TIDMXTR
RNS Number : 0749S
Xtract Resources plc
07 March 2023
For immediate release
7 March 2023
Xtract Resources Plc
("Xtract" or the "Company")
Update on Open Pit Mining Study for Bushranger Copper-Gold
Project
The Board of Xtract Resources Plc ("Xtract" or the "Company") is
pleased to provide an update on the mining study ("Study") by
independent consultants Optimal Mining Solutions (Pty) Ltd
("Optimal Mining") to examine the economics of a 20Mpta and 25Mpta
open pit operation on the Bushranger Copper-Gold Project
("Project") in central New South Wales, Australia. Optimal Mining
has prepared an initial report for the Company which has reviewed
the pit optimisation options ("Interim Report"). Optimal Mining has
identified that the economics of the Project can be improved by way
of modern ore sorting technology and the full Study will be
completed based on further test work already under way on this
option.
Highlights
-- The combined copper-gold mineral resources at the Racecourse
and Ascot Prospects on the Project were previously updated by the
Company (see RNS dated 19 December 2022) to contain approximately
1.3Mt of copper-equivalent metal, with the combined shallow
high-grade zones at the Racecourse and Ascot prospects hosting a
total of 225Mt @ 0.33% CuEq* .
-- 16 economic pit shells were modelled in the Interim Report
from an operating cost perspective only with capital cost
requirements excluded and to be finalised on completion of the
Study. The 20Mtpa and 25Mtpa open pit options potentially generate
significant operating cash margins dependent upon mining rate,
copper price and cut-off grade.
-- As processing of the Bushranger ore contributes between 49%
and 61% of the total production cost across the 16 cases examined,
Optimal Mining identified that the Bushranger copper mineralisation
may be well suited to pre-concentration, providing opportunities to
streamline mining and processing with positive impacts on metal
recoveries, capital and operating costs through the use of ore
sorting technology.
-- Optimal Mining has identified a copper project with similar
grades to Bushranger where pre-concentration reduced the amount of
material to be concentrated up to approximately 50%, significantly
reducing pre-production capital and operating costs.
-- Xtract has initiated the pre-concentration study with the
objective of quantifying improvement in cash margins, which will
then allow Net Present Values and Internal Rates of Returns to be
calculated for various mining scenarios, finalising the mining
Study.
-- Further drilling is at planning stage to test the remaining
shallow to moderate depth copper-gold mineralisation targets
located proximal to the Racecourse Mineral Resource.
*CuEq % = (Cu%) + (Au g/t * 0.6577)% + (Ag g/t * 0.008769)%
Cu Price = US$8800/t, Au Price = US$1800/oz, Ag Price =
US$24/oz
Colin Bird, Executive Chairman said: "The initial work by
Optimal Mining shows that pre-concentration of ore has the
potential to significantly increase cash flows from an open pit
operation. On a project with similar grades to Bushranger,
pre-concentration of the copper mineralisation reduced the amount
of material to be concentrated by over 50%, while retaining 87% of
the contained copper metal. This significantly reduced the
pre-production capital expenditure, improved the operating cash
margin and the overall project Net Present Value and Internal Rate
of Return. Therefore, we have initiated a study to determine how
effective ore pre-concentration could be at Bushranger and will
then feed those results into the final open pit economic
modelling.
Given the potential upside of locating additional mineralisation
in close proximity to the Racecourse Mineral Resource further drill
testing of adjacent targets is being planned which, together with
the results of the pre-concentration test work, will allow us to
finalise our ongoing plans for the Bushranger project."
Bushranger Project Results from Open Pit Mining Interim
Report
Following definition of the updated Mineral Resource for the
Racecourse Prospect and the maiden Mineral Resource for the Ascot
Prospect, Xtract contracted independent consultants Optimal Mining
to update the Bushranger Project open pit mining study. The update
was aimed at examining the economics of either a 20Mtpa or 25Mtpa
open pit mining operation for copper prices ranging from US$8,000/t
to US$11,000/t and cut-off grades of 0.10% CuEq and 0.15% CuEq. A
total of 16 scenarios were run for open pit mining of the
Racecourse and Ascot Mineral Resources, with economic pit shells
being generated for all of these scenarios.
