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Basic Materials
Size
Micro Cap
Market Cap £4.93m
Enterprise Value £4.58m
Revenue £1.24m
Position in Universe 1652nd / 1854

Xtract Resources plc - JV on new alluvial gold production at Manica

Tue 20th October, 2015 7:15am
RNS Number : 7534C
Xtract Resources plc
20 October 2015

20 October 2015

Xtract Resources Plc

("Xtract" or "the Company")

JV signed on Manica Gold Project to start Alluvial Gold production within six months

Xtract Resources Plc (AIM:XTR) has signed a Joint Venture Agreement with Mineral Technologies International Limited ('MTI') to mine alluvial gold on the Manica gold project (the 'JV Project'). Whilst this project falls within the larger Manica Gold license, it will be progressed as a separate project from the planned open pit gold mine on which Xtract is currently completing a Bankable Feasibility Study.

The Company expects that the JV Project will produce approximately 32,000oz gold per annum (16,000 gold per annum net to Xtract), in addition to that already planned from the Manica open pit. The JV Project does not impede development of the open pit project and has the added benefit of removing a lot of overburden material thereby benefitting the open pit project by partially pre-stripping the pit.

The key aspects of the Join Venture Agreement are:

MTI will fund the construction of an alluvial gold plant, which is expected to commence production in Q3 2016

The cost of the plant (to be borne wholly by MTI) is estimated at US$1.2 million

MTI will also be responsible for the cost to transport the plant to site

MTI will appoint Xtract as the operator of the plant

MTI and Xtract will split the gold produced from the plant on a 50:50 basis

Xtract will be responsible for the operating costs of the plant

The key metrics of the JV Project (as determined on a company in-house basis) are:

Estimated NPV of US$97 million, delivering an IRR of 68% (discount rate of 10%)

Life of Mine of 10 years

Payback of less than 6 months

Produce 32,000oz per annum

Operating cost of US$203/oz

Treat 6.7Mt per annum

Total resource of 29Mt at between 0.6g/t and 1g/t on surface

Jan Nelson, CEO of Xtract, said: "Through strategic partnerships this JV with MTI delivers an additional 32,000oz of gold production, 16,000oz attributable to Xtract, within six months. We expect this operation to produce approximately three times more gold than the Chepica Gold mine with no additional capital outlay to Xtract. In addition, the operating costs of the JV Project, for which Xtract is responsible, are extremely low and will help ensure a significant margin for the Company. A further benefit to the open pit at Manica is that the alluvial operation will remove a lot of overburden material and therefore have the added benefit of partially pre-stripping the pit."

Enquiries:

Xtract Resources Plc

Jan Nelson, CEO

+44 (0)20 3416 6471

Cenkos Securities plc

Derrick Lee

Nick Tulloch

+44 (0)131 220 6939

Beaufort Securities

Jon Belliss

+44 (0)207 382 8300

St James's Corporate Services Limited

Phil Dexter

+44 (0)20 7796 8647

+44 (0)7798 634398

Gable Communications

Justine James

xtract@gablecommunications.com

+44 (0)20 7193 7463

+44 (0) 7525 324431

Qualified Person

In accordance with AIM Guidelines, Peter Moir, B.Sc. Civil Engineering, M.Eng. Petroleum Engineering, UK Chartered Engineer and Director of Xtract Resources plc is the qualified person as defined in the Guidance Notes for Mining, Oil and Gas Companies, February 2010, of the London Stock Exchange, that has reviewed the technical information contained in this press release. Mr Moir has more than 30 years' experience in technical, operational and commercial aspects of the E&P business.


This information is provided by RNS
The company news service from the London Stock Exchange
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