REG - Xtract Resources plc - Half-year Report
29/09/2023 11:15
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RNS Number : 1878O Xtract Resources plc 29 September 2023
For immediate release
29 September 2023
Xtract Resources Plc
("Xtract" or "the Company")
Unaudited Interim Results for the six months ended 30 June 2023
Xtract Resources Plc (AIM: XTR), the gold producer, exploration and
development company with projects in Australia, Mozambique and Zambia,
announces its unaudited interim results for the six months ended 30 June 2023
("Period").
Highlights
Operational
· An updated mining study completed on the Bushranger project by
Optimal Mining Solutions (Pty) Ltd reported that the project could potentially
generate significant cash margins using the 20mtpa and 25Mtpa model on 16
economic pit shells modelled from an operating cost perspective only with
capital cost requirements excluded
· A pre-concentration study using TOMRA advanced optical sorting
technology achieved a grade uplift of 52%, and a mass rejection of 62% of
unmineralised material, on composite mineralized drill samples from the
Bushranger project excluding a higher-grade outlier, indicating the project is
well suited to ore pre-concentration, with positive financial impacts on a
future mining operation at the project
· Production continued at the Manica Fair Bride project with
production results published for the first quarter ended 31 March 2023
· A total of 140kg of gold was produced from the Fair Bride
operation during quarter ended 31 March 2023, of which Xtract has a claim to
23% of profits
· Following the prolonged rainy season in Mozambique, production
gathered pace in the second quarter ended 30 June 2023 with projected figures
for this second quarter on target
· Work is underway at Xtract's newly acquired Kakuyu project in
Zambia, including the delineation of two large surface anomalies adjacent to
the historic Kakuyu pit, with a combined strike length of over 2km of
prospective ground for immediate follow-up surface work
· Reconnaissance work is continuing at Kakuyu to determine
potential resources within the old waste dumps and to reveal mineralisation at
the base of the pit, while improving access to the old open pit via a ramp
push back exercise
· Post period end, the Company entered into a Joint Venture
agreement with Coopermelon Limited, to earn a 65% interest in two licences
prospective for copper mineralisation in northwest Zambia. The licences are
underexplored to date and an initial two-year period will see exploration
expenditure of at least US$2 million on the property, starting in late 2023
Financial
· Revenue from gold sales of £0.39m (H1 2022: £0.97m)
· Other revenue of £1.67m (H1 2022: £11k)
· Net Profit /(loss) of £0.62m (H1 2022: loss of £0.03m)
· Administration & operating expenses £1.05m (H1 2022: £1.33m
(including a share-based payment charge of £1.47m))
· Cash of £0.38m (FY 2022: £1.24m)
· Net assets of £21.73m (FY 2022: £21.15m)
Operational Overview
At the Bushranger copper-gold project located in the Lachlan Fold Belt of New
South Wales the previous reporting period saw the delineation of an upgraded
mineral resource of 512Mt @ 0.22% CuEq, at a cut-off of 0.1% CuEq, at the
Racecourse prospect, and a maiden mineral resource of 87Mt @ 0.22% CuEq, at a
cut-off of 0.1% CuEq, at the Ascot prospect, for a combined total of 599Mt @
0.22% Cu. Work on the Bushranger project has continued during the current
reporting period, allowing for reflection of the Phase Two drilling programme,
consolidation of results and ongoing assessment of the economics for a
profitable mining operation.
An updated open-pit mining study was completed by Optimal Mining Solutions
(Pty) Ltd ("Optimal Mining") to update the previous mining study and examine
the economics of 20Mpta and 25Mpta open pit mining operation. Sixteen economic
pit shells were modelled from an operating cost perspective with capital cost
requirements excluded and which highlighted that the 20Mtpa and 25Mtpa open
pit options potentially generate significant operating cash margins dependent
upon mining rate, copper price and cut-off grade.
It was highlighted that the project may benefit from optical mineral sorting
enabling the economics of the processing operation to be heightened with a
reduction in feedstock and increased grade. Xtract engaged TOMRA Sorting
Solutions ("TOMRA") of Sydney, Australia, to undertake the pre-concentration
test work on five composite drill samples.
All five composite drill core samples included in the study achieved upgrades
to the copper and gold content of the pre-concentrated ore, while rejecting
significant volumes of waste material. The average original grade of the four
samples of copper-gold mineralisation excluding one higher grade outlier was
0.23% Cu, while the average grade of the pre-concentrated mineralisation was
0.35% Cu, which shows a grade uplift of 52%. The average mass yield was 36%,
meaning that 64% of the original mass of the sample was rejected into the
waste product, suggesting that it will be possible to greatly reduce the
volume of material needed to be processed through the milling and floatation
circuits of a processing plant.
At Manica, total gold production for the three-month period ended 31 March
2023 ("Q1 2023") was 140kg, an increase on the previous reporting period, and
of which Xtract holds a 23% share. Month-on-month gold production has
increased from 37.6Kg in January 2023 to 66.3Kg in May 2023. Fair Bride's
average gold sale price for Q1 2023 was US$1,859 per ounce.
Clear indications are that post the heavy rains, results are improving
significantly and production for the three months ended 30 June 2023 ("Q2
2023") are expected to show a marked improvement with plant throughput
increasing from 30,000 tonnes per month in Q1 2023 to current nameplate
capacity of more than 40,000 tonnes per month.
