TIDMXTR
RNS Number : 5577O
Xtract Resources plc
01 June 2020
For immediate release
1 June 2020
Xtract Resources Plc
("Xtract" or the "Company")
Agreement Bushranger Copper/Gold Project Australia
("Bushranger")
The Board of Xtract Resources Plc ("Xtract" or the "Company") is
pleased to announce that the Company has today concluded a
conditional Sale and Purchase Agreement (the "Acquisition
Agreement" ) to acquire the entire issued share capital of
ProsepectOre Ltd ("ProspectOre") for a total consideration of
GBP1.25 million, to be satisfied in new Xtract ordinary shares.
ProspectOre currently owns a 100% interest in the Bushranger
Copper-Gold Project, located in the Lachlan Fold Belt ("LFB"), New
South Wales, Australia's world-class copper-gold province. The
Lachlan Fold Belt has recently undergone a resurgence in mineral
exploration following the discovery of new, large scale, porphyry
systems such as Alkane Resources Limited Boda discovery which add
to the existing mineral endowment of the LFB due to mines such as
Newcrest's giant Cadia-Ridgeway operation.
The Bushranger Project hosts the Racecourse deposit, where a
JORC (2012) compliant Inferred Resource has been estimated at 71Mt
@ 0.44% Cu and 0.064g/t Au using a 0.3% Cu cut-off, with copper
grades comparable to the major operating mines in the region . The
Racecourse Mineral Resource is interpreted to be a Copper-Gold
Porphyry-Style deposit and the Directors believe to be one of the
largest currently undeveloped porphyry deposits in the LFB .
Highlights
-- The Bushranger Project represents a highly prospective
copper-gold porphyry project in a world class mining district with
excellent infrastructure in a low-cost jurisdiction
-- There is renewed interest in The Lachlan Fold Belt following
Alkane's recent Boda discovery, including a 1,167m drill interval
grading 0.25% Cu, 0.55g/t Au
-- The Bushranger Project hosts the Racecourse deposit, a JORC
(2012) compliant inferred resource estimated at 71Mt @ 0.44% Cu and
0.064g/t Au using a 0.3% Cu cut-off, which is open down plunge and
along strike
-- Most recent drilling at Racecourse intersected substantially
wider mineralisation - 159m @ 0.37% Cu, 0.21g/t Au (Hole ID
BRD001), including 16m @ 0.73g/t Au - and with gold grades
increasing with depth
-- Western portions of the Bushranger Project are prospective for high-grade gold mineralisation
-- Several geophysical and geochemical targets, with
characteristics of porphyry style mineralisation, are ready for
drill testing
Colin Bird, Executive Chairman said : " This acquisition
represents entry into an asset with an inferred resource of over
350,000 tonnes of contained copper. The deposit is open ended in
both directions and the propensity for future discovery is good. I
am particularly encouraged by the fact that the gold contribution
increases with depth. The geological trend has produced a number of
historical mines, closed and operating, and of late there have been
announcement of new discoveries both porphyry copper and epithermal
gold.
The asset significantly enhances our current copper portfolio
and provides a solid platform to our emerging copper exploration
activities. I look forward actively progressing the Bushranger
project together with our Zambian exploration portfolio."
Bushranger Project Summary
The Bushranger copper-gold project comprises four exploration
licences totalling 501km2, located in eastern central New South
Wales, Australia. The project area is 160km west of Sydney, in an
area with excellent road and power infrastructure.
Geologically, the project sits within the mineral-endowed
Lachlan Fold Belt ("LFB"), a Middle Palaeozoic orogenic complex
extending through central New South Wales southwards into Western
Victoria and Western Tasmania. The LFB is Australian's world-class
copper-gold mineral province, host to Newcrest's mining operation
at Cadia-Ridgeway and CMOC's North Parkes mine. The potential for
the further discovery of porphyry (intrusion related) copper-gold
deposits and structurally controlled gold deposits, such as occur
at Tomingley and McPhillamys, ranks the LFB as one of the most
highly prospective precious and base metal provinces
internationally. In addition to copper-gold porphyries, a variety
of other deposit types occur in the LFB, including shallow-level
epithermal gold ("hot spring"), deeper hydrothermal gold (quartz
+/- carbonate veins), base metal-gold skarn deposits and
volcanogenic hosted base metal deposits.
