Xtract Resources Plc (AIM:XTR) Chepica Gold Mine: Quarterly Results Presentation London 3 February 2016
Aerial view of Chepica Gold Mine Taken with Phantom 3 Professional Drone 2
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
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
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 Q2 2016 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
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
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
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
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
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
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
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 Q1 2016 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
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
Chepica tailings dam project Surface stockpiles Processing plant ±225koz @ 0,6 to 1,5g/t Tailings dam extension 14
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
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 3 2015 QTR 4 Planned Actual Planned Actual 150 233 41,25 152 4 799 7 454 5 279 19 456 50 78 - - 1 600 2 495 - - 2,25 3,50-3,27 1,00% 1,20% 0,00% 0,80% 60 120 515 385 1 920 3 839 17 475 12 317 17 201 3 061 5 920 1 450 2,25 2,40 2,76 1,80 0,80% 1,00% 1,04% 0,80% 22 000 10 515 11 199 14 865 2,50 1,80 2,85 1,65 1,00% 1,00% 1,01% 0,75% 1 650 000 450 000 831 580 375 802-350 000-300 000-470 459-167 533 1 300 000 150 000 361 121 208 269 380 000 525 000 16
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
Mill tons 8 000 7 000 6 000 5 000 Tons 4 000 3 000 2 000 1 000 - Oct-15 Nov-15 Dec-15 18
Stockpile tons (cumulative) 12 000 10 000 8 000 Tons 6 000 4 000 2 000 - Oct-15 Nov-15 Dec-15 19
Surface stockpiles 20
Total development metres (m) 250 200 m 150 100 50 - Oct-15 Nov-15 Dec-15 21
Concentrate grade Au (g/t) 54.00 52.00 50.00 48.00 Au (g/t) 46.00 44.00 42.00 40.00 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 Q2 2016 22
Gold produced in Q4 2015 250 200 Oz 150 100 50 - Oct-15 Nov-15 Dec-15 23
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
Revenue 250 000 200 000 US$ 150 000 100 000 50 000 - Oct-15 Nov-15 Dec-15 25
Costs 90 000 80 000 70 000 60 000 US$ 50 000 40 000 30 000 20 000 10 000 - Oct-15 Nov-15 Dec-15 26
Profit/Loss 160 000 140 000 120 000 US$ 100 000 80 000 60 000 40 000 20 000 - Oct-15 Nov-15 Dec-15 27
Capex 300 000 Development & support US$ 250 000 200 000 150 000 Drilling & 3D Geological software Plant & equipment & Development 100 000 50 000 - Oct-15 Nov-15 Dec-15 28
Increased flexibility Developing a robust geological model We are Xtract Resources PLC (XTR:AIM) Chepica Flexibility & Growth
Surface drilling at Colin 30
Numereous significant drill intersections Colin 1: At 76.1m: 2.7m @ 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
Colin mineralized intersection 32
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
Drilling at Colin mine Surface 3m @ 3,86g/t Access development 120m @ 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
Old & new development adits at Chepica Weak ground Strong ground New Chepica adit Old Chepica adit 35
Consistant delivery Continuous improvement We are Xtract Resources PLC (XTR:AIM) In summary
Chepica: Mill tons actual per qtr & forecast Tons 50 000 45 000 40 000 35 000 Only 2 months of production (plant stopped for January) 30 000 25 000 20 000 15 000 10 000 5 000 - Q4 2015 Q1 2016 Q2 2016 Q3 2016 Mill tons Tailings dam 37
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
Media and Investor Enquiries: Justine James Gable Communications 34 Lime Street London EC3M 7AT T: +44 (0) 7525 324431 e-mail: xtract@gablecommunications.com Company Secretary: Phil Dexter St James s Corporate Services Limited Suite 31, 2 nd Floor, 107 Cheapside London EC2V 6DN T: +44 (0) 20 7796 8644 e-mail: phil.dexter@corpserv.co.uk Contact Details
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