REG - Xtract Resources plc - Update on Open Pit Mining Study for Bushranger

Xtract ResourcesAnnouncement

07/03/2023 07:00

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RNS Number : 0749S  Xtract Resources plc  07 March 2023

 

For immediate release

7 March 2023

 

Xtract Resources Plc

("Xtract" or the "Company")

Update on Open Pit Mining Study for Bushranger Copper-Gold Project

 

The Board of Xtract Resources Plc ("Xtract" or the "Company") is pleased to
provide an update on the mining study ("Study") by independent consultants
Optimal Mining Solutions (Pty) Ltd ("Optimal Mining") to examine the economics
of a 20Mpta and 25Mpta open pit operation on the Bushranger Copper-Gold
Project ("Project") in central New South Wales, Australia. Optimal Mining has
prepared an initial report for the Company which has reviewed the pit
optimisation options ("Interim Report"). Optimal Mining has identified that
the economics of the Project can be improved by way of modern ore sorting
technology and the full Study will be completed based on further test work
already under way on this option.

 

Highlights

 

·    The combined copper-gold mineral resources at the Racecourse and
Ascot Prospects on the Project were previously updated by the Company (see RNS
dated 19 December 2022) to contain approximately 1.3Mt of copper-equivalent
metal, with the combined shallow high-grade zones at the Racecourse and Ascot
prospects hosting a total of 225Mt @ 0.33% CuEq*.

 

·    16 economic pit shells were modelled in the Interim Report from an
operating cost perspective only with capital cost requirements excluded and to
be finalised on completion of the Study. 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 Bushranger ore contributes between 49% and 61%
of the total production cost across the 16 cases examined, Optimal Mining
identified that the Bushranger 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 ore sorting technology.

 

·    Optimal Mining has identified a copper project with similar grades to
Bushranger where pre-concentration reduced the amount of material to be
concentrated up to approximately 50%, significantly reducing pre-production
capital and operating costs.

 

·    Xtract has initiated the pre-concentration study with the objective
of quantifying improvement in cash margins, which will then allow Net Present
Values and Internal Rates of Returns to be calculated for various mining
scenarios, finalising the mining Study.

 

·    Further drilling is at planning stage to test the remaining shallow
to moderate depth copper-gold mineralisation targets located proximal to the
Racecourse Mineral Resource.

 

*CuEq % = (Cu%) + (Au g/t * 0.6577)% + (Ag g/t * 0.008769)%

Cu Price = US$8800/t, Au Price = US$1800/oz, Ag Price = US$24/oz

 

Colin Bird, Executive Chairman said: "The initial work by Optimal Mining shows
that pre-concentration of ore has the potential to significantly increase cash
flows from an open pit operation. On a project with similar grades to
Bushranger, pre-concentration of the copper mineralisation reduced the amount
of material to be concentrated by over 50%, while retaining 87% of the
contained copper metal. This significantly reduced the pre-production capital
expenditure, improved the operating cash margin and the overall project Net
Present Value and Internal Rate of Return. Therefore, we have initiated a
study to determine how effective ore pre-concentration could be at Bushranger
and will then feed those results into the final open pit economic modelling.

Given the potential upside of locating additional mineralisation in close
proximity to the Racecourse Mineral Resource further drill testing of adjacent
targets is being planned which, together with the results of the
pre-concentration test work, will allow us to finalise our ongoing plans for
the Bushranger project."

 

Bushranger Project Results from Open Pit Mining Interim Report

Following definition of the updated Mineral Resource for the Racecourse
Prospect and the maiden Mineral Resource for the Ascot Prospect, Xtract
contracted independent consultants Optimal Mining to update the Bushranger
Project open pit mining study. The update was aimed at examining the economics
of either a 20Mtpa or 25Mtpa open pit mining operation for copper prices
ranging from US$8,000/t to US$11,000/t and cut-off grades of 0.10% CuEq and
0.15% CuEq. A total of 16 scenarios were run for open pit mining of the
Racecourse and Ascot Mineral Resources, with economic pit shells being
generated for all of these scenarios.

 

The Interim Report is preliminary in nature and includes Inferred Mineral
Resources that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to be
categorised as mineral reserves. The Interim Report is based on low-level
technical and economic assessments and is insufficient to support estimation
of Ore Reserves or to provide assurance of an economic development case at
this stage, or to provide certainty that the conclusions of the Interim Report
will be realised.

 

A consequence of the grade of the mineralisation of the Racecourse and Ascot
Mineral Resource is that processing costs are estimated to be approximately
half of the total production costs. Optimal Mining has identified that
pre-concentration treatment of the copper-gold mineralisation could have
significant benefits as follows:

 

·    Reduce processing and operating costs;

·    Reduce pre-production capital expenditure due to a significantly
smaller concentrator;

·    Improve concentrator recoveries due to higher feed grades;

·    Generate more coarse dry rejects that are easier to manage;

·    Reduce the size of the tailings dam due to less concentrator feed.

