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Xtract Resources strikes new deal with contractor for Mozambique gold operation

The company's subsidiary will receive at least 2.25 kilograms of gold for the month of March

Gold and dollars
The contract will run for 10 years

Xtract Resources PLC (LON:XTR) has updated investors on its Mozambique alluvial gold mining operation, where it has secured new terms with a contractor.

Contractor Moz Gold Group is exploiting the M Block deposits, at the Manica mining concession, and it is anticipated that production volumes will increase – with the number of plants increasing to seven from three.

Under the new agreement, the Xtract subsidiary will be entitled to a percentage of the mined gold (on a sliding scale tied to volume).

Moz Gold will deliver at least 2.25 kilograms of gold for March, and subsequently it will get 3 kilograms for each calendar month thereafter.

The initial contract period runs for 10 years or upon depletion of the alluvial deposits, depending which comes first.

"The change in the new agreement to a gold split should enable easier and more efficient monitoring of the operation, along with and bi-weekly payment increasing cash flow,” said Colin Bird, executive chairman.

“Moz Gold have stripped a considerable amount of overburden and are expected now to increase their gold production.

He added: “The Manica alluvial operations are beginning to stabilise after recent heavy rains falls. The availability of processing plant and earth moving equipment should ensure significant and further increased production levels.

“The decrease in rain fall, together with plant build up should also facilitate increased production levels".

Quick facts: Xtract Resources PLC

Price: 1.05 GBX

LSE:XTR
Market: LSE
Market Cap: £4.6 m
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