Half-year Report

Downloadable PDF of this RNS

RNS Number : 6003N

Xtract Resources plc

30 September 2021

Xtract Resources Plc

(“Xtract” or “the Company”)

 

Unaudited Interim Results for the six months ended 30 June 2021

 

Xtract Resources Plc (AIM: XTR), the gold producer, exploration and development company with projects in Australia, Mozambique and Zambia, announces an update of operations and projects and its unaudited interim results for the six months ended 30 June 2021 (“Period”).

Highlights

Financial

·      Revenue from gold sales of £0.16m (H1 2020: £0.61m)

·      Net loss of £2.204m (H1 2020: £0.19m)

·      Administration & operating expenses £2.19m (including a share-based payment charge of £1.47m (H1 2020: £0.62m)

·      Cash of £8.08m (FY 2020: £0.14m)

·      Net assets of £21.45m (FY 2020: £10.74m)

·      Total alluvial mining contractor gold production of 22.1 kg (equivalent to 711 ounces) (H1 2020: 32.1kg (equivalent to 1,033 ounces))

·      Total of 6.2 Kg (equivalent to 199 ounces) attributable to the Company’s Mozambican operating subsidiary, Explorator (H1 2020: 9.0kg (equivalent to 289 ounces))

Operational

·      Results from Phase-One drilling and an Induced polarization (IP) MIMDAS survey have provided significant potential to upgrade the known inferred mineral resources at the Bushranger copper-gold project within a world-class mining district in New South Wales, Australia

·      Completed drilling and analysis of drillcore at the Eureka project in Zambia confirmed the extension of the Eureka mineralised zone to the north-west – beyond 300m and still open

·      Reconnaissance drilling at the Kalengwa project has confirmed zones of copper-gold mineralization up to 100m away from known areas of historic mining

Corporate

·      Total of £10.5m (before expenses) raised through equity placings

 

Operational Overview

During the period the company released significant results on its copper-gold portfolio, including the definition of areas in which to expand currently known mineral resources on their Bushranger copper-gold porphyry deposit within Australia’s world-class Lachlan Fold Belt district of New South Wales, and the Eureka copper-gold rich structural corridor to the West of the Zambian Copper Belt.

Phase One drilling was completed at the Bushranger project in New South Wales for a completed meterage of just over 5,000m. The initial results of the programme have proven very exciting with intercepts of mineralization comparable to Alkane’s Boda copper-gold discovery 170km away from the Racecourse deposit. The results of hole BRDD-20-001 which was drilled down-plunge of the resource included an overall intercept of 920m @ 0.33% CuEq from 110m downhole. An induced polarization (IP) MIMDAS survey flown at Bushranger generated a number of co-incident chargeability and resistivity anomalies with potential to extend the known inferred mineral resources at the project which are being tested by the Phase Two Drilling programme.

Fifteen shallow drill holes were drilled at the Eureka Project, totaling 1,089m of drilling and designed to test for extensions of the near-vertical mineralisaed zone. Results have extended the strike-length of known mineralization beyond 300m to the north-west, with exceptional results, and is still open.

Following positive results from a desk-based data compilation exercise on the Kalengwa project, a reconnaissance diamond drilling programme of six short vertical holes was designed to test a shallow zone of mineralization just south of a historic open pit. An intercept of 69m at 0.88% Cu and 2.59 g/t Au was returned from 9m depth in drillhole KXD-006, which is 100m to the south of the pit.

The Manica hard rock project continued to progress satisfactorily despite COVID-19 restrictions in Mozambique and South Africa.

The results from the alluvial operations during the period reflected the difficult operating conditions.

 

Summary of Company Projects

Australia

Bushranger project

The Phase One drilling programme at the Racecourse deposit was completed in April 2021 for a total of just over 5,000m of drilling in six holes (BRDD-21-001 to BRDD-21-006). The objective of the Phase One drilling programme was to extend the known estimated mineral resources down plunge to the North-West and at depth. The five holes which were completed (one hole was abandoned due to excessive deviation) all intersected the zoned Racecourse porphyry copper alteration-mineralisation system. A JORC (2012) compliant inferred mineral resource of 71Mt @ 0.44% Cu and 0.064 g/t Au at a 0.3% Cu cut-off has been estimated at the Racecourse prospect, which is believed to be one of the largest currently undeveloped porphyry deposits in the Lachlan Fold Belt of New South Wales, Australia, and which does not include the latest drilling.

All drillholes intersected wider mineralised zones than anticipated in the form of disseminated and fracture-fill chalcopyrite, accompanied by pyrrhotite and pyrite and confirm that the Racecourse copper mineralisation increases in width towards the northwest beyond the existing Inferred Mineral Resource. Assay results from all completed holes (BRDD-20-001, BRDD-21-002, BRDD-21-003, BRDD-21-005, & BRDD-21-006)) were received within the reporting period and were very encouraging.

