connection with
share-based payments, less any amounts transferred to retained earnings on the
exercise of share options.
Warrant Reserve
The warrant reserve presents the proceeds from issuance of warrants, net of
issue costs. Warrant reserve is non- distributable and will be transferred to
share premium account upon exercise of warrants.
Finance Income
Finance income comprises interest income. Interest income is recognised as it
accrues in profit or loss, using the effective interest method.
Revenue recognition
Revenue is recognised to the extent it is probable that the economic benefits
will flow to the Group and the revenue can be reliably measured. Revenue is
measured at the fair value of the consideration received or receivable,
excluding discounts, rebates and sales tax or duty.. A receivable is
recognised when the goods are delivered, since this is the point in time that
the consideration is unconditional because only the passage of time is
required before the payment is due.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Executive Chairman who is responsible for allocating
resources and assessing performance of the operating segments.
Discontinued operation
A discontinued operation is a component of the Group's business, the
operations and cash flows of which can be clearly distinguished from the rest
of the Group and which:
• represents a separate major line of business or
geographic area of operations;
• is part of a single co ordinated plan to dispose of
a separate major line of business or geographic area of operations; or
• is a subsidiary acquired exclusively with a view to
resale.
Classification as a discontinued operation occurs at the earlier of disposal
or when the operation meets the criteria to be classified as held for sale.
When an operation is classified as a discontinued operation, the comparative
statement of profit or loss and OCI is re presented as if the operation had
been discontinued from the start of the comparative year.
4. Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, which are described in
note 3, the Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The following are the critical judgements that the Directors have made in the
process of applying the Group's accounting policies and that have the most
significant effect on the amounts recognised in the financial statements.
Financial Assets Fair Value through Comprehensive Income
The Group reviews the fair value of its unquoted equity instruments at each
statement of financial position date. This requires management to make an
estimate of the fair value of the unquoted securities in the absence of an
active market, which has mainly been established by use of recent arm's length
transactions, as adjusted by a discount, where required. Uncertainty also
exists due to the early stage of development of corporate level investments in
subsidiaries.
Impairment of intangible assets
The assessment of intangible assets for any indications involves judgement.
Such assets have an indefinite useful life as the Company has a right to renew
exploration licences and the asset is only amortised once extraction of the
resource commences. Management tests for impairment annually whether
exploration projects have future economic value in accordance with the
accounting policy stated in Note 13. Each exploration project is subject to an
annual review by either a consultant or a geologist to determine if the
exploration results returned during the period warrant further exploration
expenditure and have the potential to result in an economic discovery. This
review takes into consideration long term metal prices, anticipated resource
volumes and supply and demand outlook. In the event that a project does not
represent an economic exploration target and results indicate there is no
additional upside a decision will be made to discontinue exploration; an
impairment charge will then be recognised in the Income Statement.
Share-based payments
The estimation of share-based payment costs requires the selection of an
appropriate valuation model and consideration as to the inputs necessary for
the valuation model chosen. The Group has made estimates as to the volatility
of its own shares, the probable life of options granted and the time of
exercise of those options. The model used by the Group is the Black-Scholes
model.
6. Expenses by nature
Profit / (loss) from continuing operations and discontinued operations for the
year has been arrived at after charging the following under administrative and
operating expenses:
Year ended 31 December 2023 Year ended 31 December 2022
Note £'000 £'000
Depreciation of property, plant and equipment 14 11 14
Amortisation of intangible fixed assets 13 - -
Inventory 19 53
Auditors remuneration 7 25 30
Directors remuneration 8 251 350
Share-based payments expense (non-directors) - 130
11. (Loss) per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Year ended Year ended
31 December 31 December
2023 2022
Pence Pence
Loss per share 0.07 (0.22)
- From continuing operations (0.02) (0.23)
- From discontinued operations 0.09 0.01
Total (0.07) (0.22)
Profit/(Loss) for the purposes of basic and diluted earnings per share
(EPS) being: £'000 £'000
Net Profit/(loss) for the year attributable to equity holders of the parent
- From continuing operations (173) (1,949)
- From discontinued operations 808 120
Total 635 (1,829)
2023 2022
Number of shares Number of shares
Weighted average number of ordinary shares for purposes of basic EPS 856,375,115 849,532,192
Effect of dilutive potential ordinary shares-options and warrants - -
Weighted average number of ordinary shares for purposes of diluted EPS 856,375,115 849,532,192
In accordance with IAS 33, the share options and warrants do not have a
dilutive impact on earnings per share, which are set out in the consolidated
income statement.
20. Trade and other payables
Current Group Company
As at As at As at As at
31 December 2023 31 December 2022 31 December 2023 31 December 2022
£'000 £'000 £'000 £'000
Trade creditors and accruals 486 759 219 183
Other loans 50 50 50 50
Current tax payable - 312 - -
536 1,121 269 233
Non-Current Group Company
As at As at As at As at
31 December 2023 31 December 2022 31 December 2023 31 December 2022
£'000 £'000 £'000 £'000
Loans from group companies - - 11,591 11,553
- - 11,591 11,553
29. Ultimate controlling party
The Directors believe there is no ultimate controlling party.
