REG - Xtract Resources plc - Update on Zambian Copper Joint Venture & Strategy

Xtract ResourcesAnnouncement

08/02/2024 07:15

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RNS Number : 3942C  Xtract Resources plc  08 February 2024

 

8 February 2024

Update on Zambian Copper Joint Venture and Strategy

The Board of Xtract Resources Plc ("Xtract", 'XTR' or the "Company") is
pleased to announce an update on progress in Zambia with the copper
exploration joint venture agreement ("Joint Venture") with Cooperlemon
Consultancy Limited ("CL") first announced on 24 August 2023, and also the
overall Company copper exploration strategy in Zambia. The Joint Venture is
focussed on the highly prospective large scale exploration licenses
29123-HQ-LEL and 30459-HQ-LEL in Northwest Zambia (the "Licences").

Highlights

v The two exploration licences are located within the Western Foreland
geological district that hosts the Kamoa - Kakula deposit and the Central Fold
and Thrust Belt ("Fold Belt") in NW Zambia.

v The two licences cover a combined 107,000 ha in a highly prospective part of
Northwest Zambia where competition for exploration licences is intense.

v Licence 29123 - HQ - LEL is located to the west of the perceived boundary
between the Western Foreland and Fold Belt, and Licence 30459 - HQ - LEL is
coincident with the boundary and may also include part of the Fold Belt.

v The Company believes there is scope for the discovery of potentially
high-grade Kamoa-style mineralisation at depth and lower grade Kolwezi-type
mineralisation at or near-surface.

v Exploration initiated with the recent acquisition of a major historic
database created by Anglo American plc and enabling a cost-effective and
fast-track programme.

Colin Bird, Executive Chairman said : "We have recently embarked on an
intensive exploration campaign targeting a discovery of commercial grade and
tonnage of copper in a region of NW Zambia that is not only the subject of
more intense competition than I have ever known for exploration ground but
also the focus of attention for most of the world's major mining companies. NW
Zambia is a proven host for large scale copper deposits and the geology of our
Joint Venture ground is highly prospective. Zambia as a nation has set
ambitious targets for copper production to underpin its economic progress and
Xtract intends to become a part of that story initially by being the only
junior company operating its own Joint Venture licences on a self-financing
and independent basis"

Background

The geology of the Licence areas subject to the Joint Venture with Cooperlemon
is dominated by the architectural domain known as the Western Foreland
succession (Kamoa-style mineralisation) and the neighbouring Lufilian Fold
Thrust Belt that plays host to lower grade, bulk tonnage, near-surface
mineralisation.

 

NW Zambia is the subject of intense competition at this time not least because
the style of the underlying mineralisation and associated geology is believed
to be similar to that of the Kamoa-Kakula deposit operated by Ivanhoe Mines in
the neighbouring Democratic Republic of the Congo ("DRC"). The licence areas
comprising the Joint Venture are projected to have continuity with the geology
of the DRC and are entirely surrounded by ground under licence to, or within,
partnerships or joint ventures between local companies and global leaders in
the mining industry such as Rio Tinto plc, Anglo American plc, First Quantum
Minerals Ltd., and Ivanhoe Mines. (Figure 1)

 

 

Figure 1: Plan Showing Exploration and Mining Licences in NW Zambia and the
Democratic Republic of Congo in Relation to Exploration Licences held by
Xtract Resources

 

http://www.rns-pdf.londonstockexchange.com/rns/3942C_1-2024-2-7.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3942C_1-2024-2-7.pdf)

 

 

Moreover, on 27 November 2023 Ivanhoe Mines announced 'greenfield' prospecting
rights for exploration over 22,195km² in the Angolan provinces of Moxico and
Cuando Cubango. This exploration block is immediately to the west of the Joint
Venture licences and believed (by Ivanhoe) to be similar to their Kamoa-Kakula
province but mostly covered by Kalahari sand and Karoo volcanics where
conventional exploration methods are less effective (Figure 2).

 

 

Figure 2: Xtract Exploration Licences Illustrated in Relation to adjoining
Licences which includes Licences held by Third Party Tier 1 Companies and
Licences Situated in the Democratic Republic of Congo.