The North Parkes and Cadia-Ridgeway deposits are world-class
porphyry copper-gold mines hosted within the Lachlan Transfer Zone,
a key structure which controlled the emplacement of the major
copper-gold deposits within
the LFB. The Bushranger project is also located within the Lachlan Transfer Zone.
On the Bushranger property, previous exploration has identified
several porphyry intrusions, some already known to be associated
with copper and gold mineralisation, as well as multiple
geochemical and IP geophysical anomalies over a strike length of
10km. The most advanced prospect is the Racecourse deposit, where a
JORC (2012) compliant Inferred Resource has been estimated at 71Mt
@ 0.44% Cu and 0.064g/t Au using a 0.3% Cu cut-off, with copper
grades comparable to the major operating mines in the region. The
deposit remains open down-plunge and along strike, and recent
deeper drilling in holes BRD001 and BRD009 has shown that it
becomes significantly wider at depth, along with increasing gold
grades - see table below.
Hole No. Depth Depth Interval Cu% Au g/t
From (m) To (m) (m)
BRD001 147 306 159 0.37 0.21
---------- -------- --------- ----- -------
including 147 209 62 0.50 0.22
---------- -------- --------- ----- -------
including 165 181 16 0.53 0.73
---------- -------- --------- ----- -------
BRD009 317 486 169 0.39 0.09
---------- -------- --------- ----- -------
including 348 416 68 0.46 0.15
---------- -------- --------- ----- -------
including 400 416 16 0.46 0.51
---------- -------- --------- ----- -------
Note: Source ProspectOre Limited. These drill results have not
been independently tested or verified by Xtract.
The drilling results detailed in the above table have not yet
been followed up with additional drilling and hence the full extent
of the Racecourse deposit is yet to be determined.
Globally, porphyry-related copper-gold deposits commonly occur
in clusters. The Bushranger licence package remains under-explored,
with several further adjacent porphyry targets, most of which have
not yet been drill tested. Geophysical surveying, which originally
identified the Racecourse deposit, has highlighted another target
southeast of Racecourse, as well as the nearby Footrot and White
Springs prospects.
The western portions of the Bushranger Project, on Exploration
Licences EL's 8305 and 8585, are prospective for structurally
controlled high-grade gold mineralisation. Immediately to the south
of EL8585 occur the Mt David and Lucky Draw historical gold mines.
In the mid 1980's 190,000 Oz @ 4.2g/t Au was mined at Lucky Draw
and in the late 19(th) century and early 20(th) century an
estimated 27,000 Oz @ 12.4g/t Au was mined at Mt David. Soil
geochemical surveys have previously been completed on EL8305 and
gold-in-soil geochemical anomalies require follow up.
Planned follow-up exploration by Xtract at Bushranger aims to
target the potential to deliver a world-class copper-gold project,
by increasing the initial inferred resource at the Racecourse
deposit and follow-on discovery of additional mineralised porphyry
systems in close proximity to existing mineralisation through a
combination of geophysical surveying and drilling.
Bushranger Project background
Bushranger's principal asset is the Racecourse Prospect, a
significant copper - gold mineralised zone of 1,000 metres strike
length located in the Macquarie Arc within the LFB, a subduction
complex that formed rapidly in the Late Ordovician, resulting in
multiple phases of intrusions and associated mineralising episodes,
establishing it as Australia's leading porphyry copper-gold region.
The tabular mineralised zone at Racecourse varies from 30 to 130m
in width and has been intersected to a depth of 350m.
Mineralisation at Racecourse occurs as fine-grained
disseminations, fracture coatings, veinlets and stringer veins of
pyrite and chalcopyrite within and adjacent to the margins of a
monzonite intrusive. Potential exists for porphyry style
subvolcanic intrusive copper-gold and pyrite systems as well as for
epithermal gold. Bushranger has been covered by geophysics in the
form of airborne magnetics and radiometrics, ground Induced
Polarisation (IP) and Electromagnetics (EM). This has successfully
located the Racecourse deposit and several further targets,
including one close to the southeast of Racecourse, as well as the
Footrot and White Springs Prospects to the south.
