Sino Minerals, a contract miner working on the Manica project, produced a total of 6.287 kg of tax-paid gold in October and November, with an approximate gross value of US$230,000, and a net value to Xtract of approximately US$92,000.
Back in September, Xtract’s chief executive Colin Bird had estimated that the group should be earning around US$300,000 per month by the year-end from the gold mined by contractors, cash flow which he said would put the company in very good stead for its ultimate plans to go mining the hard rock at Manica.
In an update at the end of January, Xtract said its combined attributable contractor income for the three months to 31 December 2017 had amounted to US$801,000, meaning the AIM-quoted company’s share was US$320,000 (40% of the contractor income).
The company noted that at the period end, some 2.828 kilograms of gold was on account but not yet sold.
Bird said then that: “The last quarter represented the commencement of operations with its attendant set-backs and problems.”.
Bird added: “The operations are progressing favourably, and we expect first quarter results for the period ending 31 March 2018 to show an overall improvement in productivity and attributable income to Xtract.”
Last month, Xtract announced that it had secured new terms with Moz Gold Group, which is exploiting the M Block deposits at Manica, which will see the UK firm entitled to a percentage of the mined gold - on a sliding scale tied to volume.
Under the deal, 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.
Xtract’s CEO said: “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.”
Xtract made a US$700,000 strategic investment in Moz Gold in December, initially via an initial convertible loan of US$400,000, with the loan and interest at 30% per annum repayable over five months.
Xtract has the right to convert the loan at any time into a 25% equity interest in Moz Gold. The firm said it has also agreed to provide a further US$300,000 convertible loan to Moz with the right to convert that for a further 10% interest in Moz Gold
A month earlier, Xtract had also agreed a new collaboration with its other contractor on Manica, Omnia Mining Ltd.
Omnia will use its processing plant to target all hard rock occurrences at Manica, apart from the Fair Bride project, which remains under the sole control and management of Xtract.
The plant is capable of processing 400,000 tonnes per year
Xtract will carry out the initial investigation on potential targets while costs of further exploration work will be shared equally between the two companies.
The deal extended a previous collaboration between Xtract and Omnia to exploit alluvial gold deposits at Manica.
Xtract said the aim of the agreement is to convert hard rock exploration targets into a joint mining operation with Omnia.
The Fair Bride project will be developed separately by Xtract.
Back in November, Xtract raised £1.7mln through a placing to pay off its debts and look at other opportunities in the area surrounding Manica.
The shares were issued at 2.85p each, and the placing saw the group’s shares in issue increase by 20%.
The firm said it had the opportunity to raise more but wanted to minimise dilution.
Since then Xtract shares have drifted lower, with the stock currently changing hands at 2.25p each.
As the gold flows from Manica, investors will be hoping that Xtract’s share price steps higher as well.