Application of a more robust grade control process has also resulted in a
marked improvement in run of mine grade delivered to the plant and mill
running time has increased from 67.3% availability in the current quarter
(ending 30 September 2023) to a reported 82% availability in May 2023.
Work is underway at the company's new Kakuyu project in Zambia, with initial
ground exploration defining large areas of prospective ground adjacent to the
historic Kakuyu Hill open pit mine. On the southern side of Kakuyu Hill an
approximate combined 800m west and east striking extension of copper
mineralisation has been postulated, and on the northern side, a substantial
copper in soil anomaly extends over an east west strike length of
approximately 1.4km which is coincident with a hydrothermal breccia. Both
targets require further surface works and drilling.
Potential exists for a small resource of copper associated with historical
waste dump material that would have historically been considered low-grade and
an assessment is underway to assess their importance.
Further work at Kakuyu concerns access to the historic pit with a push back
improving ramp access and exposure to ore at the base of the pit.
Additionally, a 250t bulk sample has been sent for processing at the Kabwe
Refinery for drying, crushing and sampling ahead of negotiations for the
future processing of ore production, with further samples also sent to an
external processing consultant for metallurgical test work.
Following the period end, the Company entered into a Joint Venture agreement
with Coopermelon limited to earn an initial 65% interest in two licences in
Northwestern Zambia prospective for potentially high-grade Kamoa style
mineralisation at depth and lower grade bulk-tonnage mineralisation at
surface. There has been little exploration to date and the Xtract intends to
spend an initial US$2 million over a two-year "Phase-One" exploration period,
starting with surface reconnaissance works in late 2023.
Summary of Company Projects
Australia
Bushranger Project
The Bushranger project rapidly advanced during the previous reporting period,
seeing the completion of the Phase Two drilling programme and ending with the
release of an upgraded mineral resource for the Racecourse prospect and a
maiden mineral resource for the Ascot prospect. Following the rapid
advancement of work on the project during the previous reporting period, 2023
saw a period of quieter reflection on results and advances towards determining
a saleable mined product from the project.
Open-Pit Mining Study
In the first quarter Xtract contracted independent consultants Optimal Mining
Solutions (Pty) Ltd ("Optimal Mining") to update the previous mining study and
examine the economics of 20Mpta and 25Mpta open pit mining operations on the
Bushranger Copper-Gold Project.
Sixteen economic pit shells were modelled from an operating cost perspective
only with capital cost requirements excluded and which highlighted that the
20Mtpa and 25Mtpa open pit options potentially generate significant operating
cash margins dependent upon mining rate, copper price and cut-off grade.
As processing of the Racecourse prospect ore contributes between 49% and 61%
of the total production costs across the 16 cases examined, it was identified
that the Racecourse prospect copper mineralisation may be well suited to
pre-concentration, providing opportunities to streamline mining and
processing, with positive impacts on metal recoveries, capital and operating
costs through the use of sorting technology.
Optimal Mining identified a project with similar grades to Racecourse where
pre-concentration reduced the amount of material to be concentrated up to
approximately 50%, significantly reducing pre-production capital and operating
costs and the decision was made to continue with a pre-concentration study.
Pre-Concentration Study
Post year end positive results of the pre-concentration study were received,
which entailed the sorting of the ore using TOMRA technology which utilises
X-Ray transmission and machine learning to sort mineralisation into a
pre-concentrated ore product and waste.
Xtract engaged TOMRA Sorting Solutions ("TOMRA") of Sydney, Australia, to
undertake the pre-concentration test work on five composite drill samples.
Data was collected using TOMRA's COM X-Ray Transmission ("XRT") system which
detects mineralised particles and then sorts the material into a
pre-concentrated product and waste using amplified mechanical, hydraulic or
pneumatic processes. The sorter is set up / trained using images taken of the
samples. The images are then analysed using proprietary TOMRA image
processing software. Based upon the images, sorting task specific algorithms
are then developed and applied to sorting the mineralised material.
All five composite drill core samples included in the study achieved upgrades
to the copper and gold content of the pre-concentrated ore, while rejecting
significant volumes of waste material. Excluding one of the higher-grade
samples as an outlier, the average original grade of the four samples of
copper-gold mineralisation was 0.23% Cu, while the average grade of the
pre-concentrated mineralisation was 0.35% Cu, which shows a grade uplift of
52%. The average mass yield was 36%, meaning that 64% of the original mass
of the sample was rejected into the waste product, suggesting that it will be
possible to greatly reduce the volume of material needed to be processed
through the milling and floatation circuits of a processing plant.
The outlying sample had the highest original feed grade of 0.51% Cu and
upgraded well with TOMRA treatment, but achieved lower metal recoveries due to
higher metals content in waste fractions, suggesting that pre-concentration
may not be as effective for higher-grade ore. This suggests that
higher-grade material may not benefit from ore sorting to the same extent as
the more typical deposit grades and would be more suited to direct processing.
The results overall show the potential of the TOMRA system to significantly
increase the copper grade into a pre-concentrated product while rejecting
potentially over 50% of the original rock mass into waste. The variability of
the results indicate that more samples would need to be tested in order to
determine an accurate average overall effect for TOMRA pre-concentration.
The pre-concentration results are sufficiently positive for the effects of
TOMRA pre-concentration to be incorporated into the overall financial model
for the Bushranger Project. Consequently, Xtract has engaged Optimal Mining
Solutions (Pty) Ltd of Australia ("Optimal Mining") to incorporate the TOMRA
results into an updated economic model for the overall Bushranger Project.