30. Events after the balance sheet date
Disposal of the Manica Gold Project
On 24 January 2024, the Company announced that it had agreed with its
Mozambique partner, MMP, and parties related to MMP terms for the disposal of
the Manica Gold Project. The terms agreed were as follows:
The Share Purchase Agreement
The Company agreed to sell its 23% net profit share interest in the Manica
Gold Project (by way of a sale of the entire issued share capital of Mistral)
to the Buyers for a consideration of up to US$15 million in cash in regular
staged payments by the Buyers over the period to 1 March 2027.
The Settlement and Restructuring Agreement
The termination of Company's mining collaboration agreement with MMP dated 28
May 2019 in relation to the Manica Gold Project under which the Company would
be paid US$3.325 million in cash to settle all monies due under the Mining
Collaboration Agreement. All funds have been received by the Company.
On 24 February 2024, the Company announced that it had completed the disposal
of the Manica Gold Project.
Zambian Exploration Licence Joint Venture
On 3 April 2024, the Company announced that the Company had entered into an
option and joint venture agreement ("Agreement") with Oval Mining Limited
("Oval"), who 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 81.7km2 located in the Mumbwa
District of the Central Province of Zambia.
Joint Venture Agreement
The Company has an option period of 18 months to earn an initial 51% in the
Licence provided it spends US$0.5 million in exploration over the period.
The Company may withdraw at any time during the option period but will lose
its right to earn 51% in the Licence. On completion of the earn in period, or
as such other time as the Company has spent US$0.5 million, it may then advise
Cooperlemon of its intention to increase its interest in the Licence to 70% by
agreeing to spend a further US$1 million 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 the Company'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 the Company's interest in the project
will be 70%. If a small mine is developed, the Company will be responsible for
funding the entire project and will not recover from Cooperlemon any share of
costs.
Additional Zambian Joint Venture Exploration Licences
On 30 May 2024 the Company announced that it had entered into an addendum to
restate the existing joint venture agreement with Cooperlemon Consultancy
Limited ("Joint Venture Agreement") in relation to the exploration for copper
in Zambia as previously announced on 24 August 2023. The addendum adds three
additional large scale exploration licenses in Northwest Zambia (the
"Additional Licences") to the joint venture.
Restated Agreement
The restated joint venture agreement with Cooperlemon Consultancy Limited
("Cooperlemon") is in relation to the exploration for copper at the Original
Licences and the Additional Licences in Northwest Zambia (together the
"Licences"). Under the restated joint venture agreement (the "Restated
Agreement"),the Company agreed the following additional key terms in addition
to those in the joint venture which was announced on 24 August 2023.
Earn-in and Phase 1 exploration budget for the Additional Licences
The Company will earn a 65% interest in the Additional Licences by funding
exploration expenditure of not less than US$0.5 million on each of the three
Additional Licences over an initial two-year period commencing on the date of
the Restated Agreement ("Additional Licences Phase 1"). The Company will earn
a 65% interest in the Original Licences by funding exploration expenditure
over an initial two-year period commencing on 23 August 2023 ("Phase 1") on
the Original Licences of not less than US$2 million and in aggregate
therefore, the Company's commitment under the Restated Agreement amounts to
US$3.5 million.
If results are positive at the end of the Additional Licences Phase 1 period a
joint venture company ("JV company") in relation to the Additional Licences
will be formed and this JV Company will then raise funds to further develop
the Additional Licences with the objective of achieving Positive Exploration
Results. For this purposes Positive Exploration Results means drilling results
that prove continuity of mineralisation at grades suggesting the potential for
the future development of a Mineral Resource of not less than 500,000 ("five
hundred thousand") tonnes of contained copper at grades consistent with
Economic Recovery achievable at the depth of discovery. Economic Recovery is
defined as a project which has a minimum IRR ("internal rate of return") of
not less than 25% and a payback period not exceeding 42 months including
recovery of capital expenditure. Xtract anticipates funding this exploration
expenditure from existing resources and current ongoing operational
activities.
Consequence of Trade Sale during the Additional Licences Phase 1 period
If there is a trade or any other sale or joint venture of the Additional
Licences during the Additional Licences Phase 1 period then the Company will
be deemed to have a 50% interest in the Additional Licences. A sale requires
the agreement of both the Company and Cooperlemon.
The of the terms and conditions of the original joint venture as announced on
24 August 2023 in respect of the Original Licences otherwise remain unchanged
by the Restated Agreement.
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 document.
ENDS
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. END FR SEWFFWELSEFMRecent news on Xtract Resources
See all newsREG - Xtract Resources plc - Silverking Project Drilling Update
AnnouncementREG - Xtract Resources plc - Silverking Project drilling update
AnnouncementREG - Xtract Resources plc - Silverking Project drilling update
AnnouncementREG - Xtract Resources plc - Western Foreland Exploration Update
AnnouncementREG - Xtract Resources plc - Silverking Project Commencement of Drilling
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