The Interim Report is preliminary in nature and includes
Inferred Mineral Resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorised as mineral reserves. The
Interim Report is based on low-level technical and economic
assessments and is insufficient to support estimation of Ore
Reserves or to provide assurance of an economic development case at
this stage, or to provide certainty that the conclusions of the
Interim Report will be realised.
A consequence of the grade of the mineralisation of the
Racecourse and Ascot Mineral Resource is that processing costs are
estimated to be approximately half of the total production costs.
Optimal Mining has identified that pre-concentration treatment of
the copper-gold mineralisation could have significant benefits as
follows:
-- Reduce processing and operating costs;
-- Reduce pre-production capital expenditure due to a significantly smaller concentrator;
-- Improve concentrator recoveries due to higher feed grades;
-- Generate more coarse dry rejects that are easier to manage;
-- Reduce the size of the tailings dam due to less concentrator feed.
The Interim Report further identified that, on a copper project
with similar grades to the Bushranger Project, pre-concentration
retained 87% of the contained metal and reduced the amount of
material to be concentrated by approximately 50%, significantly
reducing pre-production capital and operating costs. The feed grade
into the concentrator on this comparable project increased from
0.15% Cu to 0.29% Cu, improving metal recoveries. Due to the close
association of the copper mineralisation at both the Racecourse and
Ascot prospects with the mineral pyrrhotite, which is both
conductive and magnetic, there are several options for
pre-concentrating the mineralisation which may be highly
effective.
Next Steps
Due to the highlighted potential for improvement of the
project's economic viability, Xtract has initiated a study to
assess the effectiveness of pre-concentration. Mineralisation from
four drill holes from the Racecourse Prospect has already been
submitted for ore pre-concentration analysis which will allow the
open pit economic model to be refined and then finalised.
Finalisation of the open pit mining Study will include the
development of production schedules, capital cost and operating
cost estimates, which will then allow Net Present Values and
Internal Rates of Returns to be calculated for various mining
scenarios for a range of production rates, cut-off grades and
copper prices.
The initial work by Optimal Mining for the open pit economic
study have reinforced the benefits of further shallow to moderate
depth copper-gold mineralisation to the overall economic value of
the Bushranger Project. Consequently, additional drilling is at
planning stage to test the upside potential of remaining
exploration targets in close proximity to the Racecourse Mineral
Resource
Further information is available from the Company's website
which details the company's project portfolio as well as a copy of
this announcement: 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 for the release of this announcement on
behalf of the Company was Colin Bird, Executive Chairman and
Director.
Enquiries :
Xtract Resources Plc Colin Bird, +44 (0)20 3416 6471
Executive Chairman www.xtractresources.com
Beaumont Cornish Limited Roland Cornish +44 (0)207628 3369
Nominated Adviser Michael Cornish www.beaumontcornish.co.uk
and Joint Broker Felicity Geidt
Novum Securities Limited Jon Belliss +44 (0) 207 399 9427
Joint Broker Colin Rowbury www.novumsecurities.com
Qualified Person
Information in this announcement relating to the exploration
works has been reviewed by Edward (Ed) Slowey, BSc, PGeo, a
consultant to Xtract. Mr Slowey is a graduate geologist with more
than 40 years' relevant experience in mineral exploration and
mining, a founder member of the Institute of Geologists of Ireland
and is a Qualified Person under the AIM rules. Mr Slowey has
reviewed and approved the geological content of this
announcement.
Qualified Person
In accordance with AIM Note for Mining and Oil & Gas
Companies, June 2009 ("Guidance Note"), Colin Bird, CC.ENG, FIMMM,
South African and UK Certified Mine Manager and Director of Xtract
Resources plc, with more than 40 years' experience mainly in hard
rock mining, is the qualified person as defined in the Guidance
Note of the London Stock Exchange, who has reviewed the technical
information contained in this press release.
Optimal Mining Solutions (Pty) Ltd of Australia
Optimal Mining Solutions (Pty) Ltd of Australia has reviewed the
information in this announcement which has been derived from the
interim pit optimisation Study and has confirmed that the
information so presented is balanced and complete and not
inconsistent with the interim pit optimisation Study.