The Bushranger project area has a history of mining at the
nearby Burraga Copper mine 10km southwest and more recently at the
Lucky Draw Gold Mine 10km west of the Racecourse deposit. Among the
major deposits currently or previously mined on the Lachlan
Transfer Zone are Newcrest Mining Ltd.'s massive Cadia Valley
operations, located about 80km northwest of Bushranger, which
consist of two gold-copper mines, Ridgeway and Cadia East, making
this one of Australia's largest gold mines. Further northwest
again, the Northparkes mine is a large underground block caving.
Elsewhere within the LFB, recent discoveries include Alkane
Resources major new Boda deposit.
Acquisition Agreement
Background
The Acquisition Agreement has been entered into today by the
Company and ProspectOre, an Australian public unlisted company.
ProspectOre acquired the Bushranger Copper-Gold Project from
Anglo American Exploration (Australia) Pty Ltd ("Anglo") in
December 2017 ("Bushranger Acquisition Agreement"). Under this
agreement, Anglo has a "buy-back" option, as described further
below. ProspectOre also entered into an Exploration Farm-in and
Joint Venture Agreement ("JV") with Anglo at the same time to
farm-in to the surrounding exploration tenure covering 3 additional
exploration licences: EL8305, EL8306 and EL8585 ("Anglo Exploration
Tenements"). Subsequently, ProspectOre has agreed with Anglo
("Anglo Acquisition Agreement") to acquire outright the Anglo
Exploration Tenements, which supersedes the JV agreement, for a
cash consideration of A$50,000.
Key terms of the Agreement
Xtract has agreed to conditionally purchase all of the issued
share capital of ProspectOre ("Sale Shares") for a total
consideration of GBP1.25 million, which will be satisfied by the
allotment and issue of 100,000,000 new Ordinary Shares of 0.02p
each ("Consideration Shares") at an issue price of 1.25p per
Ordinary Share, to be settled upon completion. The Consideration
Shares will rank pari passu with the existing ordinary shares and
application will be made in due course for the Consideration Shares
to be admitted to trading on AIM and a further announcement will be
made in due course.
The total consideration is apportioned as to GBP10,000 in value
for licence EL8305; GBP10,000 in value for licence EL8306;
GBP10,000 in value for licence EL8585; and GBP1,220,000 in value
for licence EL5574 (the Racecourse resources lies entirely within
EL5574).
In addition to the Consideration Shares, Xtract has agreed that
on notification by the Seller, prior to Completion, to settle from
existing cash resources, a maximum amount of A$200,000 (GBP108,000)
in cash relating to outstanding liabilities of ProspectOre,
primarily being the cost to acquire the Anglo Tenements as
described above, and Director loans of A$25,000 (GBP13,500).
ProspectOre's assets principally comprise its rights, title and
interest in the Bushranger Project and the Anglo Tenements.
In the event that ProspectOre is unable to complete the share
transfer pursuant to the Acquisition Agreement, the Acquisition
will proceed by way of an Asset sale and ProspectOre has agreed to
sell the Assets on Completion.
Conditions precedent
Completion of the acquisition is subject to, and conditional
upon, the satisfaction or waiver of a number of conditions
precedent including:
(i) From the date of signing the agreement, a 30 day due
diligence period enabling Xtract, to verify that ProspectOre is the
legal and beneficial owner of the Tenements or, in respect of the
Anglo Exploration Tenements, has a legally binding right to acquire
such. In the event that the above condition is not satisfied,
Xtract will have the right to terminate the agreement.
(ii) In the event of an Asset sale, New South Wales Minister for
Energy and the Environment approval of the sale and written consent
from Anglo to the assignment of the ProspectOre's interest in the
Anglo Acquisition Agreement by no later than the cut-off date,
being 31 October 2020, or such later date agreed by Xtract and
ProspectOre. In the event that the above condition is not satisfied
by such date, both parties will have the right to terminate.
(iii) In the event of a Share sale, New South Wales Minister for
Energy and the Environment consent to the change in control of the
seller no later than the cut-off date of 31 October 2020 or such
later date agreed by Xtract and ProspectOre.
(iv) Written approval no later the cut-off date of 31 October
2020, or such later date agreed by Xtract and ProspectOre, from the
Foreign Investment Review Board that there is no objection under
the Foreign Acquisitions and Takeovers Act 1975. In the event that
the above condition is not satisfied, both parties will have the
right to terminate.
