REG - Xtract Resources plc - Kakuyu copper project Zambia

Xtract ResourcesAnnouncement

15/12/2022 16:00

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RNS Number : 8936J  Xtract Resources plc  15 December 2022

 

 

 

 

For immediate release

15 December 2022

 

Xtract Resources Plc

("Xtract" or the "Company")

Kakuyu copper project Zambia

 

The Board of Xtract Resources Plc ("Xtract" or the "Company") is pleased to
announce that it has concluded a joint venture agreement (the "Agreement" or
"JV") providing an initial 60% interest in the Kakuyu copper project in Zambia
("Kakuyu Project"). The Kakuyu Project is located approximately 53km
north-west of the town of Mumbwa, Central Province of Zambia and has a small
historic open pit. The JV's partner holds the small-scale mining licence
29805-HQ-SML, along with an adjoining area under application and the Agreement
provides the Company with the potential for near term production.

 

Highlights

 

·    Copper oxide and sulphide mineralisation occurs within a
fault-controlled setting, with workings extending over a strike length of
about 800m

 

·    The Agreement provides Xtract with an initial 60% interest in the
Kakuyu Project in Zambia with local partners Oval Mining Limited and Kakuyu
Limited (the licence holder)

 

·    The JV plans to commence small scale mining in the existing historic
open pit

 

·    Pre-stripping has commenced to expose additional in-pit
mineralisation and to target extensions to the numerous mineralised structures
identified

 

·    60% net profit interest will accrue to Xtract from mining operations,
with a 70% interest accruing for any additional mineral resources discovered
during the course of Xtract's exploration programme

 

·    Site visits from various internal and external geological and mining
personnel identified a number of mineralised structures offering strike
extension potential. These are currently being cleared prior to more detailed
evaluation

 

·    The search for further mineralisation beyond the current pit limits
has already commenced with two exploration teams on-site conducting
licence-wide geochemical surveys and detailed mapping. New targets will be
drill-tested early in 2023.

 

·    The first report from the Mining Contractor confirms good progress
has been made with the pre-strip and further additions of ore to the ROM pad.

 

 

Colin Bird, Executive Chairman said: "This arrangement is consistent with our
small mines policy and we will continue to make further acquisitions of a
similar nature with the intention of building cash flow over the near-term
whilst we advance exploration potential with a focus on brownfield exploration
targets that may extend the life of mine."

 

Kakuyu Project

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 is covered by two mineral licences, one small-scale mining
licence 29805-HQ-SML issued to Kakuyu Mining Limited which is valid until 7
November 2031 covering an area of 201.78 hectares and a second small-scale
mining licence currently under application by Kakuyu Mining Limited over an
adjoining area of similar size.

 

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 with depth is not currently known although the hematitic
lens may extend to the west, along strike of the mapped iron unit. Field
investigations showed similar features, structures and alteration in the
western diggings, outside of the larger Kakuyu Hill pit. There is also a
potential for mineralisation to the north of the hill as the area is highly
faulted with a smaller wedge of older dolomites sitting within the younger
meta-sediments which could form fluid traps. Copper occurs as both oxides and
sulphides on fractures, in breccias and as stockworks.

 

The Kakuyu Hill pit has been worked historically (although there is no
historic data) to the extent that benches have been put in place to open up
the pit. There are also underground artisanal workings with tunnels and a
collapsed shaft. Oval Mining has currently removed bulk samples of the
potential higher-grade sulphide ores from the pit which have been hand-sorted
and stockpiled on site, targeting grades of 3.5-4% Cu (although no assays are
available on in situ grades at this time). A site has also been created south
of the pit for the new waste rock dumps.

 

The deposit type and mineralisation mechanisms are not yet clear from initial
field observations and Xtract plans an exploration programme to understand
further the type of deposit and mineralisation potential at Kakuyu. This
programme is likely to comprise initially a detailed ground IP and/or EM
geophysics survey with follow up drilling on identified targets.

 

Joint Venture Agreement

Xtract has entered into a joint venture agreement with Oval Mining Limited
("Oval") relating to the exploitation of small-scale production licence
29805-HQ-SML (the "Licence"). 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. Both Oval and the Licence Holder are
Zambian-based entities. The balance of 30% will accrue to Kakuyu Mining
Limited (the "Licence Holder").

 

Oval will act as mining contractor under the terms of a separate mining
contract agreement ("Mining Contract") with responsibility for all aspects of
the mining operation. The Mining Contract must be competitive and comparable
to mining contracts being applied to similar operations in Zambia. Xtract has
reserved the right to engage alternative mining contractors should the costs
proposed by Oval be more than 10% higher than comparable contractor costs in
Zambia for three contractors working on similar operations.

