REG - Xtract Resources plc - Moroccan Joint Venture

Xtract ResourcesAnnouncement

26/02/2025 14:45

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250226:nRSZ5831Ya&default-theme=true

RNS Number : 5831Y  Xtract Resources plc  26 February 2025

 

26 February 2025

Xtract Resources Plc

("Xtract" or the "Company")

 Moroccan Joint Venture & Collaboration Agreement

 

The Board of Xtract Resources Plc ("Xtract" or the "Company") is pleased to
announce the acquisition of an initial 50% shareholding for US$500,000 in
Wildstone SARL ("Wildstone"), a Moroccan-based minerals exploration and
development company.  Wildstone is currently developing an exploration and
small-scale mining company operating in various commodities including copper,
silver and antimony within Morocco.

 

Highlights

·    Morocco is a recognised mining country with both large and small
mining operations in multi-commodities

·    Wildstone initially has 15 exploration licences for copper, silver
and antimony

·    Wildstone plans to commence exploration and subject to results,
commercial production

Colin Bird, Executive Chairman of Xtract, commented:

"This acquisition has been carefully considered and ticks all the boxes for
Xtract's mission to explore and where appropriate develop small mines in
strategic and critical minerals.  The business will be progressed along
traditional lines i.e. exploration into feasibility study and development
where appropriate. We strongly believe the entry into Morocco will establish a
firm base for shareholder value enhancement  and we will keep shareholders
updated as the project progresses."

 

Background on Wildstone SARL

Morocco is a recognised mining country with both large and small mining
operations in multi commodities and a favoured trading partner of the US ,
China and the European Union. Key commodities include phosphate, manganese ,
zinc, gold, copper, tungsten, tin, antimony and other strategic and critical
metals.

Wildstone was incorporated in Casablanca, Morocco on 22 September 2021 with
company number 516789 and its main activity is mining, exploration and
extraction in Morocco. Wildstone has 15 licences for the exploration and
extraction of copper, silver and antimony which are situated in Central
Morocco and are not contiguous. To date very limited exploration has taken
place and the licences expire in October 2026.  Wildstone intends to
initially evaluate all of the licences and thereafter establish priorities.
Once priorities are established, general exploration, including drilling, will
commence and based on results, appropriate projects will be advanced into
either small-scale production or in the course of time evaluated for large
scale potential.

Small-scale production is envisaged to commence within 9 months of the
transaction closing, provided that mining licences and any other necessary
permits are timeously obtained, and suitable agreements have been concluded
with artisanal miners. Wildstone intends that ore will be processed with basic
equipment currently in use for similar multiple sites in Morocco. If the
exploration is successful and deemed appropriate then a more sophisticated
plant will be built, the design and capacity of which will be designed
relative to the metallurgical characteristics and the size of the orebody.

 

Joint Venture and  Collaboration agreement

On 24 February 2025, Xtract entered into an exclusive collaboration agreement
with Wildstone in relation to the acquisition of Wildstone in Morocco
("Agreement"), pursuant to which Wildstone (the "Vendor") agreed to issue up
to 80% of its issued equity on a fully diluted basis to Xtract in a phased
basis.

 

Payment Terms to earn 50%

The Agreement comprises phased payments to acquire an initial interest of 50%.
As Xtract has completed its site visit and due diligence in respect of the
project, Xtract has elected to accelerate all such phased payments and has
therefore acquired today an interest of 50% of the fully diluted equity of
Wildstone for a cash consideration of US$500,000 funded from internal cash
resources, following which the Agreement has now become binding.

 

Exploration expenditure to earn 80%

Xtract may increase its interest in Wildstone by the following further phased
payments of up to US$900,000 in aggregate (which, at Xtract's sole election,
it may accelerate).

 

In the first 12 months following signing of the Agreement, Xtract has
committed to spend US$150,000 on basic exploration to earn a further 10% fully
diluted interest in the Vendor.

