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Xtract Resources encouraged by gold production trend at Manica in Mozambique

The hard rock collaboration agreement with Omnia Mining has sent channel samples and rock chips for assay sampling.

Gold production rose 42%

Xtract Resources PLC (LON:XTR) is seeing output from the Manica mine in Mozambique start to pick up.

Sino Minerals, a contract miner working on the project, produced a total of 1,703 ounces of gold in April, May and June – up 42% from the previous quarter (1,200 oz).

READ: Xtract Resources seeks new contractor for western half of Manica concession

Xtract’s subsidiary Explorator receives 25% of all the gold produced, meaning its share this time was around 426oz (Q1:297oz).

But problems processing the gold meant only 283 oz of Explorator’s portion of the precious metal was sold, bringing in US$291,000 (Q1: US$333,000).

As Xtract owns a 40% stake in Explorator, its take-home pay was US$116,400 (Q1: US$133,200).

“These results demonstrate an increasing trend in quarterly production,” said Xtract’s executive chairman Colin Bird.

“The first quarter was adversely affected by the rainy season and difficult processing conditions in the West.

The second quarter was rid of the rains but was affected by difficult processing conditions due to fine gold and erratic occurrence.

 “Since alluvial production commenced in 2017, Explorator has been self-funding and we are encouraged by production levels being maintained by one contractor.”

Bird believes eventually it can earn around US$300,000 per month from the gold mined by contractors, money it will use to develop a hard rock mining operation at the prospect.

North and South

Sino Minerals has exclusive mining rights to the eastern half of the Manica concession but mining elsewhere has been hampered by issues with the contractors for the alluvial deposits.

Moz Gold stopped work at the end of June and a new contractor will be appointed shortly, Bird said.

Other ways to boost production are also being looked at.

“We are seriously considering dividing the concession into North-South halves [rather than east-west]since the river beds and terraces require different processing plant configuration.”

Hard Rock collaboration

Meanwhile, the hard rock collaboration agreement with Omnia Mining has sent channel samples and rock chips for assay sampling.

How much it will cost to upgrade the current plant to feed all types of oxidation from oxides to sulphides is also being investigated.

“We are currently in the process of identifying more hard rock mining positions irrespective of whether the crop is oxide transition or sulphide and concurrently evaluating the cost and time of operating the plant to treat all gold mineralisation types," said Bird.

“The co-ownership of an all-purpose plant will position the Collaboration Agreement very strongly in the Manica area."

Xtract shares eased to 1.22p.

Quick facts: Xtract Resources PLC

Price: 1.425 GBX

Market: LSE
Market Cap: £6.52 m

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