Exploration Programme
Xtract has agreed to spend at least A$350,000 (GBP189,000) on
exploration drilling and resource definition drilling on the
Tenements within twelve months of the date of Completion. The
exploration costs will be funded from existing cash resources and
future cash flows.
Director appointment
Under the Acquisition Agreement, Xtract has agreed to appoint a
person nominated by ProspectOre as a director of Xtract with effect
from completion (subject to satisfactory completion of any
regulatory procedures and approvals required by the AIM Rules).
Completion
Completion will have deemed to have taken place on the
pre-conditions set out above being met, by no later than 31 October
2020 (unless otherwise agreed between the parties), together
with:
(i) Receipt of share transfer forms in favour of Xtract in respect of Sale Shares;
(ii) Settlement of loan accounts for an aggregate amount of A$25,000 (GBP13,500); and
(iii) Allotment and admission to trading on AIM of the
Consideration Shares.
ProspectOre has agreed that the Consideration Shares will be
subject to a partial lock-in as follows:
(i) 25% of the Consideration Shares shall be freely tradeable on and from Completion;
(ii) 50% of the Consideration Shares shall be freely tradeable
on the date that is six (6) months on and from Completion; and
(iii) all of the Consideration Shares shall be freely tradeable
on and from the date that is twelve months on and from
Completion.
Anglo Buy-back option
Under the terms the Bushranger Acquisition agreement, if a
deposit of greater than 2 million tons of contained Cu equivalent
(e.g. 450Mt @ 0.45% Cu equivalent) is ultimately identified, Anglo
may buy-back 80% of the Racecourse deposit at fair market value as
determined by an Independent Expert in accordance with the JORC and
Valmin Code. Anglo and ProspectOre would then provide funding
pro-rata to their interests, save that ProspectOre may decide not
to provide its share of funding and be diluted, ultimately
retaining a 0.75% net smelter royalty (NSR). If a "Decision to
Mine" is taken by ProspectOre prior to the identification of 2
million tons of contained Cu equivalent, Anglo also have an
opportunity to exercise the buy-back. Anglo have a once-only
opportunity to exercise the 80% buy-back whether the opportunity
comes through the discovery of 2 million tons of contained Cu
equivalent or a decision to mine.
If Anglo does not exercise the buy-back and ProspectOre
ultimately develops a mine, ProspectOre would hold a 100% project
interest, less 3.5% in NSR royalties and a A$7.5 million
development payment to historic holders (which includes Anglo).
Future Sale of Anglo Tenements
In the event that within three years of completion of the
acquisition of the Anglo Exploration Tenements, ProspectOre sells
the Anglo Tenements, ProspectOre must notify Anglo of the sale and
if the sale value is more than A$100,000, an additional payment is
due to Anglo equal to 50% of the sale value in excess of A$100,000.
If the sale value is less than or equal to A$100,000 no further
payment is due to Anglo.
Further AIM Disclosures
ProspectOre is an Australian public unlisted company that was
incorporated on 31 May 2017 for the purposes of acquiring an
interest in the Bushranger Copper-Gold Project, located in the
Lachlan Fold Belt, New South Wales. As at 30 June 2019, total
audited assets amounted to A$37,000 (GBP19,980) and total
liabilities A$7,000 (GBP3,780). For the year ended 30 June 2019,
audited loss before tax amounted to A$30,692 (GBP16,573).
Xtract has agreed to pay an introduction fee of 1,000,000 new
ordinary shares ("Fee Shares") at an issue price of 1.25p per
ordinary share (equivalent to a fee of GBP12,500) and 2,000,000
options to subscribe for new ordinary shares ("Fee Options") at an
exercise price of 1.25p per new ordinary share at any time on or
before 2 June 2023. The Fee Shares and Fee Options have been issued
to The Tonehill Trust, an Australian-based entity.
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. The
person who arranged for the release of this announcement on behalf
of the Company was Colin Bird, Director.
