PERTH (miningweekly.com) – ASX-listed Auroch Minerals has amended the terms of its sales agreement with Aim-listed Xtract Resources over its Manica gold project, in Mozambique.

Under the revised terms, Xtract would now pay $10-million to buy the project, instead of the initially agreed-upon $12.5-million.

The initial purchase price included $6.5-million in Xtract shares and $4.5-million in cash. Xtract would also provide funding to settle project-related creditors of up to $1.5-million.

Auroch and Xtract have agreed that the consideration would be paid in three tranches, with the first $5.8-million payable for the acquisition of the Manica mining concession. The second $4-million payment would be made in respect of all mining information relating to the concession.

The combined $9.8-million payments would comprise $500 000 in cash upon the execution of the revised agreement, a further $3.5-million in cash at the completion of the transaction and $1.8-million in cash three months post completion.

Xtract would also issue more than one-million new shares, representing around 11% of the company’s issued share capital, and valued at $0.0038 a share. The shares would be escrowed for three months.

The outstanding $200 000 would be paid in cash for the transfer of Auroch’s 2% shareholding in Explorer Limitada to Xtract.

The revision to the consideration was borne out of Xtract’s need to provide certainty to its shareholders around the dilution relating to the issue of consideration shares and reflected changing and volatile market conditions.

Auroch Minerals chairperson Glen Widdon said the company was pleased with the revised terms of the agreement, as they ensured a positive outcome for all parties.

“We wish to see the Manica project developed and financed on a timely basis and we believe the revised terms will assist in achieving this goal.”

Effective from June 1, Xtract would be responsible for all management and supervision of operations at Manica, as well as funding associated costs and liabilities.

The project was expected to require a capital investment of some $28.4-million, with underground development expected to cost a further $14.8-million.

The project has a Joint Ore Reserves Committee-compliant resource of 900 000 oz, and was capable of generating revenues of $55-million a year at steady-state production, delivering about 50 000 oz/y of gold at a cash cost of $650/oz.

The orebody would be mined from surface as an openpit operation for five years and then from underground for a further three years.