Final Results

RNS Number : 4391E
Xtract Resources plc
29 June 2023

Xtract Resources Plc
(“Xtract” or the “Company”)

Audited results for the 12 months ended 31 December 2022

 The Board of Xtract Resources Plc (“Xtract” or the “Company”) announces its audited financial results for the 12 months ended 31 December 2022. The 2022 Audited Annual Report and Accounts (“Accounts”)  are in the process of being posted to shareholders and will be available together with this announcement on the Company’s website www.xtractresources.com.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 (“UK MAR”).The person who arranged the release of this announcement on behalf of the Company was Joel Silberstein, Director.

Enquiries:

Xtract Resources Plc Colin Bird, Executive Chairman +44 (0) 203 416 6471
Beaumont Cornish (Nominated Adviser & Joint Broker) Roland Cornish / Michael Cornish / Felicity Geidt +44 (0) 207 628 3369
  Email: corpfin@b-cornish.co.uk  
Novum Securities (Joint Broker) Jon Bellis/Colin Rowbury

 

+44 (0) 207 399 9427

Corporate & Operational highlights

·    The Phase Two drilling programme at the Bushranger copper-gold porphyry project in New South Wales, Australia, was completed in July 2022, for a total of 33,354m m of diamond drilling

·    Mineral resources at the company’s 100% owned Bushranger copper-gold porphyry project have been upgraded to contain a total of 1.3Mt of copper equivalent metal at the Racecourse and Ascot prospects

·    An independent mining study completed on the Bushranger project has shown the project is potentially profitable via open-pit mining methods to a depth of 600m, which is inclusive of the higher-grade crown of the Racecourse deposit 

·    A follow-up mining study achieves substantial rates of return at mining rates of 20 to 25 mpta, which could see significant improvements from pre-concentrate ore sorting, and a follow-up study is underway

·    A metallurgical study has yielded copper recoveries of 89-90% from samples analysed from the Racecourse & Ascot prospects, with a sample from Ascot also returning payable levels of gold and silver

·    The new Kakuyu acquisition in Zambia has seen operations on site progress with a pushback to expose ore in the former open pit

·    Initial soil geochemical surveys around the base of Kakuyu hill have highlighted linear anomalies associated with brecciated carbonate rocks some of which contain supergene mineralisation at depth. Two bulk samples of high-grade ore have been dispatched to commercial concentrator operators for assessment.  Drilling is scheduled to test the extent of mineralisation and the variability of ore with depth ahead of processing plant optimisation and if appropriate, mine design

·    Mining operations began at Manica Fairbride during 2022, with over 110kg of gold produced by year-end. Xtract has a 23% Net Profit share

·    Production at Manica is increasing steadily with the new Carbon in Leach plant processing approximately 40,000 tonnes of ore per month, with proximal ore adding two years of mine life and potential to exploit the considerable sulphide resource opportunity

·    Post year end the company decided to withdraw from the Eureka project in Zambia and fully impair the carrying value with a consequent charge to the income statement of £938K

Financial highlights

·    Cash of £0.19m (2021: £5.39m)

·    Net assets of £19.68m (2021: £20.66m)

·    Revenue from gold sales of £2.11m (2021: £0.69m)

·    Administrative and operating expenses of £3.03m (2021: £3.31m)

Chairman’s Statement

Dear Shareholder,

During the period under review all projects in the portfolio have been particularly active. 

The Bushranger Project completed a major drilling programme of over 30,000m, which can be considered large for major mining companies and is quite unusual for junior resource companies.  We announced that the programme was completed in early August 2022 and immediately commenced the modelling programme to define the size of the two resources i.e., Racecourse and Ascot.  At the end of November, we announced that Racecourse contains some 512 million tonnes at 0.22% copper equivalent, resulting in a contained copper equivalent metal content of 1.1 million tonnes and classified as indicated and inferred in accordance with JORC (2012).  On the 19th of December 2022 we announced a maiden Inferred Mineral Resource estimate of some 87 million tonnes at 0.22% copper equivalent.  The combined copper equivalent of some 1.3 million tonnes represents a considerable copper inventory. 