Table 1: Bushranger Prospect Drill Samples Submitted for TOMRA Analysis
Run Drill Hole From (m) To (m) Interval (m) Cu%
1 BRDD_21_036 61.00 89.00 28.00 0.20
2 BRDD_21_010 180.00 198.00 18.00 0.24
3 BRDD_21_022 290.00 308.00 18.00 0.25
4 BRDD_21_021_B 227.00 243.00 16.00 0.56
5 BRDD_21_021_A 173.00 187.00 14.00 0.21
Table 2: Bushranger Prospect Drill Samples Results of TOMRA Analysis
Run Number 1 2 3 4 5 Avg. Avg. (excl. high grade run 4)
Cu Grade of Original Sample (Cu%) 0.20 0.24 0.25 0.56 0.21 0.29 0.23
Back Calc. Original Grade (Cu%)* 0.15 0.26 0.32 0.52 0.20 0.29 0.23
Product Grade (Cu%) following Pre-Conc. 0.35 0.35 0.41 0.94 0.30 0.47 0.35
Waste Grade (Cu%) 0.067 0.20 0.23 0.50 0.16 0.23 0.16
Original Mass (Kg) 22.5 32.7 10.5 13.7 11.9 18.3 19.4
Pre-Conc. Product Mass (Kg) 7.1 12.2 5.1 0.7 3.3 5.68 6.9
Waste Mass (Kg) 15.4 20.5 5.4 13 8.6 12.6 12.5
Original Contained Cu (kg) 3.4 8.5 3.4 7.1 2.4 5.0 4.4
Pre-Conc. Product Contained Cu (kg) 2.4 4.2 2.1 0.66 1.0 2.1 2.4
Mass Yield (%) 31.6 37.3 48.6 5.1 27.7 30.0 36.3
Metal Recovery (%) 72.6 49.6 62.1 9.3 32 45.1 54
*Back calculation of initial Cu grade from final product for mass balance
purposes.
Mozambique
Gold production has continued on the Manica project, with Fair Bride now the
leading project, in which Xtract has a 23% share of net profit. Fair Bride
gross gold production continued to increase during Q1 2023 and was 140Kg
(equivalent to 4,552 ounces). Month-on-month gold production has increased
from 37.6Kg in January 2023 to 66.3Kg in May 2023. Fair Bride's average gold
sale price for Q1 2023 was US$1,859 per ounce.
Revenue and therefore Xtract's share of net profit was impacted by two main
factors during Q1 2023. Operation through the first rainy season in Manica
resulted in a shortfall in plant throughput as wet clay-rich near-surface
mined material affected the operating efficiencies of both screens and the
mill. Measures have been put in place to alleviate the problem and the impact
of improvements can already be seen with the month-on-month ore processing
figure rising from 30,000 tonnes per month in February 2023 to a current
reported estimate of approximately 43,000 tonnes per month in May 2023.
A significant amount of additional close-spaced drilling was completed during
Q1 2023 specifically to improve grade control and the ability to better
predict the run of mine grade that could be anticipated by the processing
plant. This work had an almost immediate impact on improvement in the run of
mine grade with the average rising from 1.2g/t Au in February 2023 to a
current reported grade for May 2023 of approximately 1.8g/t Au. An increase in
grade equivalent to an additional $36 per tonne of ore delivered to the plant
at the current gold price could also have a significant positive impact on
revenue and margin.
Table 3: Gold Production and sales prices - Fair Bride (Xtract 23% share of
net profit)
Q1 2023
Tonnes Mined & Processed (tons) 107,023
Average grade (g/t) 1.51
Au Production (ounces) 4,522
Au recovery (%) 87.70
Average sales price per ounce in US$ 1,859
Cost per oz of Au (US$) 1,185
For the other projects at the Manica Concession, including the Alluvial and
other hard rock production, Xtract is entitled to a percentage share of the
gold produced. The total gold production for these the other Manica Projects
in Q1 2023 was 36Kg (equivalent to approximately 1,156 ounces) of which the
Xtract's share was 183 ounces. The average gold sales price for the other
projects in Q1 2023 was US$.1,812 per ounce.
Manica Project Background
Mozambique is recognised as a stable mining jurisdiction within a favourable
political and legal regime. The Manica Gold Project is situated in the
Odzi-Mutare-Manica Greenstone belt, with an estimated 2 million ounces of gold
previously mined in the area.
The Fair Bride Project is an open pit and underground project with a combined
SAMREC compliant resource of 1.262 million ounces (including 782k ounces
Measured and Indicated). In 2019, the Company was given the opportunity to
move the Fair Bride Project forward, from development stage to production
through a collaboration agreement with Mutapa Mining and Processing LDA,
thereby mitigating any execution risk to Xtract.
At the end of June 2022 production on the Fair Bride project commenced with
the introduction of low-grade ore to commission all parts of the processing
circuit.
Zambia
Kakuyu Project
Towards the close of the previous reporting year Xtract entered into a joint
venture agreement with Oval Mining Limited relating to the exploitation of
small-scale production licence 29805-HQ-SML. Under the terms of the Agreement,
Xtract and Oval have agreed that the net profit of the Kakuyu Project will
accrue as to 60% to Xtract and 10% to Oval, with the balance of 30% accruing
to Kakuyu Mining Limited, the licence holder.
