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Manica neither complex, capital demanding

EXPLORING FUTURE PROSPECTS The three nearby prospects for further expansion in the Manica concession area, the Guy Fawkes, Boa Esperanza and Dot’s Luck deposits, all have declared resources

GOOD AS GOLD Manica has an estimated all-in sustainable cost of $862/oz, an after-tax internal rate of return of 41.1% at a gold price of $1 262/oz and a total capital expenditure of $43.68-million

9th June 2017

     

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The Manica gold project’s definitive feasibility study (DFS) results demonstrate a robust, simplistic project with an average gold grade of 2.62 g/t producing 215 293 oz over a seven-year life, says diversified miner Xtract Resources.

In the DFS results announcement in February, Xtract executive chairperson Colin Bird says the DFS produced a robust project which is neither complex nor capital demanding.

He adds that the project has upside potential which could be exploited later on the back of a fully paid for processing plant. “Opportunity exists for hard rock consolidation which we are exploring. The alluvial opportunity is extensive and we are currently discussing and negotiating third-party mining contracts.”

Xtract has already started working on reducing capital costs and introducing practical engineering to further reduce risks and enhance financial parameters.

South African minerals consultancy Minxcon mining and engineering head Daan van Heerden confirms Bird’s statements regarding the project’s simplicity and predictability, adding that Minxcon concurred with Xtract management’s mining approach, which determined that a hybrid approach might have led to enhanced capital and operating risk.

Therefore, instead of four years of openpit mining and an eight-year operation; Xtract will be implementing a seven-year openpit operation with a 7.2 strip ratio, milling 42 000 t/m.

The DFS was based on the mineral resource statement compiled by Minxcon and published by Xtract in May last year. The resource was classified into the measured, indicated and inferred categories as defined in the South African Code for the Reporting of Exploration results, Minerals Resources and Mineral Reserves. The mineral resource statement and DFS conclude that Manica has a measured resource of 9.750-million tonnes, grading 1.86 g/t, and a total measured, indicated and inferred resource of 13.954-million tonnes, grading 1.76 g/t.

Minxcon applied a mining cutoff grade of 0.4 g/t for the openpit project and, as a result, all material below 0.4 g/t is classified as waste. The economic cutoff grade from the pit optimisation was calculated as 1.05 g/t, ensuring that all material between 0.4 g/t and 1 g/t is classified as low-grade material.

The DFS production schedule prioritises oxide material early in the life-of-mine to ensure higher initial ore recoveries. “A smoothed plant feed of 42 000 t/m was possible without the need for prestripping. Oxide material will be depleted within two years and fresh material will gradually be introduced until year four. Thereafter, only fresh material will be processed,” the DFS states.

The material will be crushed in a three-stage crushing circuit prior to processing in a ball milling and classification circuit.

Other highlights of the DFS include an all-in sustainable cost of $862/oz, an after-tax internal rate of return of 41.1% at a gold price of $1 262/oz, and total capital expenditure of $43.68-million, with a contingency of 10% added to all the capital.

The project, located 3.7 km north of the town of Manica, in western Mozambique, is considered a greenfield project because of the minimal infrastructure available on the project area.

The DFS notes that the initial capital costs and peak-funding requirement amount to $44-million, which includes engineering, procurement and construction management costs. Further, it suggests that power supply to the project area constitutes a risk as a result of the misalignment of the Manica timeline and the construction timeline of State-owned power utility Electricidade de Mozambique, which is establishing the 220 kV transmission line drivers between Chibata, in the Manica province, and Dondo, in the adjacent Sofala province.

Other Favourable Characteristics
In its March investor presentation, Xtract points out that Mozambique is a stable African economy that has gross domestic product growth of more than 5% and a “mature mining industry and culture”. It adds that the country has a favourable political and legal environment, including a mining legislative regime that does not have a local ownership requirement, indicating that the Manica project poses minimal risk.

Moreover, Xtract notes that there are three nearby prospects for further expansion in the Manica concession area, namely Guy Fawkes, Boa Esperanza and Dot’s Luck, which all have declared resources. As of March, only 10% of the 4 300 ha concession area had been drilled.

Work on the Dot’s Luck deposit consists of 43 drill holes for 5 000 m, of which 38 holes comprise the resource. Guy Fawkes has a 1 350 m strike and a 120 m depth, and consists of 98 drill holes for 14 000 m, of which 54 holes comprise the resource. Boa Esperanza has 12 drill holes for 1 000 m, of which four holes comprise the resource.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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