Update on Open Pit Mining Study for Bushranger

For immediate release

7 March 2023

Xtract Resources Plc

("Xtract" or the "Company")

Update on Open Pit Mining Study for Bushranger Copper-Gold Project

The Board of Xtract Resources Plc ("Xtract" or the "Company") is pleased to provide an update on the mining study ("Study") by independent consultants Optimal Mining Solutions (Pty) Ltd ("Optimal Mining") to examine the economics of a 20Mpta and 25Mpta open pit operation on the Bushranger Copper-Gold Project ("Project") in central New South Wales, Australia. Optimal Mining has prepared an initial report for the Company which has reviewed the pit optimisation options ("Interim Report"). Optimal Mining has identified that the economics of the Project can be improved by way of modern ore sorting technology and the full Study will be completed based on further test work already under way on this option.

Highlights

·    The combined copper-gold mineral resources at the Racecourse and Ascot Prospects on the Project were previously updated by the Company (see RNS dated 19 December 2022) to contain approximately 1.3Mt of copper-equivalent metal, with the combined shallow high-grade zones at the Racecourse and Ascot prospects hosting a total of 225Mt @ 0.33% CuEq*.

·    16 economic pit shells were modelled in the Interim Report from an operating cost perspective only with capital cost requirements excluded and to be finalised on completion of the Study. The 20Mtpa and 25Mtpa open pit options potentially generate significant operating cash margins dependent upon mining rate, copper price and cut-off grade.

·    As processing of the Bushranger ore contributes between 49% and 61% of the total production cost across the 16 cases examined, Optimal Mining identified that the Bushranger copper mineralisation may be well suited to pre-concentration, providing opportunities to streamline mining and processing with positive impacts on metal recoveries, capital and operating costs through the use of ore sorting technology.

·    Optimal Mining has identified a copper project with similar grades to Bushranger where pre-concentration reduced the amount of material to be concentrated up to approximately 50%, significantly reducing pre-production capital and operating costs.

·    Xtract has initiated the pre-concentration study with the objective of quantifying improvement in cash margins, which will then allow Net Present Values and Internal Rates of Returns to be calculated for various mining scenarios, finalising the mining Study.

·    Further drilling is at planning stage to test the remaining shallow to moderate depth copper-gold mineralisation targets located proximal to the Racecourse Mineral Resource. 

*CuEq % = (Cu%) + (Au g/t * 0.6577)% + (Ag g/t * 0.008769)%

Cu Price = US$8800/t, Au Price = US$1800/oz, Ag Price = US$24/oz

Colin Bird, Executive Chairman said: "The initial work by Optimal Mining shows that pre-concentration of ore has the potential to significantly increase cash flows from an open pit operation. On a project with similar grades to Bushranger, pre-concentration of the copper mineralisation reduced the amount of material to be concentrated by over 50%, while retaining 87% of the contained copper metal. This significantly reduced the pre-production capital expenditure, improved the operating cash margin and the overall project Net Present Value and Internal Rate of Return. Therefore, we have initiated a study to determine how effective ore pre-concentration could be at Bushranger and will then feed those results into the final open pit economic modelling.

Given the potential upside of locating additional mineralisation in close proximity to the Racecourse Mineral Resource further drill testing of adjacent targets is being planned which, together with the results of the pre-concentration test work, will allow us to finalise our ongoing plans for the Bushranger project."

Bushranger Project Results from Open Pit Mining Interim Report

Following definition of the updated Mineral Resource for the Racecourse Prospect and the maiden Mineral Resource for the Ascot Prospect, Xtract contracted independent consultants Optimal Mining to update the Bushranger Project open pit mining study. The update was aimed at examining the economics of either a 20Mtpa or 25Mtpa open pit mining operation for copper prices ranging from US$8,000/t to US$11,000/t and cut-off grades of 0.10% CuEq and 0.15% CuEq. A total of 16 scenarios were run for open pit mining of the Racecourse and Ascot Mineral Resources, with economic pit shells being generated for all of these scenarios.

The Interim Report is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as mineral reserves. The Interim Report is based on low-level technical and economic assessments and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Interim Report will be realised.  

A consequence of the grade of the mineralisation of the Racecourse and Ascot Mineral Resource is that processing costs are estimated to be approximately half of the total production costs. Optimal Mining has identified that pre-concentration treatment of the copper-gold mineralisation could have significant benefits as follows:

·    Reduce processing and operating costs;

·    Reduce pre-production capital expenditure due to a significantly smaller concentrator;

·    Improve concentrator recoveries due to higher feed grades;

·    Generate more coarse dry rejects that are easier to manage;

·    Reduce the size of the tailings dam due to less concentrator feed.

