Xtract Resources plc - Manica hard rock collaboration agreement
For immediate release
29 May 2019
("Xtract" or the "Company")
Manica licence 3990C Hard Rock Collaboration Agreement
The Board of
Highlights of the Agreement
· Funding and operational agreement for Manica hard rock gold deposits signed on
· MMP, in partnership with Omnia, appointed as independent mineral processing contractor on the various gold bearing mineral deposits on the concession
· Agreement provides for MMP to build and operate a carbon-in-leach (CIL) plant
· MMP to finance and conduct the mining operations to include all capital and operating costs
· Xtract will receive between 20% and 23% (dependent on prevailing gold price) of the hard rock after tax operating cash flow
· Concession exploration programme to be initiated with an objective to enlarge the gold resource within current known areas not yet tested
· Gravity recoverable gold to be exploited during the CIL plant-build phase, assuming suitable material is available
Fairbride Hard Rock Mining and Collaboration Agreement
The Collaboration Agreement has been entered into on
MMP is currently the owner of a 42,000 tonne per month hard rock processing plant, that includes crushing, milling and gravity recovery circuits and a furnace, for mining and mineral processing, located in the Manica region of
The MMP plant has already had over
Key terms of the Collaboration Agreement
The terms of the Collaboration Agreement are as follows:
The Company has appointed MMP an independent mineral processing contractor, to provide a technical solution for processing the Explorator's material, to conduct hard rock mining on the
MMP will provide all personnel and goods as may be necessary for the performance of the services in accordance with the prescripts and requirements of
MMP have agreed to contribute their hard rock processing plant to be utilised to process all oxide materials and, if appropriate, transition and sulphide material, together with all infrastructure and services contained within the fenced area of their mining concession that relate to the processing plant and the services as well as commit to the purchase and commission of suitable CIL plant to carry out the services.
MMP has undertaken to commence construction of the CIL plant and to provide Xtract with a schedule of purchases and an activity chart indicating initial production and a target date for commercial production of no later than
Targets and Performance
MMP has agreed to commence construction (as demonstrated by the placement of an order for the CIL), as soon as possible but in any event no later than
Explorator will maintain the Concession and the Mining Rights in good standing and will grant MMP exclusive rights to the hard rock mining aspects of the Concession and the Mining Rights for the duration of the Term.
Consideration & Payments
In consideration for the granting of exclusive rights to act as the appointed hard rock mineral processing contractor at Manica, MMP will pay Explorator an arrangement fee of
MMP will receive 77% of all the operating profit produced from the permitted area through the performance of the contract by MMP when the prevailing price of Gold is greater than
"profit" is defined as: Revenue on Sale less deductible costs (excluding non-cash items) and corporation tax.
The Company and MMP have agreed to incorporate a gold mining exploration special purpose vehicle, on a 50:50 owned basis, and with a monthly budget to be agreed by the parties from time to time. Participation in exploration projects will be decided on a case by case basis. The costs of exploration shall be divided on a case by case basis. Each party may submit a project exploration plan to the other party for review. The reviewing party may elect to contribute up to 50 per cent. of the costs of exploration on that project and will be awarded participation in the project on a pro rata basis with its share of the costs.
MMP and Xtract have further agreed that, if with increased knowledge of the Manica Concession it is deemed appropriate to undertake a major drilling campaign to identify and delineate a larger mineral resource then currently known in the Permitted Area, the parties will agree to invest on a 50:50 basis to identify a larger potential gold mining resource. The parties will form a new SPV for this activity and it will be separately managed with both parties having an equal interest. A larger mineral resource is defined as all resources in the Permitted Area in excess of those currently known, with a minimum threshold being 2,500,000 ounces.
In the event of a significant new discovery, each party will have first right of refusal, should they wish to sell their share in the SPV. If during the exploration phase either partner dilutes to less than 25 per cent. of the SPV by not participating in the exploration expenses, it will enter into a drag/tag along agreement with the other party should they wish to dispose of the overall enlarged asset.
Option to purchase the concession
The Company has granted MMP an option to purchase the Fairbride concession, subject to all parties receiving necessary regulatory approvals including, but not limited to, the Company obtaining shareholder approval, for an amount equal to the greater of:
· An amount equal to 80% of the net present value using a discount rate of 15%; or
This option to purchase has a term of 2 years and is only in respect of the known resources in the Permitted Area. In the event that the parties agree that the operation has extended life potential (beyond 8 years) or alternatively discovers a larger deposit then the parties may agree a buyout by mutual consent on the basis of an amount equal to 80% of the net present value of the larger resource, again using a discount rate of 15%.
This agreement replaces the Joint Venture and Collaboration Agreement entered into with
Shareholders should note that there is no certainty that the outcome of production and operating results at Manica pursuant to the Collaboration Agreement will be as currently expected and a number of factors could cause actual results to differ materially from those expected and set out in the forward-looking statements contained in this announcement.
Further details are 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 No. 596/2014 on market abuse. The person who arranged for the release of this announcement on behalf of the Company was
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+44 (0)20 3416 6471
Nominated Adviser and Joint Broker
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+44 (0)207628 3369
+44 (0)207 399 9427
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.
This information is provided by RNS, the news service of the
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