8
February 2024
Update on Zambian Copper
Joint Venture and Strategy
The Board of Xtract Resources Plc
("Xtract", 'XTR' or the "Company") is pleased to announce an update
on progress in Zambia with the copper exploration joint venture
agreement ("Joint Venture") with Cooperlemon Consultancy Limited
("CL") first announced on 24 August 2023, and also the overall
Company copper exploration strategy in Zambia. The Joint Venture is
focussed on the highly prospective large scale exploration licenses
29123-HQ-LEL and 30459-HQ-LEL in Northwest Zambia (the
"Licences").
Highlights
v The two
exploration licences are located within the Western Foreland
geological district that hosts the Kamoa - Kakula deposit and the
Central Fold and Thrust Belt ("Fold Belt") in NW Zambia.
v The two
licences cover a combined 107,000 ha in a highly prospective part
of Northwest Zambia where competition for exploration licences is
intense.
v Licence
29123 - HQ - LEL is located to the west of the perceived boundary
between the Western Foreland and Fold Belt, and Licence 30459 - HQ
- LEL is coincident with the boundary and may also include part of
the Fold Belt.
v The
Company believes there is scope for the discovery of potentially
high-grade Kamoa-style mineralisation at depth and lower grade
Kolwezi-type mineralisation at or near-surface.
v Exploration initiated with the recent acquisition of a major
historic database created by Anglo American plc and enabling a
cost-effective and fast-track programme.
Colin Bird, Executive Chairman said
: "We have recently embarked on
an intensive exploration campaign targeting a discovery of
commercial grade and tonnage of copper in a region of NW Zambia
that is not only the subject of more intense competition than I
have ever known for exploration ground but also the focus of
attention for most of the world's major mining companies. NW Zambia
is a proven host for large scale copper deposits and the geology of
our Joint Venture ground is highly prospective. Zambia as a nation
has set ambitious targets for copper production to underpin its
economic progress and Xtract intends to become a part of that story
initially by being the only junior company operating its own Joint
Venture licences on a self-financing and independent
basis"
Background
The geology of the Licence areas
subject to the Joint Venture with Cooperlemon is dominated by the
architectural domain known as the Western Foreland succession
(Kamoa-style mineralisation) and the neighbouring Lufilian Fold
Thrust Belt that plays host to lower grade, bulk tonnage,
near-surface mineralisation.
NW Zambia is the subject of intense
competition at this time not least because the style of the
underlying mineralisation and associated geology is believed to be
similar to that of the Kamoa-Kakula deposit operated by Ivanhoe
Mines in the neighbouring Democratic Republic of the Congo ("DRC").
The licence areas comprising the Joint Venture are projected to
have continuity with the geology of the DRC and are entirely
surrounded by ground under licence to, or within, partnerships or
joint ventures between local companies and global leaders in the
mining industry such as Rio Tinto plc,
Anglo American plc, First Quantum Minerals Ltd., and Ivanhoe Mines.
(Figure 1)
Figure 1: Plan Showing Exploration and Mining Licences in NW
Zambia and the Democratic Republic of Congo in Relation to
Exploration Licences held by Xtract Resources
http://www.rns-pdf.londonstockexchange.com/rns/3942C_1-2024-2-7.pdf
Moreover, on 27 November 2023
Ivanhoe Mines announced 'greenfield'
prospecting rights for exploration over 22,195km² in the Angolan
provinces of Moxico and Cuando Cubango. This exploration block is
immediately to the west of the Joint Venture licences and believed
(by Ivanhoe) to be similar to their Kamoa-Kakula province but
mostly covered by Kalahari sand and Karoo volcanics where
conventional exploration methods are less effective (Figure
2).
Figure 2: Xtract Exploration Licences Illustrated in Relation
to adjoining Licences which includes Licences held by Third Party
Tier 1 Companies and Licences Situated in the Democratic Republic
of Congo.
http://www.rns-pdf.londonstockexchange.com/rns/3942C_2-2024-2-7.pdf
The copper footprint in the DRC is
believed to extend across the border into NW Zambia where the Joint
Venture licences are located. Ivanhoe Mines' Kakula Mine in the DRC
is reported to be the world's highest-grade copper mine with deep,
high-grade (>5% Cu) copper mineralisation. The density of Tier 1 mining companies in the region reflects
the significant prospectivity of the Joint Venture
licences.
Xtract, has title and managed
project activities over 107,000 hectares in this highly competitive
region.
Joint Venture Agreement
Under the terms of the Joint
Venture, Xtract has agreed a phased investment.
In Phase 1 the Company will earn a
65% interest in the JV by funding exploration expenditure over an
initial 2-year period of not less than US$2 million. If the Phase 1
exploration results are successful, and prove the continuity of
mineralisation at grades suggesting the potential for the future
development of a Mineral Resource of not less than 500,000t of
contained copper, then Phase 2 will be initiated with a second
2-year exploration period and a budget of US$3M. Xtract will be the
operator of the licences for the 4-year duration.
Should a trade, or any other sale,
of the licences take place in the initial 2 years, then Xtract will
be deemed to have a 55% interest in the Joint Venture. A sale
requires the agreement of both Xtract and Cooperlemon.