The Kakuyu Project is located approximately 53km north-west of the town of
Mumbwa, Central Province of Zambia, in a region well-known for mining
including the nearby mines and occurrences of Sable Antelope, True Blue,
Crystal Jacket, Maurice F Gifford, Lou Lou, Silverking and Kamiyobo. The most
recent discovery is the Iron Oxide Copper Gold ("IOCG") Kitumba project
(BHP/Blackthorn Resources).
The Kakuyu Project has been operated at various times in the past by both
small-scale commercial and artisanal miners. There has been limited
exploration to date of the Kakuyu Project which provides Xtract with an
opportunity to make fresh discoveries in an under-explored but prospective
region. The Kakuyu Project is centred around the Kakuyu Hill pit and a large
hematitic lens (approximately 800 by 200 metres) found in a fault-controlled
setting which is understood either to be a shear hosted Cu-Au deposit or an
oxidised post orogenic IOCG deposit, or a combination thereof. The extension
of the lens feature is not well understood at depth, and potential exists in
the wider licence where field investigations showed similar features,
structures and alteration adjacent to the pit.
Work Completed During Reporting period
Exploration undertaken in and around the Kakuyu open pit has defined several
copper targets offering potential for extension of the existing in-pit
mineralisation and a significant increase in the projected life of mine. On
the southern side of Kakuyu Hill an approximate combined 800m west and east
striking extension of copper mineralisation has been postulated that requires
validation through sampling and drilling. On the northern side of Kakuyu Hill,
a substantial copper in soil anomaly extending over a strike length east to
west of approximately 1.4 kilometres has been defined which is coincident with
a hydrothermal breccia of the same composition as that hosting mineralisation
in the open pit.
An assessment of waste dumps by the grade control team is under way to
identify potential additional mineral resources presumed by previous operators
to be low-grade or waste material. A programme of sampling is in progress and
additional feedstock may be generated.
A detailed assessment and inventory of ore currently stored on the ROM pad is
in progress to develop a grade control and ore blending plan to ensure the
delivery of consistent tonnage and grade output.
Advancements towards a future mining operation have progressed, with work
under way to push back the existing ramp access to the pit to expose in-pit
extensions of higher-grade (targeting >2.0% Cu) ore providing additional
feedstock whilst simultaneously improving pit access. In addition, a 250t bulk
sample has been delivered to the Kabwe Refinery for drying, crushing and
sampling ahead of negotiations for the future processing of ore production,
with samples also sent to an external processing consultant for metallurgical
test work.
The Company is now sourcing a drill rig to test the potential extensions to
mineralisation associated with the existing open pit together with the
substantial soil anomaly delineated along the northern boundary of Kakuyu
Hill.
New Acquisition
Post period end, the Company announced that it had entered into a Joint
Venture agreement with Cooperlemon consultancy Limited in relation to the
exploration for copper at large scale exploration licenses 29123-HQ-LEL and
30459-HQ-LEL in Northwest Zambia.
Under the Joint Venture agreement Xtract has agreed the following key terms:
Earn-in and Phase 1 exploration budget: Xtract will earn a 65% interest in
the joint venture by funding exploration expenditure over an initial two-year
period ("Phase 1") on the Licences of not less than US$2 million. Exploration
is expected to commence in Q4 2023 and will comprise both physical activity
within the Licence boundaries (including but not limited to mapping, soil
geochemistry, geophysics and drilling), and desktop studies, laboratory
analysis and interpretation of data and results. Xtract anticipates funding
this exploration expenditure from existing resources and current ongoing
operational activities.
If the Phase 1 exploration results are successful and prove the continuity of
mineralisation at grades suggesting the potential for the future development
of a Mineral Resource of not less than 500,000 tonnes of contained copper,
consistent with economic recovery at the depth of discovery with a minimum
internal rate of return of not less than 25% and a payback period not
exceeding 42 months (including the recovery of capital expenditure), then
there will be a second two year exploration period ("Phase 2").
Phase 2 exploration budget: The Phase 2 exploration expenditure of US$3
million will also be funded by Xtract who will be the operator of the Licences
for the duration of the Agreement.
Consequence of Trade Sale: If there is a trade or any other sale of the
Licences and / or the Joint Venture during Phase 1 of the joint venture then
Xtract will be deemed to have a 55% interest in the Joint Venture. A sale
requires the agreement of both Xtract and Cooperlemon.
Mine Development: In the event that either or both of the licences advance to
a point where they are commercially viable and suitable for development then
the licences will be moved to a corporate entity to be owned 75% by Xtract and
25% by Cooperlemon, and it will be the responsibility of the newly formed
corporate entity to raise all capital for mine development and future
operations.
The two licences cover a combined 107,000 hectares area covering ground in a
highly prospective part of Northwest Zambia where competition for exploration
licences is acute. The Company believes there is scope for the discovery of
potentially high-grade Kamoa-style mineralisation at depth and lower grade
bulk tonnage at or near-surface. There has been limited exploration to date
and initial fieldwork will commence in September on the two licences with a
view to defining potential drill targets as soon as possible.
Licence No: 29123-HQ-LEL, which comprises 88,149 hectares and expires on 7
September 2025, is held by Oval Mining Limited ("Oval"). The application for
Licence 30459-HQ-LEL, which comprises 19,600 hectares and which has been
approved for issue by the Zambian Mining Cadastre, is held by Far North
Enterprises Limited ("Far North"). Both licences are located in North-West
Zambia adjacent to the Democratic Republic of Congo (DRC) border. Oval and Far
North have each agreed with Xtract to be bound by the terms and the conditions
of the JV Agreement with Cooperlemon (who is acting on their behalf) as though
they were a party to the JV Agreement.
