Xtract Resources plc (XTR.L) Final Results

Audited results for the 12 months ended 31 December 2020

The Board of Xtract Resources Plc (“Xtract” or the “Company”) announces its audited financial results for the 12 months ended 31 December 2020. The 2020 Audited Annual Report and Accounts (“Accounts”) are in the process of being posted to shareholders and will be available together with this announcement on the Company’s website www.xtractresources.com.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (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 the release of this announcement on behalf of the Company was Joel Silberstein, Director.

Corporate & Operational highlights

· Company agreed conditional acquisition of a 100% interest in the Bushranger Copper-Gold Project within the world-class Lachlan Fold Belt in New South Wales, Australia

· Completion of sale & purchase agreement to acquire 100% interest in the Bushranger Copper-Gold project in Australia for £1.25m was settled in new Xtract ordinary shares

· Bushranger Project has a JORC (2012) compliant Inferred Resource of 71Mt @ 0.44% Cu and 0.064g/t Au, with deposit widths and gold grades increasing down-plunge

· At Manica in Mozambique, two further mining contractor agreements were concluded post period end to develop the Guy Fawkes and Boa Esperanza hard rock gold deposits

· At the Eureka copper-gold project in Zambia, exploration pitting post period end encountered high grade sample suggesting there is potential to extend the known deposit to over 300m length

· Data integration at the historic high-grade Kalengwa mine site in Zambia confirms that much of the near-mine copper-silver potential remains to be adequately drill tested

· Total of £0.65 million (before expenses) raised through an equity placing

· Additional mining contractor agreement concluded for the exploitation of alluvial gold deposits at Manica in Mozambique

· Total of 19.38kg (equivalent to 620 ounces) of production attributable to Explorator (2019: 37.31kg (equivalent to 1,199 ounces)

Financial highlights

· Cash of £0.92m (2019: £0.36m)

· Net assets of £11.93m (2019: £10.78m)

· Revenue from gold sales of £1.73m (2019: £1.35m)

· Administrative and operating expenses of £2.09m (2019: £1.81m)

Dear Shareholder,

The period under review has been very positive, with the Company advancing its mission to be a major explorer with small scale mining operations. The objective being to have meaningful income to explore any discovery, which has the potential to become a large-scale mining operation. This balance of production and operation can mitigate the inevitable effect of dilution against discovery, since any discovery will require a large drilling budget to establish its value.

A major step for the Company was the acquisition of the Bushranger Copper-Gold project in NSW, Australia in late October 2020 and we commenced drilling on 16 December 2020. We drilled 5 holes, all of which encountered considerable widths of copper mineralisation, with the first hole encountering 920m of continuous mineralisation. Post balance sheet, we completed the programme, received some assay results, conducted a major geophysical programme and did some initial open pit modelling.

The results of the geophysics have been extremely encouraging and the porphyry appears to be open in all directions, with particularly strong indications of mineralisation to the northwest and southeast at relatively shallow depths. The Directors were extremely encouraged by the results of the initial programme and are planning a second drilling programme to commence early Quarter 3, 2021 for at least 20,000m. We are currently modelling a potential open pit, based on previous drill holes and eagerly await the outcome of the modelling against more positive copper prices and mid-term projections.

The Racecourse Project in the Lachlan Fold Belt has well surpassed our expectations and we look forward with anticipation to phase 2 of the drilling programme.

In Zambia the period commenced with reconnaissance drilling and the results were extremely encouraging at Eureka, whilst the Kajevu programme showed only sporadic mineralisation. We therefore decided to continue with Eureka and discontinue further work at Kajevu. The Eureka project has continued to progress, and we are particularly pleased with the extension to the former open pit and the strike remains open. It appears that the oxide mineralisation extends to at least 60m depth and there is sufficient ore to commence an open pit for concentrated ore supply to local processing facilities. After the period under review, further drilling was carried out and in the region of the former open pit and very high copper results have been received. Thus, future exploration will have a dual focus. We will drill to extend the oxide open pit and we will drill deeper to test the continuity of the body into sulphides. It has been postulated that Eureka may well be an IOCG deposit, and we will investigate that prognosis. At the time of writing, we are moving drilling equipment to further test the extension of strike.

The Kalengwa processing project received much test work ranging from rudimentary upgrading to building a leach process site. The latter was somewhat hampered by leaching results and the prospect of prolonged rains interfering with a 12-month operation. We are settled on an upgrading process for the tailings and are confident that we can produce a +10% material for transport to Copperbelt processing facilities. Drilling was carried out south of the open pit and we are confident that we can conduct primary mining south of the pit without necessarily blasting, since the material seems amenable to scraping. A primary operation together with the hard rock dumps, justifies sulphide processing circuit and this will form the second part of our Kalengwa processing operation.

The Manica Fairbride operation in Mozambique continued but was severely hampered by the excessive rains in Manica, with the area suffering the tail end of two cyclones. Construction of equipment in South Africa continued but smaller items could not be transported to site, because of Covid-19 restrictions between the borders of South Africa and Mozambique. At the time of writing, the tailings dams are complete, civil works are in progress, most equipment has been manufactured and we are confident for a third quarter 2021 start-up of operations.

The delays at the Fairbride project motivated us to approach our partners to investigate the Guy Fawkes and Boa Esperanza projects with local contracting groups. We engaged a group to work on the Guy Fawkes project, which is predominantly underground. They have established entrances to the orebody and are blocking the upper levels out for stoping. Currently, they are mining a deeper entrance to block out deeper levels, prior to commencing more productive stoping methods.

The alluvials continue to produce modest results, and since the date of commencing operations, we have made a surplus of income over expenditure in the current year, despite very adverse operating conditions, which are essentially deep overburden and low grade. We are optimistic for gold production for the third quarter of this year, when all operations are active.

The second part of 2021 should be very exciting for the Company since we have high expectations for production income increasing and receiving positive results from our phase 2 drilling programme in Australia. We have succeeded in keeping all operations progressing through the Covid-19 outbreak, while minimising disruption.

I thank all of my fellow directors and staff for their efforts and contributions during the period under review and the period thereafter and look forward to their patience and effort bringing rewards to our shareholders towards year end.

Colin Bird

Executive Chairman

Full update https://www.investegate.co.uk/xtract-resources-plc–xtr-/rns/final-results/202106281106033190D/


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