REG - Xtract Resources plc - Chilibwe Licence - decision to commence drilling

Xtract ResourcesAnnouncement

07/11/2024 13:00

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RNS Number : 4033L  Xtract Resources plc  07 November 2024

 

 

7 November 2024

 

Xtract Resources Plc

("Xtract" or the "Company")

Chilibwe Licence, Zambia - Decision to Commence Drilling

 

The Board of Xtract Resources Plc ("Xtract" or the "Company") is pleased to
announce that it has approved the commencement of preliminary reconnaissance
diamond drilling on the Chilibwe large scale exploration licence 22118-HQ-LEL
in Zambia (the "Licence"), funded by Xtract as a loan to Chilibwe under the
terms of Xtract's collaboration agreement with Chilibwe Mining as set out
further below.

 

Colin Bird, Executive Chairman of Xtract, commented: "All of our historic data
compilation and recent field work suggests there are drill-ready targets on
the Licence, and we intend to start drilling within the next 7 days. A rig and
drilling contractor have been assigned to the Chilibwe Project and the
drilling team is in transit to site. We look forward to providing the Market
with updates once drilling generates material results".

 

 

Licence Information

As set out in the Zambia Mining Cadastre on 7 October 2024, Licence
22118-HQ-LEL is a large-scale exploration licence covering 27,203ha in the
name of Chilibwe Mining Limited ("Chilibwe"). The Licence was granted on 7
February 2018 and has an expiry date of 6 February 2025. The Licence is for
cobalt, copper, gold and nickel.

 

The Licence is currently subject to Zambian Court proceedings in respect of a
dispute between Chilibwe and its previous joint venture partner which has
restricted Chilibwe to date from developing the Project (the "Existing Joint
Venture"). Chilibwe has lodged a case with the High Court for Zambia to have
the Existing Joint Venture terminated such that it would retain a 100%
interest in the Licence. The Licence may nevertheless in the future be
subject to further or new challenges or other disagreements.

 

The Licence is located in the North Central province of Zambia and is located
to the northwest of Eurasian Resources Group's Frontier mine which is situated
on the Zambian-DRC border and to the southeast of the historic Mufulira copper
mine. There has been historic exploration and Xtract is continuing to assess
the data currently available and assessing in-country archives.

 

Chilibwe Mining exclusive collaboration agreement

On 10 October 2024 Xtract entered into an exclusive collaboration agreement
with Chilibwe in relation to large scale exploration licence 22118-HQ-LEL in
Zambia to prepare a work programme and budget for the exploration and
development of the Licence and assist in obtaining funding for the Project
("Agreement").

 

The Agreement allows Xtract to further its exploration and development
strategy, without any funding commitment. The key commercial terms of the
Agreement are as follows:

 

Services to be provided by Xtract

Xtract has been appointed to assist Chilibwe on an exclusive basis for 24
months in preparing a work programme and budget for the exploration and
development of the Licence and management of the subsequent exploration
programme or any renewal of the Licence with a view to obtaining a mining
licence (the "Project") and in obtaining funding for the Project
(the "Business") (the "Services").

 

Xtract are to commence the Services within 15 days of the Agreement.
Commencement is defined as both physical activity within the Licence
boundaries and desktop studies related to the Services which will include
technical, financial and legal due diligence in relation to a project of this
nature.

 

The fee for the Services payable to Xtract is as follows:

i)          a 25% shareholding in Chilibwe and / or 25% interest in
the Business ("Xtract Fee Shares"), and in the event of a Trigger Event will
be due to be issued early as set out further below; and

ii)         25% of any dividends due to be paid by Chilibwe in
relation to the Business (the "Fees")

 

Trigger Event for payment of the Xtract Fee Shares

In the event of (i) the completion of funding for the Project; or (ii) a
proposed change of control of Chilibwe and or sale of equity in Chilibwe; or
(iii) Chilibwe entering into a joint venture or similar arrangement in
relation to the Licence, Business or Project (a "Trigger Event"), then Xtract
has the right to be immediately issued the Xtract Fee Shares which will
represent 25% of Chilibwe's fully diluted issued share capital (as enlarged by
the issue of the Xtract Fee Shares and assuming the exercise of all other
 options or other rights to subscribe for Chilibwe shares).

 

 No commitment to obtain financing

Xtract has made no commitment to provide any funding itself to the Project
pursuant to the Agreement. Furthermore, Xtract has made no representation or
commitment that it will be able to obtain funding for the Project. Any funds
provided to Chilibwe by Xtract or spent on the project by Xtract ("Xtract
Loan") can at Xtract's election be converted into shares in Chilibwe based on
the funds provided by Xtract and by Chilibwe ("Loan Conversion Shares").

 

Exclusivity & break fee

Chilibwe has appointed Xtract as its sole and exclusive agent for 24 months
in relation to the Services (the "Exclusivity Period"). If Chilibwe accepts
funding from another party in the Exclusivity Period then it shall within 7
days: (i) pay a break fee to Xtract of US$500,000 (the "Break Fee"); (ii)
issue the Xtract Fee shares (if not already issued); and (iii) issue any Loan
Conversion Shares / or make any Xtract Loan repayments.

 

 

Information on Chilibwe Mining

Chilibwe Mining Limited was registered on 17 August 2005 in Zambia with
company number 120050059656 and its main activity is the Chilibwe Project. The
executive director of Chilibwe Mining is Lukonde Makungu who is also an
executive director and shareholder of Cooperlemon Consultancy Limited which is
a private Zambian based mining consultancy firm.

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").

The person who arranged for the release of this announcement on behalf of the
Company was Colin Bird, Executive Chairman and Director.

 

 

 Xtract Resources Plc                               Colin Bird,          +44 (0)20 3416 6471

                                                    Executive Chairman   www.xtractresources.com (http://www.xtractresources.com/)

 Beaumont Cornish Limited                           Roland Cornish       +44 (0)207628 3369

 Nominated Adviser and Joint Broker                 Michael Cornish      www.beaumontcornish.co.uk (http://www.beaumontcornish.co.uk/)

                                                    Felicity Geidt

 Novum Securities Limited                           Jon Bellis           +44 (0)207 399 9427

 Joint Broker                                       Colin Rowbury        www.novumsecurities.com

 

 

Qualified Person:

Colin Bird: The technical information contained in this announcement has been
reviewed, verified, and approved by Colin Bird, C.Eng, FIMMM, South African
and UK Certified Mine Manager and Director of Xtract Resources plc, with more
than 40 years' experience mainly in hard rock mining.

 

Important Notice:

Beaumont Cornish Limited ("Beaumont Cornish"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority, is
acting as nominated adviser to the Company in connection with this
announcement and will not regard any other person as its client and will not
be responsible to anyone else for providing the protections afforded to the
clients of Beaumont Cornish or for providing advice in relation to such
proposals. Beaumont Cornish has not authorised the contents of, or any part
of, this document and no liability whatsoever is accepted by Beaumont Cornish
for the accuracy of any information, or opinions contained in this document or
for the omission of any information. Beaumont Cornish as nominated adviser to
the Company owes certain responsibilities to the London Stock Exchange which
are not owed to the Company, the Directors, Shareholders, or any other person.

 

 

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