Xtract Resources Plc (AIM:XTR) Chepica Gold Mine: Quarterly Results Presentation

Transcription

1 Xtract Resources Plc (AIM:XTR) Chepica Gold Mine: Quarterly Results Presentation London 3 February 2016

2 Aerial view of Chepica Gold Mine Taken with Phantom 3 Professional Drone 2

3 We are xtracting significant returns for shareholders We are focussing on getting the basics right We are aiming to deliver consistent results We are working towards continuous improvement We are Xtract Resources PLC (XTR:AIM) Corporate Overview

4 Vision our destination We want to build a mining house that is profitable and able to self fund its development and create value for our shareholders What does this mean? Develop out projects to build a mining house Maximise assets in order to generate cash flow We need a sustainable growth profile and margin 4

5 Our current reality where we are Project level Producing Chepica Gold mine that has not fully delivered on a consistent basis. We are addressing this. Improving flexibility Addressing poor ground conditions Developing a more robust geological model Completing the Manica BFS that is potentially significant for the company Timing to completion is critical due Q Project funding under discussion Manica alluvial JV partnership with MTI Finalising production time-line and metrics Shareholder issues Inconsistant production & financial numbers Not hitting our target completion dates Dilution remains an issue for stakeholders More effective stakeholder communication 5

6 Understanding what makes us different Chepica is a producing mine that can generate cash flow In Manica we have acquired a significant gold deposit that could transform the company (and that comes with a virtually completed BFS) We have formed successful partnerships, including MTI, that will allow us to grow our ability to generate cash flow with minimal capital risk We have built a management team that has a proven track record and have shown that they do not give up untill the job is done 6

7 Strategy how will we get there? Ensure that Chepica delivers on its production plan current cash flow Investigate viability of Chepica Tailings Project Start Manica alluvial mining operations within a relatively short period of time, to grow the margin and create more sustainibility in terms of ongoing production Complete the Manica BFS and secure project finance Stakeholder communication this presentation forms the first of many to be given over the course of the next six months to explain the route map and ensure more clarity and transparency in terms of ongoing performance and risk management These presentations will focus on key milestones in Q2 and Q3 2016: Manica Gold Project significant improvement in project metrics & revised timeline Chepica land option payments Chepica surface drilling results estimate of geological potential at Colin Chepica Tailings project economic metrics Manica Resource upgrade Chepica Resource upgrade 7

8 Manica Gold project Conditions for completion of the Acquisition Auroch obtaining necessary Shareholder approval Approval received on 15 th October 2015 Obtaining the necessary approvals under the Mozambique Mining Act relating to the change of control and communicating such change of control to the Mozambican mining authorities. Final ruling received from the Honorable President of the Mozambique Tax Authority, who determined a total of US$699,000 due in capital gains tax, which clears the way for final approval from the Mozambican government Final approval from the Mozambican government is expected in Q1 2016, upon which time all conditions will have been fulfilled In addition, at the Manica Alluvial Gold Project Xtract is completing a total re-design in order to achieve greater economic metrics 8

9 Copper projects South Africa Recoveries too low to produce a viable copper concentrate Tested the dumps for pyrite Sulphur content too low Exited from project no further liabilities or costs 9

10 Chepica turning the corner For the first time we see month on month improvement The mine has never been in such a good production position We are Xtract Resources PLC (XTR:AIM) Chepica Operational review

11 Chepica Gold Mine Crushing plant & stockpiles Plant Main offices Tailings dam Colin Vent Shaft Colin adit Chepica old adit Chepica new adit Engineering workshop Return water dam 11

12 Chepica what are our threats? Having enough reef ends (flexibility) / keeping the mill full Understanding geological continuity at Colin Section / proper development lay-outs that avoids bad ground conditions when stoping commences Meeting our land option payment obligations (security of tenure) First option payment of $380,000 due by end of Q The intention is to re-negotiate the timing and terms with land option holder Zones of weak ground conditions have either stopped or slowed down our development which impacted the timing of stoping operations Storage capacity of current Tailings dam needs to be increased 12