Financial
During the Period, other revenue which relates to Xtract's profit from Fair
Bride amounted to £1.67m. Administration expenses for the Group amounted to
£1.05m (H1 2022 - £1.33m). Non-operating income for the period amounted to
£nil (H1 2022- 0.49m) and comprised primarily of fees invoiced within the
group to third parties.
Enquiries:
Xtract Resources Plc Colin Bird, Executive Chairman +44 (0)20 3416 6471
Beaumont Cornish Roland Cornish +44 (0)20 7628 3369
(Nominated Adviser and Michael Cornish
Joint Broker) Felicity Geidt
Email: corpfin@b-cornish.co.uk (mailto:corpfin@b-cornish.co.uk)
Novum Securities Limited Colin Rowbury/Jon Belliss +44 (0)207 399 9427
(Joint Broker)
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 for
the release of this announcement on behalf of the Company was Joel
Silberstein, Director.
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 (http://www.xtractresources.com)
Xtract Resources PLC
Consolidated Income Statement
For the six month period ended 30 June 2023
Six months ended Year ended
Notes 30 June 2023 30 June 31 December
Unaudited 2022 Unaudited 2022
£'000 £'000 Audited
£'000
Continuing operations
Revenue from Gold sales 5 393 972 2,110
Other revenue 5 1,669 11 -
Other non-operating income - 494 702
Administrative and operating expenses (1,051) (1,332) (3,038)
Direct Operating (601) (715) (1,686)
Other Operating (87) (82) (122)
Administration (363) (535) (1,230)
Project expenses (426) (214) (1,430)
Operating profit/(loss) 585 (69) (1,656)
Other gains and losses - - -
Finance (cost)/income 37 93 110
Profit/(loss) before tax 622 24 (1,546)
Taxation (1) (52) (283)
Profit/(loss) for the period from continuing operations 3 621 (28)
(1,829)
Profit/(loss) for the period 6 621 (28) (1,829)
Attributable to:
Equity holders of the parent 621 (28) (1,829)
Net (loss)/profit per share
Basic (pence) 6 (0.07) (0.00) (0.22)
Diluted (pence) 6 (0.07) (0.00) (0.22)
Xtract Resources PLC
Consolidated statement of comprehensive income
For the six month period ended 30 June 2023
Six months ended Year ended
30 June 30 June 31 December
2023 2022 Unaudited 2022
Unaudited £'000 Audited
£'000 £'000
Profit /(Loss) for the period 621 (28) (1,829)
Other comprehensive income
Items that will not be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations
(716) 550 343
Other comprehensive income/(loss) for the period (716) 550 343
Total comprehensive (loss)/income for the period (95) 522 (1,486)
Attributable to:
Equity holders of the parent (95) 522 (1,486)
(95) 522 (1,486)
Xtract Resources PLC
Consolidated Statement of Financial Position
As at 30 June 2023
Notes 30 June 2023 Unaudited 30 June 2022 31 December
£'000 Unaudited 2022 Audited
£'000 £'000
Non-current assets
Intangible Assets 7 18,608 19,760 19,418
Property, plant & equipment 8 75 45 40
Other financial assets - - -
18,683 19,805 19,458
Current assets
Trade and other receivables 2,556 1,636 1,342
Inventories 119 14 123
Cash and cash equivalents 375 1,239 192
3,050 2,889 1,657
Total assets 21,733 22,694 21,115
Current liabilities
Trade and other payables 1,473 1,350 759
Other loans 50 94 50
Current tax payable 297 - 312
1,820 1,444 1,121
Non-current liabilities
Environmental rehabilitation provision 326 - 312
326 - 312
Total liabilities 2,146 1,444 1,433
Net current assets/(liabilities) 1,230 1,445 536
Net assets 19,587 21,250 19,682
Equity
Share capital 9 4,975 4,974 4,975
Share premium account 71,978 71,786 71,978
Warrant reserve 304 432 304
Share-based payments reserve 2,122 1,874 2,121
Fair Value reserve - - -
Foreign currency translation reserve (65) 858 651
Accumulated losses (59,727) (58,674) (60,347)
Equity attributable to equity holders of the parent 19,587 21,250 19,682
Total equity 19,587 21,250 19,682
Xtract Resources PLC
Consolidated statement of changes in equity
As at 30 June 2023
Share Capital Share premium account £'000 Warrant reserve Share-based payments reserve £'000 Fair Foreign currency translation reserve £'000 Accumulated losses Total Equity
£'000 £'000 value £'000 £'000
reserve
£'000
Balance at 31 December 2021 4,973 71,684 467 1,874 - 308 (58,646) 20,660
Loss for the period - - - - - - (28) (28)
Foreign currency translation difference - - - - - 550 - 550
Issue of Shares 1 67 - - - - - 68
Exercise of warrants - 35 (35) - - - - -
Balance at 30 June 2022 4,974 71,786 432 1,874 - 858 (58,674) 21,250
Loss for the period - - - - - - (1,801) (1,801)
Issue of Shares 1 192 - - - - - 193
Foreign currency translation difference (207) - (207)
Share issue costs - - - - - - - -
Issue of share options - - - 247 - - - 247
Expiry of warrants - - (128) - - - 128 -
Exercise of warrants - - - - - - - -
Balance at 31 December 2022 4,975 71,978 304 2,121 - 651 (60,347) 19,682
Profit/(loss) for the period - - - - - - 621 621
Foreign currency translation difference - - - - - (716) - (716)
Issue of Shares - - - - - - - -
Exercise of warrants - - - - - - - -
Balance at 30 June 2023 4,975 71,978 304 2,121 - (65) (59,726) 19,587
Xtract Resources PLC
Consolidated Statement of Cash Flows
For the six month period ended 30 June 2023
Notes 6 months period ended 6 months period ended
30 June 2023 30 June 2022 Year ended
Unaudited Unaudited 31 December
£'000 £'000 2022
Audited
£'000