 

Xtract will appoint a project manager to oversee the Kakuyu Project and will
be responsible for the management and implementation of exploration and
resource development together with all costs associated with exploration and
the delineation of mineral resources and reserves with a view to extending the
life of mine of the Kakuyu Project.

 

Xtract has agreed to maintain the Kakuyu Project in good standing with payment
of all contractors, to be met from cash flow and on execution of the Agreement
to:

-      pay US$65,000 to Oval being the amount calculated by the parties
required for the mining start-up costs for the first month of mining and
delivery of 2,000 tonnes of copper ore at an average grade of between 3.5 and
4.0% Cu. Thereafter, all project-related costs will be met from cash flow;

-      reimburse US$90,000 to Oval in respect of stripping and mining to
date on the Kakuyu Project, to be settled from cash flow by the reduction of
Xtract's percentage share of net profit from 60% to 20% for the period
required to reimburse Oval;

-      meet the costs associated with exploration within the Licence.

 

The parties have agreed that the ore will be sold to a company with the
requisite expertise and infrastructure located in Zambia and an agreement has
been approved in principle with a nearby mineral processing contractor.

 

Xtract and Oval have further agreed that if the funds for the purchase,
transport, construction and commissioning of the processing plant are met by
Xtract then Xtract will be entitled to recover these costs as a priority from
cash flow after Oval has been reimbursed its costs of US$90,000 as described
above, by increasing its share of net profits 70% until the costs have been
recovered. Xtract and Oval have agreed that the cost of the processing plant
will not exceed US$400,000.

 

Xtract has  undertaken to prepare internally as soon as possible a project
feasibility study providing guidance on the potential of the Kakuyu Project
along with estimations of the extent of planned future exploration.

 

Xtract will fund its commitments pursuant to the Agreement from existing
resources and cash flow from its existing projects.

 

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

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018.The person who arranged for the release
of this announcement on behalf of the Company was Colin Bird, Director.

 

Enquiries:

 

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

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

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

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

                                                    Felicity Geidt

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

 Joint Broker                                       Colin Rowbury        www.novumsecurities.com (http://www.novumsecurities.com)

 

Qualified Person:

Information in this announcement relating to the exploration works has been
reviewed by Edward (Ed) Slowey, BSc, PGeo, a consultant to Xtract. Mr Slowey
is a graduate geologist with more than 40 years' relevant experience in
mineral exploration and mining, a founder member of the Institute of
Geologists of Ireland and is a Qualified Person under the AIM rules. Mr
Slowey has reviewed and approved the geological content of this announcement.

Qualified Person:

In accordance with AIM Note for Mining and Oil & Gas Companies, June 2009
("Guidance Note"), Colin Bird, CC.ENG, FIMMM, South African and UK Certified
Mine Manager and Director of Xtract Resources plc, with more than 40 years'
experience mainly in hard rock mining, is the qualified person as defined in
the Guidance Note of the London Stock Exchange, who has reviewed the technical
information contained in this press release.

TECHNICAL GLOSSARY

The following is a summary of technical terms:

 "breccia"                                 Rock fragmented into angular components

 "dolomite"                                Calcium-magnesium carbonate mineral, (CaMg)CO3, or a rock composed largely of
                                           the mineral dolomite

 "EM" (Electromagnetic surveying)          Geophysical exploration method employing the related electric and magnetic
                                           fields which can be set up in a conductive body by an artificial electric
                                           field at surface

 "hematite"                                A mineral composed of ferric iron oxide

 "IP"                                      A method of ground geophysical surveying which employs the passing of an

                                         electrical current into the ground to test for indications of conductive
 Induced Polarisation                      metallic sulphides

 "IOCG" (iron oxide copper-gold) deposits  Mineral deposits that typically occur at the margins of large igneous bodies
                                           which intrude into sedimentary strata, often forming pipe-like, mantle-like or
                                           extensive breccia-vein sheets within the host stratigraphy

 "metasediment"                            A metamorphosed sediment

 "orogenic"                                Pertaining to mountain building events in the Earth's history

 "oxide"                                   Mineral produced by natural weathering processes at or near the earth's
                                           surface

 "shear"                                   Plane of failure in faulted body of rock

 "stockwork"                               A large-scale ramifying series of fissures filled with mineralized material

 "sulphide"                                A metallic compound of sulphur

 

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