Recent flotation test results on drill core taken from the Fair Bride gold project in Mozambique have underlined the potential returns the site could generate, Xtract Resources (LON:XTR) told investors.
Last week, the firm announced its purchase of the Manica gold licence from Auroch Minerals for US$12.5mln.
The acquisition includes the Fair Bride open pit project, where a bankable feasible study (BFS) is due in six months and production a year later.
Prior to today, recoveries of greater than 80% from the sulphide ore had been achieved.
But at labs in Perth, Western Australia, where 737kg of core was shipped, recoveries of between 91% and 94% were achieved, Xtract reported.
The work also showed that cash costs of the project could be substantially reduced, the firm said.
Chief executive Jan Nelson said: "The flotation results commissioned by the Auroch team show a considerable improvement in recoveries of sulphide zone.
"This will impact significantly on the potential revenues that the project could generate.
"Lower mass pull results recovering more than 50% of the gold at less than 10% and gravity concentration at a coarser grind recovering up to 70% of the gold at a much reduced energy consumption are expected to substantially reduce the cash costs of the project. This clearly highlights the quality of this project and the potential returns Xtract could generate from this project."
An earlier scoping study has indicated revenues from the mine of US$55mln annually based on 50,000 ounces per year of gold production, cash costs of US$650 per ounce and an open pit operation for five years and three years underground.
Resources are estimated at 900,000 ounces from 3.5Mt at a grade of 3.01 grams per tonne (g/t) with start-up costs of US$28.4mln. A further US$14.8mln will be needed for the underground development.
Fair Bride represents approximately 10% of the total licence at Manica and there are significant opportunities to increase the gold resource through exploration, said Xtract.
Xtract shares eased 1.89% to 0.26p.