On Monday 13 February, Xtract Resources Plc announced that it has signed a collaboration agreement with Nexus Capital Ltd. concerning the alluvial goal deposits at the Manica mine in Mozambique following a review being launched last year. Xtract shares were up 33% to 0.299 pence per share on Monday.
Xtract previously announced that it would conduct a total review of the company’s position relative to a number of its projects and said the review of the alluvial contract with Nexus, previously named Mineral Technologies International Ltd, was an “essential part”.
“The alluvial contract in its existing form was questioned by both parties who agreed that there was a more commercial and risk free basis to jointly work the alluvial gold deposits by contracting with surrounding mining operators and to receive a royalty while minimising financing, execution and operating risk to Xtract and Nexus”, said the miner.
Under the agreement signed on Monday, several alluvial deposits have been identified that could be mined to use latent capacity at the processing plant. Nexus will assume all costs associated with the deposits, except for contributing toward costs associated with monitoring staff and transporting the gold dore to the refinery. Xtract expects to receive first income under the new agreement during the second quarter of 2017.
Xtract said the agreement will also allow several sub-agreements with third party mining contractors concerning the Manica concession. Discussions are being held with a number of third parties to conclude agreements for the exploitation of alluvial deposits. Xtract, as the operator of the smelter, will earn a royalty on any gold processed through it. Nexus has already invested about US$1-million to date in plant and equipment and, as a result, will be entitled to the first US$1-million of “front end payments” from the contract miners, Xtract said.
“The board’s strategic review of Xtract’s portfolio identified major risk in financing and working alluvial operations when the asset cannot be defined in gold quantity or deposition, i.e. value. The Collaboration Agreement extinguishes this risk and will result in potential near-term income which has the possibility to grow significantly in the coming months”, said Chairman Colin Bird.
“I am pleased with the outcome of the last six months discussions with Nexus and the prospects of short-term income which has the propensity to increase considerably. The accelerating of income from the mining of the alluvial deposits is the last hurdle in the company’s strategic review and we can now move forward with restoring shareholder value”, he added.
Source: London South East
Auroch agrees settlement with Xtract
Auroch Minerals Limited has entered into settlement arrangements with Xtract Resources Plc with respect to the outstanding debt owed to Auroch totalling US$1,748,136 (A$2.28-million).
The settlement arrangements with Xtract have been structured as three separate agreements, a convertible note agreement, a loan agreement and a royalty agreement over production at the
Manica gold project in Mozambique. Auroch will also be issued of 500,000,000 warrants in Xtract.
Auroch Executive Chairman, Glenn Whiddon, said that: “Auroch is pleased to have reached a resolution with Xtract on the outstanding payment. This will give Xtract the opportunity to complete a definitive study while at the same time provide Auroch with a regular cash flow to fund ongoing exploration and business development activities, while maintaining its cash balance of A$6-million”.
For the convertible note agreement Xtract has agreed to issue unsecured convertible notes to the total value of US$748,136 to the company. The convertible notes accrue interest at 10% per annum payable quarterly in advance and are to be repaid no later than 31 December 2017.
In the event of a fundraising by Xtract, Auroch may require Xtract to allocate 15% of the aggregate net proceeds to redeeming part of the convertible notes.
Xtract has also entered into an unsecured loan agreement with Auroch for the balance of the total debt totalling US$1million. Xtract will repay the loan agreement on or before 31 December 2017 together with interest that will accrue at a rate of 10% per annum.
In addition, Xtract intends to seek shareholder approval prior to 30 June 2017 to authorise Xtract to replace the loan agreement with a convertible loan note on substantially the same terms as the convertible note.
Xtract has granted security to Auroch by way of a royalty agreement over the Manica gold project whereby Auroch will receive a royalty payment equal to 3% of gross revenue from commercial operations (including any alluvial gold production). The royalty is subject to a maximum payment of US$1,748,136.
In addition, Xtract has agreed to issue the company 500,000,000 warrants exercisable at 0.02p each on or before 21 December 2017.
Source: Finance Nine
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