Mining contractor activity at Aim-listed Xtract Resources’ Manica concession area, in Mozambique, is progressing “favourably”, with initial mining of the alluvial gold deposits expected to start at the end of this month, the company reports.

Xtract’s Mozambique subsidiary, Explorator, concluded mining contractor agreements for the project with mining contractors Omnia Mining and Moz Gold in June and with Sino Minerals Investment Company in July for the exploitation of the alluvial deposits.

Omnia and Moz Gold have the exclusive right to mine the unconsolidated deposits on the western half of the permitted area of the mining concession, while Sino has the right to mine the deposits on the eastern half of the concession, Mining Weekly reported earlier this month.

The agreements will endure for a period of ten years or until the alluvials have been depleted before the ten-year period, with the option to extend for a further period of five years, if the alluvials have not been depleted.

The agreements include performance targets, with Omnia required to have in place a fully operational plant with a mining capacity of 100 t/h. The minimum target mining capacity is expected to increase to 400 t/h from November.

A minimum capacity of 220 000 t/m is to be achieved by November and an eventual yearly production target of 2.64-million tonnes of alluvial materials is expected.

Sino will, from October 15, be required to have a fully operational plant with a mining capacity of 200 t/h, expanding to 400 t/h by January 15, 2018. Explorator will receive some 8% of all gold revenues, with gold tax paid by the contractor.

Xtract reports that all Omnia’s earthmoving equipment on site has already been serviced and customised. Two-thirds of the company’s plant equipment is on site and has been installed.

Almost one-third of the first of two Omnia settling dams has been completed, while subsoil is currently being removed for key installations and infrastructure.

Meanwhile, mine planning and logistics layouts with Sino are to be agreed by the end of this month and a second 200 t/h plant is to be ordered from China.

“Omnia [is] showing a robust approach towards its production objectives. The plant delivered to site is expected to be able to process considerably more tonnes than the contract allows for,” Manica chairperson Colin Bird noted in an update to shareholders earlier this month.

He pointed out that shareholders should be aware that, while plant capacity is important, statistics of overburden stripping and reclamation are extremely important for successful results. Omnia production plans have been well formulated to address this issue.

Bird added that, the following week, Sino Minerals and the company would work towards developing a mine plan, which would address the logistics issues previously noted.

Having finalised its monitoring arrangements, the company will adopt systems with a balance between manpower and technology to ensure minimum capital and operating cost, with good security coverage.