Xtract Resources (LON:XTR) has re-negotiated the terms of its acquisition of the Manica gold project in Mozambique to stop bigger than expected dilution from future share payments.
The price of the deal remains at US$12.5mln, but vendor Auroch Minerals has agreed to take a set number of shares, worth US$4mln, to fix the potential dilution of Xtract’s current share capital to 11%.
The cash consideration rises to US$7mln, from US$4.5m. Of that, US$2mln will now come from project finance with a further US$1mln to be retained for any potential tax liability.
Jan Nelson, Xtract’s chief executive, said as well as reducing unnecessary dilution, the use of project finance would conserve cash resources.
Discussions with lenders are at an advanced stage, he added, with firm proposals expected over the next three months.
Manica includes the Fair Bride open pit, where a bankable feasible study (BFS) is due in six months and production a year later.
"We are also pleased to report that the Manica project remains on track to commence operations in 16 months, with gold production of 50koz per annum, in accordance with previous announcement," Nelson said.