Enquiries :
Xtract Resources Plc Colin Bird, +44 (0)20 3416 6471
Executive Chairman www.xtractresources.com
Beaumont Cornish Limited Roland Cornish +44 (0)207628 3369
Nominated Adviser and Michael Cornish www.beaumontcornish.co.uk
Joint Broker Felicity Geidt
Novum Securities Limited Colin Rowbury +44 (0) 207 399 9427
Joint Broker www.novumsecurities.com
Qualified Person:
Information in this announcement relating to the Licence has
been reviewed by Edward (Ed) Slowey, BSc, PGeo, a consultant to
Xtract. Mr Slowey is a graduate geologist with more than 40 years'
relevant experience in mineral exploration and mining, a founder
member of the Institute of Geologists of Ireland and is a Qualified
Person under the AIM rules. Mr Slowey has reviewed and approved the
geological content of this announcement.
Qualified Person:
In accordance with AIM Note for Mining and Oil & Gas
Companies, June 2009 ("Guidance Note"), Colin Bird, CC.ENG, FIMMM,
South African and UK Certified Mine Manager and Director of Xtract
Resources plc, with more than 40 years' experience mainly in hard
rock mining, is the qualified person as defined in the Guidance
Note of the London Stock Exchange, who has reviewed the technical
information contained in this press release.
TECHNICAL GLOSSARY
The following is a summary of technical terms:
"airborne magnetics" A survey of the earth's magnetic field carried
out from a helicopter or aeroplane
"airborne radiometrics" The measurement from an aircraft of radiation
from radionuclides present at or near the
Earth's surface
"Au" Gold
"base metals" Generally a metal inferior in value to the
precious metals, including copper, lead, zinc,
nickel and aluminium
"carbonate" A mineral containing carbonate ions e.g. calcite
(CaCO(3) ), or a rock, generally a sedimentary
rock, comprised largely of carbonate minerals
"chalcopyrite" A copper-iron sulphide mineral, CuFeS(2) ,
often found in copper ores
"Cu" Copper
"Diamond drill Form of core drilling which uses a rotary
holes" drill with a diamond drill bit attached in
order to create precisely measured holes
"disseminations" Mineralization distributed throughout a rock
"electromagnetics" Geophysical exploration method employing the
related electric and magnetic fields which
can be set up in a conductive body by an artificial
electric field at surface
"epithermal" Descriptive of hydrothermal mineral deposit
formed within about 1km of the Earth's surface
and in the temperature range 50-200 degrees
centigrade occurring mainly in veins
"exploration" Method by which ore deposits are evaluated
"geochemical" Of measurement of the abundance of chemical
elements in rocks or soils
"geophysical" Of measurement of physical characteristics
of the earth
"hydrothermal" Descriptive of hot magmatic emanations rich
in water
"IP" Induced Polarisation - a method of ground
geophysical surveying which employs the passing
of an electrical current into the ground to
test for indications of conductive metallic
sulphides
"JORC Code" Australasian Institute of Mining and Metallurgy
Joint Ore Reserves Committee code on mineral
resources and ore reserves
"mineralisation" Process of formation and concentration of
elements and their chemical compounds within
a mass or body of rock
"Mineral Resource" A concentration or occurrence of material
of intrinsic economic interest in or on the
Earth's crust in such form and quantity that
there are reasonable prospects for eventual
economic extraction
"monzonite" A coarse-grained igneous rock ranging from
acid to basic containing approximately equal
amounts of alkali and calc-alkali felspar
minerals
"Ordovician" Geological period occurring between 500 to
435 million years ago
"orogenic" Pertaining to mountain building events in
the Earth's history
"Palaeozoic" Epoch of Earth's history from 300 to 600 million
years ago
"porphyry copper-gold" A deposit of disseminated copper and gold
minerals in or around a large body of intrusive
rock
"pyrite" Iron sulphide mineral, FeS2
"quartz" A mineral composed of silicon dioxide, SiO(2)
"skarn" Metamorphosed rock resulting from the hydrothermal
interaction of hot silicate magmas and cooler
lime bearing sedimentary rocks
"stringer" A narrow vein or irregular filament of mineral
traversing rock mass of different composition.
"subduction" The process of one continental plate passing
beneath another during collision in the Earth's
crust
"subvolcanic" A term applied to intrusive igneous rocks
that have crystallised just below volcanic
level
"veins/veinlets" Small mineral-filled fractures in a rock
ENDS
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END
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