Xtract Resources’ wholly-owned Mozambique subsidiary, Explorator Limitada, has concluded a mining contractor agreement with Longhau Tianci Mining Co Ltd for the exploitation of the Guy Fawkes hard-rock gold deposit at its Manica mining concession in Mozambique.
The pact will see Longhau mine the Guy Fawkes deposit for six years or until the orebody is depleted or no longer viable, Xtract says.
Guy Fawkes was mined historically since 1893 and was one of the largest of a series of hard-rock gold mines in the district, with total production of almost 16,000 oz Au reported, Xtract said. A previously reported SAMREC-compliant indicated and inferred resource at Guy Fawkes came out at 1.13 Mt at 1.91 g/t Au with potential for additional upside in several dimensions.
Subject to a number of pre-conditions including the contract miner obtaining a gold trading licence and Explorator securing a mining licence and environmental licence, the agreement includes performance targets whereby Longhau will be required 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, Xtract said.
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 doré bars.
Longhau, as the contract miner, will retain 74% in gold for services provided, and Explorator will retain 26% of all gold production, amounting to 20% after payment by Explorator of the applicable Mining Production Tax of 6%.
After deduction of applicable expenses and costs and tax incurred by Explorator, Xtract has agreed with Mutapa Mining and Processing LDA (MMP), Explorator’s existing hard-rock collaboration partner, to split the net cash flow 65% in Explorator’s favour (with 35% due to MMP).
Longhau is to commence adit mining and initial underground development during the processing build phase, Xtract said.
Colin Bird, Xtract Executive Chairman, said: “We are pleased to report the signing of this agreement, which should provide the opportunity for incremental cash flow during MMP’s Fair Bride construction and building phase.
“The Guy Fawkes deposit shows considerable variation both in mining width and grade, demonstrating propensity for selective higher-grade mining. Longhau intends to work a portion of the deposit by open-cast methods where drilling indicates that suitable grades locally can run close to surface. Underground mining will be selective.
“We are currently in discussions in respect of the Boa Esperanza deposit and look forward to updating shareholders shortly.”