Mineral Reserves and Resources
The Company estimates and discloses mineral reserves and
resources using the definitions adopted by JORC. Further details
are available at www.jorc.org. See the "Glossary of Geological and
Mining Terms" for complete definitions of mineral reserves and
mineral resources.
About Mineral Resources
Mineral resources are not mineral reserves and do not have
demonstrated economic viability but do have reasonable prospect for
economic extraction. They fall into three categories: measured,
indicated, and inferred. The reported mineral resources are stated
inclusive of mineral reserves. Measured and indicated mineral
resources are sufficiently well-defined to allow geological and
grade continuity to be reasonably assumed and permit the
application of technical and economic parameters in assessing the
economic viability of the mineral resource. Inferred mineral
resources are estimated on limited information not sufficient to
verify geological and grade continuity or to allow technical and
economic parameters to be applied. Inferred mineral resources are
too speculative geologically to have economic considerations
applied to them. There is no certainty that mineral resources of
any category will be upgraded to mineral reserves.
Important Information about Mineral Reserve and Resource
Estimates
Whilst the Company takes all reasonable care in the preparation
and verification of the mineral reserve and resource figures. the
figures are estimates based in part on forward-looking information.
Estimates are based on management's knowledge, mining experience,
analysis of drilling results, the quality of available data and
management's best judgment. They are, however, imprecise by nature,
may change over time, and include many variables and assumptions
including geological interpretation, commodity prices and currency
exchange rates, recovery rates, and operating and capital costs.
There is no assurance that the indicated levels of metal will be
produced, and the Company may have to re-estimate the mineral
reserves based on actual production experience. Changes in the
metal price, production costs or recovery rates could make it
unprofitable to operate or develop a particular deposit for a
period of time.
Forward Looking Statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should" "envisage", "estimate", "intend", "may", "plan",
"will" or the negative of those, variations or comparable
expressions, including references to assumptions. These
forward-looking statements are not based on historical facts but
rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the
amount, nature and sources of funding thereof), competitive
advantages, business prospects and opportunities. Such forward
looking statements re ect the Directors' current beliefs and
assumptions and are based on information currently available to the
Directors. A number of factors could cause actual results to differ
materially from the results discussed in the forward-looking
statements including risks associated with vulnerability to general
economic and business conditions, competition, environmental and
other regulatory changes, actions by governmental authorities, the
availability of capital markets, reliance on key personnel,
uninsured and underinsured losses and other factors, many of which
are beyond the control of the Company. Although any forward-looking
statements contained in this announcement are based upon what the
Directors believe to be reasonable assumptions, the Company cannot
assure investors that actual results will be consistent with such
forward looking statements.
TECHNICAL GLOSSARY
The following is a summary of technical terms:
"Ag" Silver
"Au" Gold
"Cu" Copper
"CuEq" Copper equivalent grade, calculated using
assumed metal prices for copper, gold and
other metals
"Indicated Mineral That part of a Mineral Resource for which
Resource" quantity, grade (or quality), densities, shape
and physical characteristics are estimated
with sufficient confidence to allow the application
of Modifying Factors in sufficient detail
to support mine planning and evaluation of
the economic viability of the deposit. Geological
evidence is derived from adequately detailed
and reliable exploration, sampling and testing
gathered through appropriate techniques from
locations such as outcrops, trenches, pits,
workings and drill holes, and is sufficient
to assume geological and grade (or quality)
continuity between points of observation where
data and samples are gathered. (JORC 2012)
"Inferred Mineral That part of a Mineral Resource for which
Resource" quantity and grade (or quality) are estimated
on the basis of limited geological evidence
and sampling. Geological evidence is sufficient
to imply but not verify geological and grade
(or quality) continuity. It is based on exploration,
sampling and testing information gathered
through appropriate techniques from locations
such as outcrops, trenches, pits, workings
and drill holes. (JORC 2012)
"mineralisation" Process of formation and concentration of
elements and their chemical compounds within
a mass or body of rock
"porphyry" A deposit of disseminated copper minerals
in or around a large body of intrusive rock
"Mtpa" Million tonnes per annum
ENDS
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