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UPDATE - Xtract Resources finds new gold vein at surface in Chepica

Last updated: 11:02 18 Mar 2015 GMT, First published: 12:02 18 Mar 2015 GMT

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Xtract Resources (LON:XTR) shares almost trebled as it unearthed a major gold bearing vein on the Salvadori prospect at its Chepica mine in Chile.

Sampling at Salvadori returned grades between 2.5 grams per tonne (g/t) and 8g/t gold, with the gold reef said to have a true width of four metres (m), with 200m of strike-length visible on surface.

How best to mine the newly exposed gold bearing reef is now being assessed, Xtract said, with it likely that a large portion of the reef horizon will be mined as a stripping programme from surface. This would be a low cost operation and complement the underground operations at Chepica.

Work underground has now exposed 30m of veins at level 7, approximately 120m below surface in the central part.

A further 350m of the reef horizon will be developed before stoping commences on level 7 in about three months after which development will be directed to further expose the reef on level 8.

Jan Nelson, chief executive, said: "Underground development is progressing well and the discovery of a gold bearing reef at the Salvadori prospect on surface will not only increase mining flexibility  but will also impact positively on the grade being recovered at the mine."

It is the second boost for Xtract Resources in a few weeks.

Work resumed at Chepica in February after ground problems disrupted progress last year, with the miner hitting the main reef or vein after two previous attempts failed.

It aims to mill 6,500 tonnes of ore this month and 8,500 tonnes in April, with this level of processing enough to get it to break even.

Xtract is buying Chepica in stages with a final payment due early in 2017.

Shares leapt almost 200% to 0.285p on the Salvadori news.

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