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Strategic Review at Chepica Mine

22 Sep 2016 07:00

RNS Number : 5053K
Xtract Resources plc
22 September 2016
 

 

22 September 2016

This announcement contains inside information

 

Strategic Review at Chepica Mine

 

The Board of Xtract Resources Plc ("Xtract" or the "Company") announces that after undertaking a review of the Chepica Gold/Copper Mine in southern Chile (the "Mine"), it has determined that the underlying fundamentals and the risk associated with the project are no longer supportive of continuing investment by the Company. On this basis, the Company has advised the option holder that it will not make future option payments. The next option payment is due on 15 October 2016 following which the Company will relinquish its option and mining rights at Chepica.

 

The reasons for this decision are:

 

· The Board does not consider that the Mine can consistently produce 10,000 tonnes of ore month by month at the required gold ore grade;

· Previous studies have suggested that the Mine performance has improved and the weakness was a less than optimal processing plant. In addition to the plant improvements, it has been established that the Mine requires new transport and mining equipment, the lease or purchase cost of which has not been included in future operating cost estimates; and

· The timeline to achieving revenues in excess of cost is expected to be longer than previously determined. In order to achieve positive cash generation and profitability, significant and more than previously forecast funding would be required. The Board now believes that taking into consideration the historical Mine performance, it is extremely unlikely that an acceptable return on new investment could be made.

 

Accordingly, the Board has advised the option holder of its decision to relinquish its option and mining rights at the Mine and will cease any further funding of the Company's local subsidiary, Minera Polar Limitada ("Minera") through which it has operated the Mine, with immediate effect.

 

Xtract, via Minera, will seek an orderly disposal of this investment in due course and in the interim will do all things necessary to introduce new interested parties whose mission is small scale underground mining and whose operations include either a presence or an intention to operate in Latin America.

 

Further to the Company's notification on 17 August 2016, the Company will provide an update on its Manica asset during the early part of next week.

 

Colin Bird, Executive Chairman, said: "The Chepica mine has been challenged technically and commercially for an extended period.

 

The technical challenges received a further set back in late 2015 when the region experienced a major earthquake and, separately, a tragic dual fatality at the surface plant. Our internal review concludes that a new operator, with a separate input capital structure and operating experience in Latin America, may be able to achieve the operating returns required for new investment.

 

Shareholders will be advised on progress and exit discussions and identification of the new direction for the Mine as soon as possible."

 

Enquiries:

Xtract Resources Plc

Colin Bird, Executive Chairman

 

+44 (0)20 3416 6471

 

Cenkos Securities plc

Derrick Lee

Beth McKiernan

+44 (0)131 220 6939

Beaufort Securities

Jon Belliss

 

+44 (0)207 382 8300

 

 

 

 

 

 

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCAKDDBDBKBQCB
Date   Source Headline
23rd Feb 20249:00 amRNSCompletion of Disposal of Manica Gold Project
16th Feb 20249:05 amRNSDisposal of Manica Gold Project
13th Feb 20241:15 pmRNSResult of Meeting
8th Feb 20247:00 amRNSUpdate on Zambian Copper Joint Venture & Strategy
24th Jan 202411:00 amRNSProposed disposal of Manica Gold Project
6th Nov 202311:30 amRNSBushranger pit optimisation & financial study
23rd Oct 20231:32 pmRNSManica Q2 2023 Gold Production Update
29th Sep 202311:10 amRNSHalf-year Report
24th Aug 20239:24 amRNSZambian exploration licences joint venture
28th Jul 20236:00 pmRNSResult of AGM
20th Jul 20239:05 amRNSBushranger Pre-Concentration Test Results
6th Jul 20237:00 amRNSManica Q1 2023 Gold Production Update
5th Jul 202310:28 amRNSNotice of AGM
29th Jun 20234:16 pmRNSFinal Results
20th Jun 202312:55 pmRNSAccounts and Annual General Meeting update
6th Apr 20237:00 amRNSFourth quarter 2022 production update
30th Mar 20237:00 amRNSChange of auditor
7th Mar 20234:35 pmRNSPrice Monitoring Extension
7th Mar 20237:00 amRNSUpdate on Open Pit Mining Study for Bushranger
26th Jan 20237:00 amRNSKakuyu Copper Project Zambia update
23rd Jan 20234:40 pmRNSSecond Price Monitoring Extn
23rd Jan 20234:35 pmRNSPrice Monitoring Extension
13th Jan 20239:44 amRNSDirector/PDMR Shareholding
9th Jan 20231:25 pmRNSThird quarter 2022 production update
19th Dec 202211:42 amRNSAscot Prospect Maiden Mineral Resource
15th Dec 20223:53 pmRNSKakuyu copper project Zambia
8th Dec 20224:08 pmRNSHolding(s) in Company
5th Dec 202210:32 amRNSTotal Voting Rights
23rd Nov 202211:05 amRNSSecond Price Monitoring Extn
23rd Nov 202211:00 amRNSPrice Monitoring Extension
23rd Nov 20227:00 amRNSRacecourse Prospect Updated Mineral Resource
22nd Nov 202212:21 pmRNSApplication update
4th Nov 202210:43 amRNSAward of share options and settlement shares
6th Oct 202211:00 amRNSAscot Prospect final assay results
30th Sep 202210:52 amRNSHalf-year Report
30th Sep 20227:00 amRNSProduction update
24th Aug 202210:20 amRNSResult of AGM
15th Aug 20221:05 pmRNSBushranger results of metallurgical test work
8th Aug 20224:40 pmRNSSecond Price Monitoring Extn
8th Aug 20224:35 pmRNSPrice Monitoring Extension
8th Aug 20222:06 pmRNSSecond Price Monitoring Extn
8th Aug 20222:00 pmRNSPrice Monitoring Extension
4th Aug 20229:13 amRNSBushranger completion of phase two drilling
29th Jul 202211:37 amRNSNotice of AGM
27th Jul 202212:14 pmRNSBushranger assay results and drilling update
21st Jul 20227:00 amRNSFair Bride Update
7th Jul 202212:18 pmRNSBushranger assay results and drilling update
1st Jul 202211:06 amRNSSecond Price Monitoring Extn
1st Jul 202211:00 amRNSPrice Monitoring Extension
30th Jun 20224:33 pmRNSFinal Results

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