13 Chepica what are our tactics? To continue to develop the reef on 5, 6 and 7 level at the Colin section (developing the A Reef block) Consider a second decline at Colin to access the B-reef block Establish Chepica decline on reef during Q2 Complete the surface drilling program at Colin and continue to build geological model Continue to build surface stockpile from off mine sources Raise tailings dam wall by approximately 5m (all permissions in place) Complete a feasibility on mining the Chepica tailings dam create additional depositional storage and cash flow 13

14 Chepica tailings dam project Surface stockpiles Processing plant 0,6 to 1,5g/t Tailings dam extension 14

15 Chepica our business philosophy If you keep your eye on the profit you are going to skimp the product (ore-body). Focus on making great products (getting the basics right) and the profits will flow. Steve Jobs We pushed the profit at the expense of the ore-body (and as a result we have not had any flexibility,which has resulted in inconsistant production delivery) As a result we have redesigned the entire development lay-out for the mine to ensure flexibility In order to deliver sustainable and consistent production we have had to prioritise: Capital and development before profit this quarter More time spent at start-up to focus on initial infrastructure to mitigate poor ground conditions Funding of major surface drilling programme to build a more robust geological model 15

16 Q4 Actuals - unaudited Production On reef meters On reef tons Off reef meters Off reef tons On reef gold grade (g/t) On reef Copper grade (%) Decline/Incline meters Decline/Incline tons Stope tons Stope gold grade (g/t) Stope Copper grade (%) Total tons milled Mill Gold grade (g/t) Mill Copper grade (%) Financial Revenue Costs Profit Capital 2015 QTR QTR 4 Planned Actual Planned Actual , ,25 3,50-3,27 1,00% 1,20% 0,00% 0,80% ,25 2,40 2,76 1,80 0,80% 1,00% 1,04% 0,80% ,50 1,80 2,85 1,65 1,00% 1,00% 1,01% 0,75%

17 Chepica turning the corner For the first time we see month on month improvement The mine has never been in such a good production position We are Xtract Resources PLC (XTR:AIM) Chepica Production metrics

18 Mill tons Tons Oct-15 Nov-15 Dec-15 18

19 Stockpile tons (cumulative) Tons Oct-15 Nov-15 Dec-15 19

20 Surface stockpiles 20

21 Total development metres (m) m Oct-15 Nov-15 Dec-15 21

22 Concentrate grade Au (g/t) Au (g/t) Oct-15 Nov-15 Dec-15 Target gold concentrate grade is 60g/t Concentrate gold grade for the quarter has been slightly lower at 47g/t due to the lower in situ value of surface stockpiles reporting at in situ grades of 0.8 to 1.5g/t Underground in situ gold grades from development have increased from 2.5g/t to 3.5g/t and we expect these values to reflect in the concentrate grade for Q

23 Gold produced in Q Oz Oct-15 Nov-15 Dec-15 23

24 Chepica turning the corner But the corner has been turned The mine has never been in such a good production position We are Xtract Resources PLC (XTR:AIM) Chepica Financials

25 Revenue US$ Oct-15 Nov-15 Dec-15 25

26 Costs US$ Oct-15 Nov-15 Dec-15 26

27 Profit/Loss US$ Oct-15 Nov-15 Dec-15 27

28 Capex Development & support US$ Drilling & 3D Geological software Plant & equipment & Development Oct-15 Nov-15 Dec-15 28

29 Increased flexibility Developing a robust geological model We are Xtract Resources PLC (XTR:AIM) Chepica Flexibility & Growth

30 Surface drilling at Colin 30

31 Numereous significant drill intersections Colin 1: At 76.1m: 3.86g/t Colin 1: At 118.6m: 4.3m awaiting assay results Colin 2: At 114.8m: 1.5m awaiting assay results Colin 2: At 129m: 2m awaiting assay results Colin 3: At 55.2m: 1.8m awaiting assay results Colin 3: At 116.2m: 10.6m awaiting assay results Colin 4: At 49.7m: 1.8m- awaiting assay results Colin 4: At 116.8m: 2.2m awaiting assay results Colin 4: At 126m: 6.2m awaiting assay results *Widths reported refer to borehole intersection widths and reflect mineralized zones identified in core 31