Hole BRDD-20-001 was drilled down-plunge of the deposit and returned an overall intersection of 920m @ 0.3% Cu, 0.02g/t Au and 1.45g/t Ag (0.33% CuEq) from 110m. Higher-grade zones within the overall mineralised envelope included 156m @ 0.48% Cu, 0.04g/t Au & 2.44g/t Ag (0.52% CuEq) from 110m and 44m @ 0.50% Cu, 0.05g/t Au & 1.92/t Ag (0.55% CuEq) from 504m.

All other drillholes were drilled obliquely across the deposit to test the width of the porphyry system and for extensions of mineralization to the northwest. The following is a summary of the significant mineralisaed intervals from the Phase One Programme;

–       BRDD-21-001: 920m @ 0.33% CuEq from 110m

o  Including 156m @ 0.52% CuEq from 110m

o  And 44m @ 0.55% CuEq from 504m

–       BRDD-21-002: 362m @ 0.2% CuEq from 422m

o  Including 14m @ 0.36% CuEq from 500m

o  And 26m @ 0.32% CuEq from 638m

–       BRDD-21-003: 200m @ 0.2% CuEq from 598m

o  Including 68m @ 0.26% CuEq from 676m

o  And 16m @ 0.31% CuEq from 714m

–       BRDD-21-005 returned 112m @ 0.22% CuEq from 716m

o  including 34m @ 0.28% CuEq from 736m

o  and 10m @ 0.33% CuEq from 802m

–       BRDD-21-006 returned assays of 222m of 0.25% CuEq from 600m

o  including 40m @ 0.33% CuEq from 776m

o  and 22m @ 0.38% CuEq from 782m

The initial results of the Phase One drilling programme are exciting and the overall mineral intersection and higher-grade zones in drill hole BRDD-20-20 compare very favourably with intercepts reported by Alkane Resources Limited (“Alkane”) for their Boda copper-gold discovery located 170km from Bushranger. The Phase One results also give significant potential to extend currently known mineral resources at the Racecourse deposit. There are further indications that grade may increase towards the surface within the high-grade mineralized “crown” of the porphyry system, which could significantly add to the known inferred mineral resource and enhance the open-pit mining potential of the project.

External consultants were engaged to build a financial model to investigate the economics of open pit extraction of the shallower ore.

An induced Polarisation (IP) MIMDAS geophysical survey was commissioned at Bushranger to potentially trace copper-gold and associated sulphide alteration to beyond 1,000m vertical depth and laterally. The results indicate that the copper-gold mineralisation comprising the Racecourse Mineral Resource is associated with a strong IP chargeability response on the southwestern side of the central porphyry intrusion, which is evident on all survey lines along 2.5km of strike length. The survey also indicates that the Racecourse Mineral Resource has the potential to extend in several directions, including at least 800m to the northwest beyond the limit of the currently defined mineral resource.

Following the successful results of the Phase One drilling and (IP) MIMDAS survey at the Bushranger project, a Phase Two programme is underway to test for higher-grade mineralisation at shallower depths within the interpreted mineralised “crown” of the porphyry system which will be influenced by the modelled pit optimisation design.

 

Zambia

Eureka

A Phase 2 drilling programme was partially completed in the first half of the year at the Eureka copper-gold deposit with the following aims:

·      To test the deposit north-west strike extension suggested by exploration pitting, thereby demonstrating at least 300m of strike extent

·      To provide additional information on internal deposit width and grade to support open pit mine planning

·      To define a copper resource sufficient to support an open pit mining operation for a minimum of 3 years

15 shallow holes, designated EX-08 to EX-022, totalling 1,089m were completed by mid-year, mostly angled to cross the near-vertical mineralised zone. Core from three of these was cut by diamond saw and sent for assay. These holes were selected as a priority to provide information on the grade, width and continuity of the mineral zone in the area of the planned box cut beneath the shallow historic open pit (EX-022) and to confirm the extension of the deposit to the north-west (EX-018 & EX-019).

Results confirmed the strike extension of the Eureka mineralised zone to the north-west – beyond 300m and still open. Assay results from the first three holes returned exceptional copper grades beneath the current open pit, averaging 4.42% Cu over 27.0m (circa 18m true width) from 50m depth in angled hole EX-022, including two 9m sub-intervals >6% Cu and 1m >20% Cu.

In the north-west extension, angled hole EX-019 assayed 0.83% Cu over 18.0m (circa 12m true width), including 1.36% Cu over 8.0m. The near-vertical mineral zone occurs directly beneath approximately 9m of overburden/saprolite, suggesting just shallow pre-stripping will be required. Additional drill assay results were awaited and it was planned to drill additional holes to further extend the deposit footprint.

The Company also announced that plans were being prepared to excavate a box-cut at the base of the current open pit to obtain a bulk sample and provide break points for benches. Roads in and around the area were being upgraded to receive heavy vehicles and allow the transport of ore from site. Tenders were received from several Zambia-based open pit contractors for the pit operation.

