TIDMXTR
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
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
Beaumont Cornish Limited Roland Cornish +44 (0)207628 3369
Nominated Adviser Michael Cornish www.beaumontcornish.co.uk
and Joint Broker Felicity Geidt
Novum Securities Limited Jon Bellis +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.
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 Geophysical exploration method employing the
surveying) 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
Induced Polarisation employs the passing of an electrical current
into the ground to test for indications of conductive
metallic sulphides
"IOCG" (iron Mineral deposits that typically occur at the
oxide copper-gold) margins of large igneous bodies which intrude
deposits 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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END
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