 

Xtract will in the second year earn a further 10% fully diluted interest in
the Vendor by spending a further US$250,000 on exploration, which is
anticipated to be a continuation of progress made in Year 1, but with more
drilling and consequent assay work, and in the third year earn a further 10%
fully diluted interest in the Vendor by spending US$500,000 on drilling and
resource evaluation and definition, with the anticipation of producing one or
more JORC resources.

 

Xtract will, whilst it is a 25% shareholder, continue to contribute to fund
its local share of overheads and any costs incurred in transferring any
license to other entities within Wildstone. Should Xtract earn-in to 80% of
the Vendor through exploration expenditures but not deliver the Larger Scale
Mine Development, cash flows from the Small-Scale Development will be shared
75% to Xtract and 25% to the existing shareholders of Wildstone.

 

Small and Larger Scale Mine Development

The parties anticipate that within 6 months of signing the Agreement, small
scale mining shall commence, utilising Wildstone's own contractors (the "Small
Scale Development"). The capital funding for the Small-Scale Development of
US$200,000 will be provided by Xtract who will be allowed to recover the
initial capital by being paid 75% of free cashflow. Xtract shall be
responsible for all Small-Scale Development mining funding until such time as
the operation is demonstrating a surplus income over expenditures (including
sustaining and maintenance capital).  On full capital repayment, Xtract will
be entitled to 60% of all profits.

 

The Small-Scale Development will continue during the exploration phase and
will be replaced or may run concurrently if the potential for a larger more
sophisticated processing plant is identified (Larger Scale Development).  For
the purposes of defining potential for a Larger Scale Development, the
criteria to be used is not less than 5 years mine life at a minimum annual
throughput of 150,000 tonnes, with a DCF model demonstrating a payback of not
more than 18 months and a return on investment not less than 20%. Xtract will
be expected to fund 100% of the Larger Scale Development, anticipated to be
US$1million on the plant design, construction, implementation and
commissioning.  On commencement of production, Xtract will receive 60% of
cashflow for capital recovery, the remainder being shared 70% to Xtract and
30% to the existing shareholders in Wildstone.  This arrangement will
continue for 18 months, or until the capital is fully repaid, whichever is the
shorter.  After the completion of the 18-month period, the profits will be
shared 80% to Xtract and 20% to the existing shareholders.

 

Operating Committee

Xtract and the Vendor will appoint one person each to be on an operating
committee.  The Vendor board shall comprise of 2 representatives from Xtract
and the two existing shareholders. As a 50% shareholder, Xtract has the right
to appoint the chairman, who will have a casting vote in addition to his vote.

 

The existing shareholders will also have the right but not the obligation,
until Xtract has earned an 80% shareholding in the Vendor, to nominate a
non-executive director to be appointed to the Board of Xtract.  Such director
will have the right to receive options in Xtract Resources as decided by
Xtract's Remuneration Committee and receive a salary of US$1,500 per month for
his services and may at Xtract's sole election continue as a director of
Xtract after Xtract has earned an 80% shareholding in the Vendor. Any
appointment will be subject to standard AIM regulatory approvals.

 

Further information on Wildstone and the Agreement

The total amount committed by Xtract under the terms of the Agreement amounts
to US$2.7 million to be funded from Xtract's internal resources.

 

As at 31 December 2023, the last period for which unaudited (and unverified)
financial statements have been prepared, Wildstone's total assets amounted to
£9.7K and total liabilities (more than one year) to £5.6K. For the year
ended 31 December 2023 revenue amounted to £ nil and the loss before tax to
£3K.

 

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

 

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

 

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

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

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

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

                                                    Felicity Geidt

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

 Joint Broker                                       Colin Rowbury        www.novumsecurities.com

 

Qualified Person:

Colin Bird: The technical information contained in this announcement has been
reviewed, verified, and approved by Colin Bird, C.Eng, FIMMM, South African
and UK Certified Mine Manager and Director of Xtract Resources plc, with more
than 40 years' experience mainly in hard rock mining.

 

Important Notice:

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

 

 

ENDS

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  JVESESFLMEISEDE