Xtract appoints mining contractor for Boa Esperanza deposit

25th August 2020 By: Donna Slater - Creamer Media Contributing Editor and Photographer

Resource, development and mining company Xtract Resources’ wholly-owned Mozambican subsidiary Explorator has concluded an additional mining contractor agreement with Longhau Tianci Mining Company for the exploitation of the Boa Esperanza hard-rock gold deposit at its Manica mining concession in Mozambique.

Boa Esperanza is a steeply north-dipping Archean greenstone belt orogenic gold deposit occurring within the 10-km-long west-northwest trending Mutamborico shear zone in western Mozambique. It lies within a complex area of sheared and tectonised banded iron formation and quartz veining.

Gold is associated with disseminated pyrite mineralisation which is oxidised near surface.

On May 29, Xtract entered into a collaboration agreement with Mutapa Mining and Processing (MMP) for the mining and mineral processing of the company's Manica hard-rock gold deposits at Xtract's Manica mining concession.

The Boa Esperanza agreement, which is a six-year contract, includes rights of early termination either by Explorator or the contract miner, and is subject to a number of preconditions, including the contract miner obtaining a gold trading licence and Explorator securing a mining licence and environmental licence.

The agreement includes performance targets that require the contract miner to commission a plant with a minimum throughput of 60 t/d within two months from the date of signing.

The throughput tonnage will be increased to 120 t/d within three months of commencing operations.

Further, Explorator will be responsible for recording the gold concentrate produced from the permitted area on a daily basis, while the contract miner will be responsible for the smelting of the gold concentrate and delivery of gold dore bars. Explorator will also be responsible for all statutory and legal requirements regarding the licence and for payment of the mining production tax of 6%.

In terms of payments, the contract miner will retain 84% in gold for services provided through the stripped material up to a depth of 30 m, while Explorator will retain 16% of all gold production, amounting to 10% after payment by Explorator of the applicable mining production tax of 6%.

Thereafter, Explorator will retain 26% of all gold production, amounting to 20% after payment by Explorator of the applicable mining production tax.

After deduction of applicable expenses and costs and tax incurred by Explorator, Xtract has agreed with MMP to split the net cash flow 65% in Explorator's favour, with 35% due to MMP.

Boa Esperanza was mined historically since at least 1936, with total production of 4 800 oz of gold reported from two small openpits and underground workings.

Limited exploration drilling has been undertaken, with 12 holes for which records are available, totalling about 1 000 m in all. Four of these holes completed in 2003 using diamond core drilling, intersected mineralisation, including BED001 which intersected a 15.45 m zone of gold at a grade of 1.35 g/t, that was discovered 38.15 m from the surface. In addition, BED002 intersected 31.48 m of gold at a grade of 0.76 g/t, 49.95 m from the surface.

The drilling at Boa Esperanza, as well as underground sampling, indicates that there are potential pockets or shoots of higher-grade ore within the overall resource.

Also, the Duque gold workings, located 5 km along strike to the west-northwest, suggests potential for additional discoveries beneath scree and overburden cover where the zone has been only sparsely drilled or remains untested by drilling.

Xtract executive chairperson Colin Bird says Boa Esperanza has had only limited drilling and, as such, the contractor plans to open the veins progressively and follow the vein and ore shoot.

“This approach is common to this type of orebody and it is not unusual for mines to still be in production for many years after their original ore estimate.”

He adds that this new agreement provides the company with another potential source of cash flow concurrent with the Guy Fawkes agreement.

Bird also notes that the “onerous” Covid-19 lockdown protocols in South Africa have been reduced and he is confident that border restrictions will be lifted to allow the importing of machinery from South Africa to Mozambique.