 

http://www.rns-pdf.londonstockexchange.com/rns/3942C_2-2024-2-7.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/3942C_2-2024-2-7.pdf)

 

The copper footprint in the DRC is believed to extend across the border into
NW Zambia where the Joint Venture licences are located. Ivanhoe Mines' Kakula
Mine in the DRC is reported to be the world's highest-grade copper mine with
deep, high-grade (>5% Cu) copper mineralisation. The density of Tier 1
mining companies in the region reflects the significant prospectivity of the
Joint Venture licences.

Xtract, has title and managed project activities over 107,000 hectares in this
highly competitive region.

Joint Venture Agreement

Under the terms of the Joint Venture, Xtract has agreed a phased investment.

In Phase 1 the Company will earn a 65% interest in the JV by funding
exploration expenditure over an initial 2-year period of not less than US$2
million. 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 500,000t of contained
copper, then Phase 2 will be initiated with a second 2-year exploration period
and a budget of US$3M. Xtract will be the operator of the licences for the
4-year duration.

Should a trade, or any other sale, of the licences take place in the initial 2
years, then Xtract will be deemed to have a 55% interest in the Joint Venture.
A sale requires the agreement of both Xtract and Cooperlemon.

Further information on the JV Licences

Licence No: 29123-HQ-LEL, which comprises 88,149 ha and expires on 7 September
2025, is held by Oval Mining Limited ("Oval"). The application for Licence
30459-HQ-LEL, which comprises 19,600 ha 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 NW 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 Joint Venture with
Cooperlemon (who is acting on their behalf) as though they were a party to the
Agreement.

 

 

Opportunities and Prospects

Xtract acquired its interest in the Joint Venture licences by virtue of the
long-standing and successful presence in Zambia of the senior management of
Xtract and the historic success reflected in discovery of a now Tier 1 asset,
Sentinel Mine, later developed and still operated by First Quantum Minerals
(FQM). Long-term alliances formed with senior Zambian exploration companies
and entrepreneurs and consultants  with deep exploration experience in Zambia
have created a strong platform for Xtract. There are clear cost benefits from
the use of consultants with common geological skills, mobile assets and
logistics/administration staff operating in the same geographic region.

Exploration Progress in Q4, 2023 and Financing

Xtract now has exclusive access to unique historic data sets generated by
Anglo American plc which pre-date any proper understanding of the Western
Foreland geological setting and potential. This has enabled a fast-track
early-stage exploration strategy on a very cost-effective basis that will save
an estimated US$1.5M in direct exploration costs during Phase 1 of the Joint
Venture.

With funds received from Xtract's entitlement from its 23% net interest in the
Manica project in Mozambique for the period ended September 2023 as announced
on 24 January 2024, Phase 1 exploration commitments for the Joint Venture are
available from existing cash resources meaning no fund-raise is anticipated
and therefore no dilution to shareholders. The financing of Phase 2 will be
based on the results from Phase 1 and also, the decision by shareholders on
the proposed disposal of XTR's interest in Manica at the  Extraordinary
General Meeting (EGM) to be held on 13 February 2024 and detailed in the EGM
circular sent to XTR shareholders which is available on the Company web site.

Prospects for Mine Development

In the event that either or both of the Joint Venture licences advance to a
point where they reveal commercially viable copper assets that are suitable
for development, then the licences will be moved to a corporate entity to be
owned 75% by Xtract and 25% by Cooperlemon. It will then be the responsibility
of the newly formed corporate entity to raise all capital for mine development
and future operations.

The Zambian government has expressed a clear ambition to increase domestic Cu
production from the present 830K tpa to 3M tpa by the end of the decade.
 This implies a clear political and strategic national support for the mining
industry and the granting of licences to develop opportunities for this
'clean-energy' and battery metal. Elsewhere, for example in Central and South
America, there is a mixture of sentiment from qualified support to total
opposition to mining. Moreover, the complexity of permitting worldwide now
means long lead times in decision-making of several years is being experienced
between discovery and commissioning of Tier 1 projects.

Taking into consideration the almost universally projected increased global
demand for Cu, with a more than 40% increase to 36.6Mt expected by 2031,
linked to by the 'Clean and Green' energy revolution, The Board anticipates
that it is likely that Zambia will be a major source of Cu production for at
least the next 75 years.

Xtract shareholders have an opportunity to share in this potentially historic
rebirth of the Zambian Cu Belt.

Further information

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 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.

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

 

 

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 announcement
and no liability whatsoever is accepted by Beaumont Cornish for the accuracy
of any information or opinions contained in this announcement 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.

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.

 

 

ENDS

 

 

 

 

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