The Interim Report further identified that, on a copper project with similar grades to the Bushranger Project, pre-concentration retained 87% of the contained metal and reduced the amount of material to be concentrated by approximately 50%, significantly reducing pre-production capital and operating costs. The feed grade into the concentrator on this comparable project increased from 0.15% Cu to 0.29% Cu, improving metal recoveries. Due to the close association of the copper mineralisation at both the Racecourse and Ascot prospects with the mineral pyrrhotite, which is both conductive and magnetic, there are several options for pre-concentrating the mineralisation which may be highly effective.

Next Steps

Due to the highlighted potential for improvement of the project's economic viability, Xtract has initiated a study to assess the effectiveness of pre-concentration. Mineralisation from four drill holes from the Racecourse Prospect has already been submitted for ore pre-concentration analysis which will allow the open pit economic model to be refined and then finalised. Finalisation of the open pit mining Study will include the development of production schedules, capital cost and operating cost estimates, which will then allow Net Present Values and Internal Rates of Returns to be calculated for various mining scenarios for a range of production rates, cut-off grades and copper prices.

The initial work by Optimal Mining for the open pit economic study have reinforced the benefits of further shallow to moderate depth copper-gold mineralisation to the overall economic value of the Bushranger Project. Consequently, additional drilling is at planning stage to test the upside potential of remaining exploration targets in close proximity to the Racecourse Mineral Resource

Further information is available from the Company's website which details the company's project portfolio as well as a copy of this announcement: www.xtractresources.com

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (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.

Enquiries:

Qualified Person

Information in this announcement relating to the exploration works has been reviewed by Edward (Ed) Slowey, BSc, PGeo, a consultant to Xtract. Mr Slowey is a graduate geologist with more than 40 years' relevant experience in mineral exploration and mining, a founder member of the Institute of Geologists of Ireland and is a Qualified Person under the AIM rules. Mr Slowey has reviewed and approved the geological content of this announcement.

Qualified Person

In accordance with AIM Note for Mining and Oil & Gas Companies, June 2009 ("Guidance Note"), Colin Bird, CC.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, is the qualified person as defined in the Guidance Note of the London Stock Exchange, who has reviewed the technical information contained in this press release.

Optimal Mining Solutions (Pty) Ltd of Australia

Optimal Mining Solutions (Pty) Ltd of Australia has reviewed the information in this announcement which has been derived from the interim pit optimisation Study and has confirmed that the information so presented is balanced and complete and not inconsistent with the interim pit optimisation Study.

Mineral Reserves and Resources

The Company estimates and discloses mineral reserves and resources using the definitions adopted by JORC.  Further details are available at www.jorc.org.  See the "Glossary of Geological and Mining Terms" for complete definitions of mineral reserves and mineral resources.

About Mineral Resources

Mineral resources are not mineral reserves and do not have demonstrated economic viability but do have reasonable prospect for economic extraction.  They fall into three categories: measured, indicated, and inferred. The reported mineral resources are stated inclusive of mineral reserves.  Measured and indicated mineral resources are sufficiently well-defined to allow geological and grade continuity to be reasonably assumed and permit the application of technical and economic parameters in assessing the economic viability of the mineral resource. Inferred mineral resources are estimated on limited information not sufficient to verify geological and grade continuity or to allow technical and economic parameters to be applied.  Inferred mineral resources are too speculative geologically to have economic considerations applied to them. There is no certainty that mineral resources of any category will be upgraded to mineral reserves.

Important Information about Mineral Reserve and Resource Estimates

Whilst the Company takes all reasonable care in the preparation and verification of the mineral reserve and resource figures. the figures are estimates based in part on forward-looking information. Estimates are based on management's knowledge, mining experience, analysis of drilling results, the quality of available data and management's best judgment. They are, however, imprecise by nature, may change over time, and include many variables and assumptions including geological interpretation, commodity prices and currency exchange rates, recovery rates, and operating and capital costs. There is no assurance that the indicated levels of metal will be produced, and the Company may have to re-estimate the mineral reserves based on actual production experience. Changes in the metal price, production costs or recovery rates could make it unprofitable to operate or develop a particular deposit for a period of time.

Forward Looking Statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements.

TECHNICAL GLOSSARY

The following is a summary of technical terms:

ENDS