Further information on the JV Licences
Licence No: 29123-HQ-LEL, which
comprises 88,149 ha and expires on 7 September 2025, is held by
Oval Mining Limited ("Oval"). The application for Licence
30459-HQ-LEL, which comprises 19,600 ha and which has been approved
for issue by the Zambian Mining Cadastre, is held by Far North
Enterprises Limited ("Far North"). Both licences are located in NW
Zambia adjacent to the Democratic Republic of Congo (DRC) border.
Oval and Far North have each agreed with Xtract to be bound by the
terms and the conditions of the Joint Venture with Cooperlemon (who
is acting on their behalf) as though they were a party to the
Agreement.
Opportunities and Prospects
Xtract acquired its interest in the
Joint Venture licences by virtue of the long-standing and
successful presence in Zambia of the senior management of Xtract
and the historic success reflected in discovery of a now Tier 1
asset, Sentinel Mine, later developed and still operated by First
Quantum Minerals (FQM). Long-term alliances formed with senior
Zambian exploration companies and entrepreneurs and
consultants with deep exploration experience in Zambia have
created a strong platform for Xtract. There are clear cost benefits
from the use of consultants with common geological skills, mobile
assets and logistics/administration staff operating in the same
geographic region.
Exploration Progress in Q4, 2023 and
Financing
Xtract now has exclusive access to
unique historic data sets generated by Anglo American plc which
pre-date any proper understanding of the Western Foreland
geological setting and potential. This has enabled a fast-track
early-stage exploration strategy on a very cost-effective basis
that will save an estimated US$1.5M in direct exploration costs
during Phase 1 of the Joint Venture.
With funds received from Xtract's
entitlement from its 23% net interest in the Manica project in
Mozambique for the period ended September 2023 as announced on 24
January 2024, Phase 1 exploration commitments for the Joint Venture
are available from existing cash resources meaning no fund-raise is
anticipated and therefore no dilution to shareholders. The
financing of Phase 2 will be based on the results from Phase 1 and
also, the decision by shareholders on the proposed disposal of
XTR's interest in Manica at the Extraordinary General Meeting
(EGM) to be held on 13 February 2024 and detailed in the EGM
circular sent to XTR shareholders which is available on the Company
web site.
Prospects for Mine Development
In the event that either or both of
the Joint Venture licences advance to a point where they reveal
commercially viable copper assets that are suitable for
development, then the licences will be moved to a corporate entity
to be owned 75% by Xtract and 25% by Cooperlemon. It will then be
the responsibility of the newly formed corporate entity to raise
all capital for mine development and future operations.
The Zambian government has expressed
a clear ambition to increase domestic Cu production from the
present 830K tpa to 3M tpa by the end of the decade. This
implies a clear political and strategic national support for the
mining industry and the granting of licences to develop
opportunities for this 'clean-energy' and battery metal. Elsewhere,
for example in Central and South America, there is a mixture of
sentiment from qualified support to total opposition to mining.
Moreover, the complexity of permitting worldwide now means long
lead times in decision-making of several years is being experienced
between discovery and commissioning of Tier 1 projects.
Taking into consideration the almost
universally projected increased global demand for Cu, with a more
than 40% increase to 36.6Mt expected by 2031, linked to by the
'Clean and Green' energy revolution, The Board anticipates that it
is likely that Zambia will be a major source of Cu production for
at least the next 75 years.
Xtract shareholders have an
opportunity to share in this potentially historic rebirth of the
Zambian Cu Belt.
Further information
Further information is 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 information contained within
this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (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 for the
release of this announcement on behalf of the Company was Colin
Bird, Executive Chairman and Director.
Enquiries:
Xtract Resources Plc
|
Colin Bird,
Executive Chairman
|
+44 (0)20 3416 6471
www.xtractresources.com
|
Beaumont Cornish Limited
Nominated Adviser and Joint Broker
|
Roland Cornish
Michael Cornish
Felicity Geidt
|
+44 (0)207628 3369
www.beaumontcornish.co.uk
|
Novum Securities Limited
Joint Broker
|
Jon Bellis
Colin Rowbury
|
+44 (0)207 399 9427
www.novumsecurities.com
|
Beaumont Cornish Limited ("Beaumont
Cornish"), which is authorised and regulated in the United Kingdom
by the Financial Conduct Authority, is acting as nominated adviser
to the Company in connection with this announcement and will not
regard any other person as its client and will not be responsible
to anyone else for providing the protections afforded to the
clients of Beaumont Cornish or for providing advice in relation to
such proposals. Beaumont Cornish has not authorised the contents
of, or any part of, this announcement and no liability whatsoever
is accepted by Beaumont Cornish for the accuracy of any information
or opinions contained in this announcement or for the omission of
any information. Beaumont Cornish as nominated adviser to the
Company owes certain responsibilities to the London Stock Exchange
which are not owed to the Company, the Directors, Shareholders, or
any other person.
Qualified Person:
Colin Bird: The technical
information contained in this announcement has been reviewed,
verified, and approved by Colin Bird, C.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.
ENDS