Net cash used in operating activities 10 330 (1,732) (2,530)
Investing activities
Acquisition of intangible fixed assets (56) (2,555) (2,868)
Acquisition of tangible fixed assets (43) (26) (27)
Net cash from/(used in) investing activities (99) (2,581) (2,895)
Financing activities
Proceeds on issue of shares - 68 261
Proceeds from borrowings - - 50
Net cash from financing activities - 68 311
Net increase/(decrease) in cash and cash equivalents 231 (4,245) (5,114)
Cash and cash equivalents at beginning of period 192 5,389 5,389
Effect of foreign exchange rate changes (49) 95 (83)
Cash and cash equivalents at end of period 374 1,239 192
Xtract Resources PLC
Notes to the interim financial information
For the six month period ended 30 June 2023
1. General information
Xtract Resources PLC ("Xtract") is a company incorporated in England and Wales
under the Companies Act 2006. The Company's registered address is 1(st) Floor,
7/8 Kendrick Mews, London, SW7 3HG. The Company's ordinary shares are traded
on the AIM market of the London Stock Exchange. The Company invests and
engages in the management, financing and development of early-stage resource
assets.
2. Accounting policies
Basis of preparation
Xtract prepares its annual financial statements in accordance with UK-adopted
international accounting standards and in conformity with the Companies Act
2006.
The consolidated interim financial information for the period ended 30 June
2023 presented herein has been neither audited nor reviewed. The information
for the period ended 31 December 2022 does not constitute statutory accounts
as defined in section 434 of the Companies Act 2006 but has been derived from
those accounts. The auditor's report on those accounts was not qualified and
did not contain statements under section 498 (2) or (3) of the Companies Act
2006. As permitted, the Group has chosen not to adopt IAS 34 'Interim
Financial Reporting'.
The Interim financial information is presented in pound sterling and all
values are rounded to the nearest thousand pounds (£'000) unless otherwise
stated.
The interim consolidated financial information of the Group for the six months
ended 30 June 2023 were authorised for issue by the Directors on 29 September
2023.
Going concern
As at 30 June 2023 the Group held cash balances of £375K. A small operating
loss has been reported for the Group, however, as at the date of the release
of the consolidated financial information, the Group's assets have been and
continue to generate revenues. The Group has continued with its exploration
activities in Australia and recently completed the Phase Two drilling
programme at the Racecourse Prospect.
The Directors have assessed the working capital requirements for the
forthcoming twelve months and have undertaken the following assessment.
Management have reviewed the cash flow projections for the forthcoming twelve
months, based on the current operations in Mozambique, Australia, Zambia as
well as the corporate overhead. The Group expects production at Fair Bride to
continue at current levels during the coming months with the Group receiving
23% share of net profit after tax. The gold mined at Manica projects other
than Fair Bride has significantly scaled down as the mineable resource for
these projects is significantly reduced. Their contribution to the Group's
revenues has decreased from the prior years.
Based on the assumption that Fair Bride operates within its targeted
parameters and no new business is consummated, the Directors do not anticipate
the need for funds to be raised in the twelve-month period from the date of
authorising the consolidated information.
As is common with junior mining companies, the Company in the past has raised
finance from shareholders for its activities, in discrete tranches to finance
its activities for limited periods only and further funding would be required
from time to time to finance those activities.
The Directors therefore continue to adopt the going concern basis of
accounting in preparing the consolidated financial information and therefore
the consolidated financial information does not include any adjustments
relating to the recoverability and classification of assets and liabilities
that may be necessary if the going concern basis of preparation of the
consolidated financial information is not appropriate.
On this basis the Board believes that it is appropriate to prepare the
consolidated financial information on the going concern basis.
Changes in accounting policy
The accounting policies applied are consistent with those adopted and
disclosed in the Group Consolidated financial statements for the year ended 31
December 2022, except for the changes arising from the adoption of new
accounting pronouncements detailed below.
There are no amendments or interpretations to accounting standards that would
have a material impact on the financial statements.
3. Business segments
Segmental information
The divisions on which the Group reports its primary segment information are
reported to its Executive Chairman, who is the Chief Operating Decision maker
of the Group. The Executive Chairman and the Chief Operating Officer are
responsible for allocating resources to the segments and assessing their
performance.