32 Colin mineralized intersection 32

33 Colin mine general layout Colin ventilation shaft New decline to access B-reef block Surface boreholes drilled From side of mountain Colin main adit entrance Access to A-reef block 33

34 Drilling at Colin mine Surface 3,86g/t Access development 3,27g/t over 3,36m width Colin adit entrance Position of new decline to access B-reef block Reef projection A-Reef block 300m New boreholes drilled from surface on side of mountain 34

35 Old & new development adits at Chepica Weak ground Strong ground New Chepica adit Old Chepica adit 35

36 Consistant delivery Continuous improvement We are Xtract Resources PLC (XTR:AIM) In summary

37 Chepica: Mill tons actual per qtr & forecast Tons Only 2 months of production (plant stopped for January) Q Q Q Q Mill tons Tailings dam 37

38 In summary Profit of US$225,000 for Q4 Slow start to the quarter in terms of ensuring greater underground support Opened up reef on 4 levels Ready to start stoping on 5 level Accumulated a surface stockpile in excess of 10kt from off mine sources Chepica adit 30m from opening up 2 more reef drives Surface boreholes confirm major mineralized intersections to depth at Colin Robust geological model in place for first time All production metrics are trending in the right direction Major opportunity in mining tailings dam management estimates additional production of 15,000t per month contributing significant revenue 38

39 Media and Investor Enquiries: Justine James Gable Communications 34 Lime Street London EC3M 7AT T: +44 (0) Company Secretary: Phil Dexter St James s Corporate Services Limited Suite 31, 2 nd Floor, 107 Cheapside London EC2V 6DN T: +44 (0) phil.dexter@corpserv.co.uk Contact Details

40 Disclaimer This presentation ( Presentation ) is being issued by Xtract Resources PLC. (the Company or Xtract ) for information purposes only. The content of this Presentation has not been approved by an authorised person for the purposes of Section 21(2)(b) of the Financial Services and Markets Act Reliance on this Presentation for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. This Presentation is not an admission document or an advertisement and is being provided for information purposes only and does not constitute or form part of, and should not be construed as, an offer or invitation to sell or any solicitation of any offer to purchase or subscribe for any ordinary shares of the Company in the United States or any other jurisdiction. Neither this Presentation, nor any part of it nor anything contained or referred to in it, nor the fact of its distribution, should form the basis of or be relied on in connection with or act as an inducement in relation to a decision to purchase or subscribe for or enter into any contract or make any other commitment whatsoever in relation to any securities of the Company. No representation or warranty, express or implied, is given by or on behalf of the Company, its directors and advisors or any other person as to the accuracy or completeness of the information or opinions contained in this Presentation and no liability whatsoever is accepted by the Company, ts directors or advisors or any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. The Presentation has been prepared by the management of the Company for information purposes only. The Company has not been and will not be registered under the United States Investment Company Act of 1940, as amended (the "Investment Company Act"). In addition, the Ordinary Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"). Consequently, the Ordinary Shares may not be offered, sold or otherwise transferred within the United States or to, or for the account or benefit of, US persons, except pursuant to an exemption from the registration requirements of the Securities Act and under circumstances which will not require the Company to register under the Investment Company Act. No public offering of the ordinary shares of the Company is being made in the United States. Certain statements, beliefs and opinions in this Presentation are forward-looking. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this Presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Presentation. In receiving any information relating to the Company (whether in written or oral form), including the information in this Presentation, you will be deemed to have represented and agreed for the benefit of the Company (i) that you will only use such information for the purposes of discussions with the Company, (ii) to hold such information in strict confidence and not to disclose it (or any discussions with the Company) to any person, except as may be required by law, regulation or court order, (iii) not to reproduce or distribute, in whole or in part, (directly or indirectly) any of the information in this Presentation; (iv) that you will comply with all laws applicable to possessing such information, including without limitation insider trading laws, market abuse regulations and applicable regulations and recommendations of the UK Financial Services Authority or any other relevant regulator, and (v) that you are permitted, in accordance with all applicable laws, to receive such information. Issued by Xtract Resources PLC. 4 th floor 2 Cromwell Place, South Kensington, London SW7 2JE 40