The Kakuyu Project is located approximately 53km north-west of the town of Mumbwa, Central Province of Zambia. The project is covered by two mineral licences, one small scale mining licence (“SML”) 29805-HQ-SML issued to Kakuyu Mining Limited (“KML”), which is valid until 7 November 2031 and covers an area of 201.78 hectares, and a second adjoining SML of similar size which is under application by KML.

The project is relatively underexplored with potential for along-strike extension of the historic Kakuyu Hill open pit which typically returned grades exceeding 3.5% Cu.

Photo 1. Copper Ore taken from the Kukuyu Project

Historic Mining & Mineralisation

The region is well-known for mining, including the nearby mines and occurrences of Sable Antelope, True Blue, Crystal Jacket, Maurice F Gifford, Lou Lou, Silverking and Kamiyobo. The most recent discovery is the Iron Oxide Copper Gold (“IOCG”) Kitumba deposit, where a JORC compliant total mineral resource of 27.9Mt @ 2.2% Cu, above a cut-off grade of 1.0% Cu, was reported in July 2015.

The Kakuyu Project has been operated at various times in the past by both small-scale commercial and artisanal miners. There has been limited exploration to date which provides Xtract with an opportunity to make fresh discoveries in an under-explored but prospective region. The Kakuyu Project is centred around the Kakuyu Hill pit and a large haematitic lens (approximately 800 by 200 metres) found in a fault-controlled setting which is understood either to be a shear hosted Cu-Au deposit or an oxidised post orogenic IOCG deposit, or a combination thereof. The extension of the lens feature with depth is not currently known although the haematitic lens may extend to the west, along strike of the mapped iron unit. Field investigations showed similar features, structures, and alteration in the western diggings, outside of the larger Kakuyu Hill pit. There is also a potential for mineralisation to the north of the hill as the area is highly faulted with a smaller wedge of older dolomites sitting within the younger meta-sediments which could form fluid traps. Copper occurs as both oxides and sulphides on fractures, in breccias and as stockworks.

Photo 2. Kakuyu Hill Pit

Joint Venture Agreement

Xtract has entered into a joint venture agreement with Oval Mining Limited (“Oval”) relating to the exploitation of small-scale production licence 29805-HQ-SML (the “Licence”). Under the terms of the Agreement, Xtract and Oval have agreed that the net profit of the Kakuyu Project will accrue as to 60% to Xtract and 10% to Oval. Both Oval and the Licence Holder are Zambian-based entities. The balance of 30% will accrue to Kakuyu Mining Limited (the “Licence Holder”).

During the term of the joint venture, Oval will act as mining contractor with responsibility for all aspects of the mining operation, while Xtract will appoint a project manager to oversee the Kakuyu Project and will be responsible for the management and implementation of exploration and resource development, together with all costs associated with exploration and the delineation of mineral resources and reserves with a view to extending the life of mine of the Kakuyu Project.

The parties have agreed that the ore will be sold to a company with the requisite expertise and infrastructure located in Zambia and an agreement has been approved in principle with a nearby mineral processing contractor.

Kakuyu Hill Pit

The Kakuyu Hill pit has been worked historically (although there is no historic data) to the extent that benches have been put in place to open up the pit. There are also underground artisanal workings with tunnels and a collapsed shaft. Oval Mining has removed bulk samples of the potential higher-grade sulphide ores from the pit which have been hand-sorted and stockpiled on site, targeting grades of >2% Cu. A site has also been created south of the pit for the new waste rock dumps.

In order to understand further the deposit morphology and mineralisation potential at Kakuyu Xtract plans an exploration programme of ground geophysics with follow up drilling on identified targets. Initial field investigations by Xtract have already defined several copper targets offering potential to extend the existing in-pit mineralisation along-strike to the East and West and increase the projected mine life of the operation. In addition, a large soil anomaly extending over an east-west trending strike length of approximately 1.4km has been defined which is coincident with a hydrothermal breccia of the same composition as the hosting mineralisation in the open pit.

A 250t bulk sample has been delivered to the Jubilee Metals refinery in Kabwe  for preliminary metal recovery test work ahead of negotiations for the future processing of ore production.

Plan 1 Layout plan showing potential for further deposit extensions Kakuyu Project