Principal activities are as follows:
● Operating alluvial gold & hard rock mining segment - Mozambique
● Mine Development - Mozambique
● Exploration
● Investment and other
Segment results Total
6 months ended 30 June 2023 Mine Investment Alluvial Gold Mining Production
Development Exploration (Continuing) And Other (Continuing)
(Continuing) (Continuing)
£'000
£'000 £'000 £'000 £'000
Segment revenue
Sale of gold bars - - - 393 393
Less: Cost of sales - - - - -
Segment Gross profit - - - 393 393
Other operating income - - 1,669 - 1,669
Administrative and operating expenses
- (94) (352) (605) (1,051)
Project costs - (184) (34) (208) (426)
Segment result - (278) 1,283 (420) 585
Other gain and losses - - - - -
Finance costs - 47 (10) 37
(Loss)/profit before tax (278) 1,330 (430) 622
Tax - - - (1) (1)
(Loss)/profit for the period (278) 1,330 (431) 621
Mine Development (Continuing) Investment and Other (Continuing) Total
6 months ended 30 June 2022
Alluvial Gold Mining Production (Continuing)
Exploration (Continuing)
£'000
£'000 £'000 £'000 £'000
Segment revenue
Sale of gold bars - - - 972 972
Less: Cost of sales - - - - -
Segment Gross profit - - - 972 972
Other operating income - - - 11 11
Non-operating income - - 494 - 494
Administrative and operating expenses
- (145) (825) (362) (1,332)
Project Costs - - (214) - (214)
Segment result - (145) (545) 621 (69)
Other gain and losses - - - - -
Finance costs - - 89 4 93
(Loss)/profit before tax - (145) (456) 625 24
Tax - - - (52) (52)
(Loss)/Profit for the period - (145) (456) 573 (28)
Year 31 December 2022 Mine Development (Continuing) Investment and Other (Continuing) Alluvial Gold Mining Production (Continuing) Total
Exploration (Continuing)
£'000 £'000 £'000 £'000 £'000
Segment revenue
Sale of gold bars - - - 2,110 2,110
Less: Cost of sales - - - - -
Segment Gross profit - - - 2,110 2,110
Other operating income - - 667 35 702
Administrative and operating expenses
(196) - (1,156) (1,686) (3,038)
Project Costs (127) - (1,289) (14) (1,430)
Segment result (323) - (1,778) 445 (1,656)
Other gains and losses - - - - -
Finance income / (costs) (34) - 184 (40) 110
(Loss)/Profit before tax (357) - (1,594) 405 (1,546)
Tax - - - (283) (283)
(Loss)/Profit for the period (357) - (1,594) 122 (1,829)
Balance Sheet 30 June 2023 30 June 2022 31 December 2022
£'000 £'000 £'000
Total Assets
Gold production 11,252 880 682
Exploration 8,277 9,728 8,792
Mining Development - 10,437 10,756
Investment & other 2,212 1,649 885
Total segment assets 21,741 22,694 21,115
Liabilities
Gold production (1,632) (371) (892)
Exploration (133) (459) (219)
Mining Development - - -
Investment & other (390) (614) (322)
Total segment liabilities (2,155) (1,444) (1,433)
The accounting policies of the reportable segments are the same as the Group's
accounting policies which are described in the Group's latest annual financial
statements. Segment results represent the profit earned by each segment
without allocation of the share of profits of associates, central
administration costs including directors' salaries, investment revenue and
finance costs, and income tax expense. This is the measure reported to the
Group's Board for the purposes of resource allocation and assessment of
segment performance.
4. Tax
At 30 June 2023, the Group has no deferred tax assets or liabilities and an
income tax of £nil (2022: £52k) charge for the period.
5. Revenue & Other revenue
An analysis of the Group's revenue is as follows:
Six months ended Year ended
30 June 2023 30 June 2022 31 December 2022
£'000
£'000 £'000
Revenue from gold sales 393 972 2,110
393 972 2,110
Other revenue 1,669 - -
1,669 - -
Other revenue relates to the 23% Net profit from its operations in Mozambique.
6. Loss per share
The calculation of the basic and diluted loss per share is based on the
following data:
Year ended
Six months ended
Profit/(Losses) 30 June 2023 30 June 2022 31 December 2022
£'000
£'000 £'000
Profit/(Losses) for the purposes of basic earnings per share being: 621 (28)
Net loss from continuing operation attributable to equity holders of the
parent
(1,829)
621 (28) (1,829)
Number of shares
Weighted average number of ordinary and diluted shares for the purposes of 856,375,115 847,000,046
basic earnings per share
849,532,192
(Loss)/profit per ordinary share basic and diluted (pence) (0.07) (0.00) (0.22)
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. Details of the shares issued during the period as shown in
Note 9 of the Financial Statements.
7. Intangible assets
Development expenditure & Mineral exploration Mine Production
Total
£'000 £'000 £'000
As at 1 January 2023 19,418 - 19,418
Additions - at fair value (Manica) - - -
Additions - at cost (Manica) - - -
Transfer to Mine producing asset (10,823) 10,823 -
Foreign exchange - (62) (62)
Additions - at fair value (Bushranger) - - -
Additions - at cost (Bushranger) 56 - 56
Foreign exchange (602) - (602)
As at 30 June 2023 8,049 10,761 18,810
Amortisation
As at 1 January 2023 - - -
Charge for the year - (202) (202)
As at 30 June 2023 - - -
Net Book value at 1 January 2023 19,418 19,418
Net book value at 30 June 2023 8,049 10,559 18,608
Mozambique
In March 2016, The Company acquired the Manica licence 3990C ("Manica
Project") from Auroch Minerals NL. The Manica Project is situated in central
Mozambique in the Beira Corridor. At the time of acquisition, the project had
a JORC compliant resource of 900koz (9.5Mt@ 3.01g/t) in situ, which has
increased to 1.257moz (17.3Mt @ 2.2g/t) following an independent technical
report completed by Minxcon (Pty) Ltd in May 2016.
