Xtract Resources plc Strategic investment in Manica alluvial operator (4946Z)
December 15 2017 - 3:31AM
UK Regulatory
TIDMXTR
RNS Number : 4946Z
Xtract Resources plc
15 December 2017
For immediate release
15 December 2017
Xtract Resources Plc
("Xtract" or the "Company")
Xtract makes strategic investment in Manica alluvial
operator
The Board of Xtract Resources Plc ("Xtract" or the "Company") is
pleased to announce that it has today made a strategic investment
in Moz Gold Limitada' ("Moz"). As previously announced on 7
December 2017, Moz currently operates the M Block in the Western
mining area of the Manica mining concession in Mozambique owned by
the Company's wholly-owned Mozambican subsidiary, Explorator
Limitada ("Explorator"). The details of the agreement are outlined
below.
Highlights
-- Xtract to make an initial convertible loan of US$400,000 to Moz Gold
-- Loan and interest at 30% per annum, to be repaid over 5 months
-- Xtract has the right to convert the loan at any time into to 25% equity interest in Moz Gold
-- Xtract has agreed to provide a further US$300,000 convertible
loan to Moz with the right to convert for a further 10% interest in
Moz Gold
-- Moz Gold now in commercial production on the M Blocks
Colin Bird, Executive Chairman said: "As owners of the Manica
concession, Xtract consider it of shareholder benefit to take a
bigger stake in gold production from the concession, since we
consider the revenues will be long life and sustainable. This
agreement should significantly enhance Xtract's earnings from
alluvial activities well beyond initial expectations. All other
components of area consolidation are proceeding satisfactorily, and
I look forward to updating before year end or certainly early in
the new year".
Convertible Loan Agreement
The Company has agreed today to loan a total of US$700,000 to
Moz to be drawn down in two separate tranches, with an interest
rate of 30% per annum.
The first tranche of US$400,000 shall be drawn down shortly
after the execution date of the loan. The second tranche of
US$300,000 can only be drawn down at Xtract's discretion and only
once the first tranche has been fully repaid or converted into
equity in Moz.
The first tranche is to be fully repaid by Moz within 5 months
of drawdown, with the first repayment of US$50,000 within 45 days
of execution of the agreement. The remaining balance is payable on
maturity. The second tranche will be payable within 4 months of
drawdown.
The Borrower will provide Xtract with security over the
processing plant and the use of proceeds will be solely for working
capital purposes for the alluvial operations.
Xtract reserves the right to convert the loan into to equity at
any time after the execution date of the agreement and may elect to
convert the loan into a 25% share interest in Moz. The conversion
may be in all or part of the loan.
In the event that Xtract elects to convert to equity, Xtract
shall repay all loan repayments that have been made back to Moz.
Moz will issue and deliver to Xtract a share certificate underlying
the conversion within 7 days of the conversion.
On completion of the first tranche, completion being the full
repayment or conversion of the principal and interest, Xtract may
elect to have the second tranche paid in cash or convert into 10%
share in Moz. The conversion may be in all or part at Xtract's
election.
Moz will issue and deliver to Xtract a share certificate
underlying the conversion within 7 days of the conversion.
Xtract is funding the loan from its existing cash resources.
Moz is a private company newly incorporated in Mozambique, and
owned by private individuals, formed to mine the alluvial gold
deposits in the Western mining area of Xtract's Manica mining
concession in Mozambique. Xtract has granted Moz the alluvial
mining contract over the M Blocks. Moz has no other operations. Moz
has not yet prepared any audited accounts. Moz's total unaudited
liabilities and assets as at 12 December 2017, the last practicable
date, amounted to approximately US$982,000 and US$ nil
respectively, and the unaudited loss before tax to date since
incorporation, amounted to approximately US$991,000 reflecting
Moz's start-up costs.
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
This announcement contains inside information for the purposes
of Article 7 of EU Regulation No. 596/2014 on market abuse.
Enquiries:
Xtract Resources Colin Bird, Executive +44 (0)20 3416
Plc Chairman 6471
Michael Cornish
Roland Cornish +44 (0)207628
Beaumont Cornish Felicity Geidt 3369
Email: corpfin@b-cornish.co.uk
+44 (0)207 382
Beaufort Securities Jon Belliss 8300
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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