 

The Interim Report further identified that, on a copper project with similar
grades to the Bushranger Project, pre-concentration retained 87% of the
contained metal and reduced the amount of material to be concentrated by
approximately 50%, significantly reducing pre-production capital and operating
costs. The feed grade into the concentrator on this comparable project
increased from 0.15% Cu to 0.29% Cu, improving metal recoveries. Due to the
close association of the copper mineralisation at both the Racecourse and
Ascot prospects with the mineral pyrrhotite, which is both conductive and
magnetic, there are several options for pre-concentrating the mineralisation
which may be highly effective.

 

Next Steps

Due to the highlighted potential for improvement of the project's economic
viability, Xtract has initiated a study to assess the effectiveness of
pre-concentration. Mineralisation from four drill holes from the Racecourse
Prospect has already been submitted for ore pre-concentration analysis which
will allow the open pit economic model to be refined and then finalised.
Finalisation of the open pit mining Study will include the development of
production schedules, capital cost and operating cost estimates, which will
then allow Net Present Values and Internal Rates of Returns to be calculated
for various mining scenarios for a range of production rates, cut-off grades
and copper prices.

 

The initial work by Optimal Mining for the open pit economic study have
reinforced the benefits of further shallow to moderate depth copper-gold
mineralisation to the overall economic value of the Bushranger Project.
Consequently, additional drilling is at planning stage to test the upside
potential of remaining exploration targets in close proximity to the
Racecourse Mineral Resource

 

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

 

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse 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 Colin Bird, Executive Chairman and 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 Belliss          +44 (0)207 399 9427

 Joint Broker                                       Colin Rowbury        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.

 

Optimal Mining Solutions (Pty) Ltd of Australia

Optimal Mining Solutions (Pty) Ltd of Australia has reviewed the information
in this announcement which has been derived from the interim pit optimisation
Study and has confirmed that the information so presented is balanced and
complete and not inconsistent with the interim pit optimisation Study.

Mineral Reserves and Resources

The Company estimates and discloses mineral reserves and resources using the
definitions adopted by JORC.  Further details are available at
www.jorc.org.  See the "Glossary of Geological and Mining Terms" for complete
definitions of mineral reserves and mineral resources.

About Mineral Resources

Mineral resources are not mineral reserves and do not have demonstrated
economic viability but do have reasonable prospect for economic extraction.
They fall into three categories: measured, indicated, and inferred. The
reported mineral resources are stated inclusive of mineral reserves.
Measured and indicated mineral resources are sufficiently well-defined to
allow geological and grade continuity to be reasonably assumed and permit the
application of technical and economic parameters in assessing the economic
viability of the mineral resource. Inferred mineral resources are estimated on
limited information not sufficient to verify geological and grade continuity
or to allow technical and economic parameters to be applied.  Inferred
mineral resources are too speculative geologically to have economic
considerations applied to them. There is no certainty that mineral resources
of any category will be upgraded to mineral reserves.

Important Information about Mineral Reserve and Resource Estimates

Whilst the Company takes all reasonable care in the preparation and
verification of the mineral reserve and resource figures. the figures are
estimates based in part on forward-looking information. Estimates are based on
management's knowledge, mining experience, analysis of drilling results, the
quality of available data and management's best judgment. They are, however,
imprecise by nature, may change over time, and include many variables and
assumptions including geological interpretation, commodity prices and currency
exchange rates, recovery rates, and operating and capital costs. There is no
assurance that the indicated levels of metal will be produced, and the Company
may have to re-estimate the mineral reserves based on actual production
experience. Changes in the metal price, production costs or recovery rates
could make it unprofitable to operate or develop a particular deposit for a
period of time.

Forward Looking Statements

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

 

TECHNICAL GLOSSARY

The following is a summary of technical terms:

 

 "Ag"                          Silver
 "Au"                          Gold
 "Cu"                          Copper
 "CuEq"                        Copper equivalent grade, calculated using assumed metal prices for copper,
                               gold and other metals

 "Indicated Mineral Resource"  That part of a Mineral Resource for which quantity, grade (or quality),
                               densities, shape and physical characteristics are estimated with sufficient
                               confidence to allow the application of Modifying Factors in sufficient detail
                               to support mine planning and evaluation of the economic viability of the
                               deposit. Geological evidence is derived from adequately detailed and reliable
                               exploration, sampling and testing gathered through appropriate techniques from
                               locations such as outcrops, trenches, pits, workings and drill holes, and is
                               sufficient to assume geological and grade (or quality) continuity between
                               points of observation where data and samples are gathered. (JORC 2012)

 "Inferred Mineral Resource"   That part of a Mineral Resource for which quantity and grade (or quality) are
                               estimated on the basis of limited geological evidence and sampling. Geological
                               evidence is sufficient to imply but not verify geological and grade (or
                               quality) continuity. It is based on exploration, sampling and testing
                               information gathered through appropriate techniques from locations such as
                               outcrops, trenches, pits, workings and drill holes. (JORC 2012)

 "mineralisation"              Process of formation and concentration of elements and their chemical
                               compounds within a mass or body of rock
 "porphyry"                    A deposit of disseminated copper minerals in or around a large body of
                               intrusive rock

 "Mtpa"                        Million tonnes per annum

ENDS

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