Kalengwa

The Kalengwa open pit Copper Mine is believed to have been one of the highest-grade copper mines in Zambia. Total production of 1.9Mt of 9.44% Cu and 50g/t Ag was reported from the open pit over a 12-year period from 1970 to 1982 resulting in circa 15,000 tonnes of copper production per annum.

Based on historic drilling, further resources remain unexploited lateral to the open pit -a non-JORC compliant, resource of 1.45Mt @ 2.50% Cu (for 36,300 tonnes of copper metal) is reported. This historic resource was prepared in 1998 but is not compliant with a recognised standard and has not been subsequently updated or verified (Source: African Minerals Ltd, Assessment of Kalengwa Mine, 1998, as reported by Lunga Resources Ltd, 2013). With focus on mining of the high-grade core of the deposit, much of the surrounding ground has only been sparsely drilled within this brownfield target, including areas within the original soil geochemical anomaly.

Compilation of historic mine drilling data identified a shallow zone of semi-consolidated copper oxide mineralisation located just south of the old open pit. A reconnaissance diamond drilling programme of six short vertical holes was completed by Xtract. Based on preliminary testing by hand-held XRF, the most interesting hole, KXD-006, was initially selected for laboratory assay, returning results as follows: 69.0m @ 0.88% Cu, 2.59g/t Ag from 9.0m depth, including sub-intervals of 12m @ 1.01% Cu and 17m @ 1.07% Cu.

KXD-006 is located about 100m from the open pit and the intersection is approximately twice the thickness reported in historic holes. Core from the remaining holes was still being processed at mid-year. The Company planned to review results from KXD-006, along with information from the remaining holes, to prepare for further delineation of the mineralised zone.

In addition, rock dumps from the historic mine workings remain on site and it was proposed to evaluate these with a view to reprocessing them to recover copper. Also, further evaluation test work was planned to confirm the suitability of the Kalengwa mine tailings for re-treatment.

 

Mozambique

Mozambique is recognised as a stable mining jurisdiction within a favourable political and legal regime. The Manica Gold Project is situated in the Odzi-Mutare-Manica Greenstone belt, with an estimated 2 million ounces of gold previously mined in the area.

Operations during the period were adversely affected due to COVID 19, with most of the mining contactor’s key personnel returning to their homeland for medical treatment or vaccination. Operations were stopped or seriously curtailed and despite this we still managed to maintain an operation with production before operating conditions improved during the second half of the Period. The Fair Bride Project is an open pit and underground project with a combined SAMREC compliant resource of 1.262 million ounces (including 782k ounces Measured and Indicated). In 2019, the Company was given the opportunity to move the Fair Bride Project forward, from development stage to production through a collaboration agreement with Mutapa Mining and Processing LDA, thereby mitigating any execution risk to Xtract. The Fair bride Project continued to progress satisfactorily despite COVID-19 restrictions in Mozambique and South Africa with production scheduled to commence during the second half of 2021.

The Company has mining contractor agreements in place with Longhau Tianci Mining Co Ltd (“Longhau”) for the exploitation of the Guy Fawkes and Boa Esperanza hard rock gold deposits at its Manica mining concession. SAMREC-compliant Indicated and Inferred Resources of 1.13Mt @ 1.91g/t Au (at a cut-off of 0.5g/t open cut and 1.5g/t underground were previously reported for Guy Fawkes, with potential for additional upside in several dimensions. At Boa Esperanza, a SAMREC-compliant hard rock Inferred Resource gold of 143,000 tonnes @ 0.77g/t Au (at a cut-off of 0.5g/t less 20% mine depletion) was also previously reported.

 

Financial

During the Period, administration expenses for the Group amounted to £1.96m (H1 2020 – £0.34m). Included within administration expenses is an amount of £1.47m (H1 2020- Nil) in relation to a share-based payment charge in relation to the grant of 28.4 million options to directors and employees in February 2021.

 

Enquiries: 

Xtract Resources Plc Colin Bird, Executive Chairman

 

+44 (0)20 3416 6471

 

Beaumont Cornish

(Nominated Adviser and

Joint Broker)

Michael Cornish

Felicity Geidt

Email: corpfin@b-cornish.co.uk

 

+44 (0)20 7628 3369
Novum Securities Limited

(Joint Broker)

Colin Rowbury/Jon Belliss +44 (0)207 399 9427

This announcement contains inside information for the purposes of Article 7 of EU Regulation No. 596/2014 on market abuse.  Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person who arranged for the release of this announcement on behalf of the Company was Joel Silberstein, Director.

Further details are available from the Company’s website which details the company’s project portfolio as well as a copy of this announcement: www.xtractresources.com

 

The full Unaudited Interim Results for the six months ended 30 June 2021 are available in our Financials Section.