Following this maiden resource we commenced a financial modelling programme, managed independently by Optimal Mining.  During the course of the study, it became evident that significant benefit may be accrued by the introduction of ore sorting and pre-concentration.  We therefore paused the programme and sent representative samples to Tomra Sorting Solutions for test work to determine ore – waste separation characteristics.  The results of this work are expected in the 3rd Quarter of 2023 and once received will be incorporated into the financial model.  If the results are positive the potential for reducing infrastructure size and direct operating cost are significant and thus, we eagerly await the outcome of the test work.

The Manica gold project in which we have a 23% beneficial share, commenced trial production in July 2022 and at the time of writing it is fully operational with gold production for the month of April 2023 some 60kg.  The gold production month on month has increased despite experiencing atrocious rains and two cyclones.  The weather has significantly improved, and we are looking at an increase of production and a steady dry season rate of not less than 65kg per month.

Studies are on the way to define in-pit oxide feed material together with general exploration aimed at identifying new additional oxide or sulphide material.  We are conducting test work to determine the overall recovery for the transitional material and are optimistic that the cut-off between oxide and refractory sulphide will not be night and day, but gradational. 

We are also conducting trials on drill core with a view to designing optimised additional plant for sulphide/refractory ore, which will prolong mine life and provide a sustainable operation for years to come.  The board has decided that the contribution of the alluvial deposits, compared to the potential contribution of the Fairbride hard rock, is negligible and thus are winding down on alluvial operations.  In any event, this was inevitable since the alluvial resources have almost reached the state of economic depletion.  

In Zambia, we did trial mining at the Chongwe Mine, deriving limited production and copper revenues.  Post balance sheet, we acquired the Kakuyu Project, near Mumbwa, on acquisition it was considered somewhat limited.  Our work to date suggests that project may be significantly larger, and we have already identified 2.4km of strike based on soil geochemistry which may be integrated into the pit mining programme.  Unexpected is the presence of random and variable amounts of cobalt, which we are investigating with a view to selectively mining the higher-grade cobalt areas.  We are scheduling drilling to assess the ore composition at depth to facilitate an optimised processing plant design and if appropriate a full mine design.

The Eureka Project has proved to be very variable in grade and thickness and is also very close to a water source which complicates the mining.  At this stage we have minimal intention to continue the Eureka Project and the Company has therefore impaired all costs relating to the project.

We are actively looking at a number of smaller scale copper mining propositions in Zambia and Southern Africa in general, since we feel that such assets will have a valuable role to play in the anticipated copper shortage environment in 2024/5.  The Company through its cashflow has avoided making secondary placements, completing all of its activities with available cash and cash generated from operations.  We intend to maintain the profile if results allow and only seek cash for new acquisitions, which have the potential to add significant value to the Company for our shareholders.

The market recognition for small resource companies has been very slow and thus, Xtract along with most of its peers has suffered significant share price reduction.  This is very disappointing when significant hurdles have been jumped, but the headwinds facing smaller companies has been excessive and prolonged.  The thread of recession, the war in Ukraine, slow down in China and other geopolitical uncertainty has led to a fear of investment in companies which are not robust and generate significant amounts of cash, with a history of so doing.

The sector has now been ignored by investors for a longer time than I have ever experienced, but at the time of writing I see the green shoots of recovery beginning to appear.  The incentive for a potential market recovery is the constant comment from all trade sources suggesting that 2024/5 and beyond will reveal major deficits in the supply of copper and other strategic New Age metals.  We continue to look for opportunities and are pleased that we commenced our copper search some years ago, since project demand has increased at a rate I have not experienced previously.  The effect of this will be that in future projects will cost more to acquire and will generally be of a lower quality.

Your company is well placed to take advantage of its current asset base and shareholders can rest assured that management will not make hasty decisions to acquire new inferior projects.

I would like to thank my fellow directors and management for their efforts during the period under review and look forward to a buoyant progressive 2023.

Yours sincerely,

Colin Bird

29 June 2023

 

The full Audited results for the 12 months ended 31 December 2022 are available here.