Xtract Resources announced plans to dispose of the Manica Gold Project on Wednesday, reporting that it had entered into conditional agreements with its Mozambique partner MMP and related parties.
The AIM-traded firm said the key components of the MMP agreements included a share purchase agreement, under which Xtract would sell its 23% net profit share interest in Manica, represented by the entire issued share capital of Mistral, to the buyers.
It said consideration for the sale would be up to $15m in cash, with payments scheduled in regular staged instalments by the buyers until 1 March 2027.
A settlement and restructuring agreement would meanwhile see Xtract terminate its mining collaboration agreement with MMP, dated 28 May 2019, concerning the Manica Gold Project.
As part of the termination, Xtract would receive $3.325m in cash, settling all outstanding payments due under the mining collaboration agreement.
Of that amount, $2m had already been paid, and the mining collaboration agreement would be brought to an end.
The board said the proposed disposal of the Manica Gold Project represented a fundamental change of business for Xtract under the AIM rules.
As a result, the completion of the transaction was contingent on various conditions, including obtaining approval from Xtract’s shareholders, which would be sought at a general meeting.
Despite the disposal, Xtract said it would continue to operate as a minerals company under the AIM rules, as it retained significant mineral interests in two large-scale early-stage exploration copper projects in Northeast Zambia, and the Bushranger copper project in Australia.
“The Manica Project will be transitioning to the complex ore phase which has not yet been fully scoped or technically and financially modelled,” said executive chairman Colin Bird.
“We do not want to be exposed to this risk, particularly in exciting copper times for our company.
“The President of Zambia is targeting annual production of three million tonnes of copper per annum, and the discovery of Western Foreland – Kamoa style mineralisation in Zambia will do much to achieve this goal.”
Bird said the predictive rise in copper use, notwithstanding electric vehicles, was forecast to be substantial, adding that while EVs were important, developing world emergence and growth was providing significant additional copper demand.
“We believe that the resulting copper supply shortage is becoming more acute and Xtract is determined to be a major player in the copper discovery arena.
“Viewing worldwide exploration activities, the Xtract board is even more convinced that its southern African copper focus, and particularly on the Western Foreland, exploration and small mine opportunities, is the optimum strategy for our shareholders.
“The two projects in the Xtract copper portfolio in NW Zambia hold a pivotal position in the Western Foreland geological architecture and present a significant potential opportunity for both our shareholders and our copper portfolio in general.”
At 1334 GMT, shares in Xtract Resources were up 0.91% at 1.11p.