Australia
In November 2020, the Company acquired the Bushranger copper-gold project
("Bushranger Project") which comprises of four exploration licences totaling
501km2, located in eastern central New South Wales, Australia. The Bushranger
Project hosts the Racecourse deposit, a JORC (2012) compliant inferred
resource estimated at 71Mt @ 0.44% Cu and 0.064g/t Au using a 0.3% Cu cut-off.
8. Property, plant and equipment
Cost or fair value on acquisition of subsidiary Mining plant & equipment Land & Buildings Furniture & Fittings Total
£'000 £'000 £'000 £'000
At 1 January 2023 65 - - 65
Additions - at cost 42 - - 42
Foreign exchange (2) - - (2)
At 30 June 2023 105 - - 105
Depreciation
At 1 January 2023 (25) - - (25)
Charge for the period (6) - - (6)
At 30 June 2023 (31) - - (31)
Net book value
At 30 June 2023 74 - - 74
At 1 January 2023 40 - - 40
9. Share capital
As at As at As at
30 June 2023 Number 30 June 2022 31 December 2022
Number Number
Deferred shares of 0.09p each
As at 1 January 5,338,221,169 5,338,221,169 5,338,221,169
Issued during the period - - -
5,338,221,169 5,338,221,169 5,338,221,169
Ordinary shares of 0.02p each
As at 1 January 856,375,115 845,143,693 845,143,693
Issued during the period - 5,249,998 11,231,422
Outstanding as at 30 June 856,375,115 850,393,691 856,375,115
No Ordinary Shares of 0.02p were issued during the period.
10. Cash flows from operating activities
Six month
period ended
Six month 30 June 2022 Year ended
period ended £'000 31 December 2022
30 June 2023 £'000 £'000
Profit/(loss) for the period 621 24 (1,546)
Adjustments for:
Continuing Operations
Depreciation of property, plant and equipment 6 8 14
Amortisation of intangible assets 202 - -
Net Finance costs 70 (71) (3)
Impairment of intangible assets - - 938
Interest income (107) (23) (107)
Other (gains) /losses - - -
Share-based payments expense - - 248
Operating cash flows before movements in working capital 792 (62)
(456)
Decrease/(Increase) in inventories 6 162 52
(Increase)/decrease in receivables (1,223) (972) (677)
(Decrease)/increase in payables 723 (876) (1,467)
Cash (used in)/ generated from operations 298 (1,748) (2,548)
Net finance costs 47 94 110
Tax (paid) (15) (78) (92)
Foreign currency exchange differences - - -
Net cash from/ (used in) operating activities 330 (1,732) (2,530)
11. Related party transactions
There have been no changes to related party arrangements or transactions as
reported in the 2022 Annual Report.
Transactions between Group companies, which are related parties, have been
eliminated on consolidation and are therefore not disclosed. The only other
transactions which fall to be treated as related party transactions are those
relating to the remuneration of key management personnel, which are not
disclosed in the Half Yearly Report, and which will be disclosed in the
Group's next Annual Report.
12. Subsequent events
Joint Venture Agreement
0n 24 August 2023 Xtract announced that it had entered into a joint venture
agreement with Cooperlemon Consultancy Limited ("Cooperlemon") in relation to
the exploration for copper at large scale exploration licenses 29123-HQ-LEL
and 30459-HQ-LEL in Northwest Zambia (the "Licences"). Under the joint venture
agreement ("JV Agreement"), Xtract has agreed the following key terms:
Earn-in and Phase 1 exploration budget: Xtract will earn a 65% interest in
the joint venture by funding exploration expenditure over an initial two-year
period ("Phase 1") on the Licences of not less than US$2 million. Exploration
is expected to commence in Q4 2023 and will comprise both physical activity
within the Licence boundaries (including but not limited to mapping, soil
geochemistry, geophysics and drilling), and desktop studies, laboratory
analysis and interpretation of data and results. Xtract anticipates funding
this exploration expenditure from existing resources and current ongoing
operational activities.
If the Phase 1 exploration results are successful and prove the continuity of
mineralisation at grades suggesting the potential for the future development
of a Mineral Resource of not less than 500,000 tonnes of contained copper,
consistent with economic recovery at the depth of discovery with a minimum
internal rate of return of not less than 25% and a payback period not
exceeding 42 months (including the recovery of capital expenditure), then
there will be a second two year exploration period ("Phase 2").
Phase 2 exploration budget: The Phase 2 exploration expenditure of US$3
million will also be funded by Xtract who will be the operator of the Licences
for the duration of the Agreement.
Consequence of Trade Sale: If there is a trade or any other sale of the
Licences and / or the Joint Venture during Phase 1 of the joint venture then
Xtract will be deemed to have a 55% interest in the Joint Venture. A sale
requires the agreement of both Xtract and Cooperlemon.
Mine Development: In the event that either or both of the licences advance to
a point where they are commercially viable and suitable for development then
the licences will be moved to a corporate entity to be owned 75% by Xtract and
25% by Cooperlemon, and it will be the responsibility of the newly formed
corporate entity to raise all capital for mine development and future
operations.
ENDS
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