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Half-Year Report , 27th September 2019

lse:xtr

#1

Very encouraging half year report especially the alluvial operations in Manica prospect , Mozambique when considering the cyclone damage caused to that area during the period under review .

Operations continue to be modest but cash generative and, in every month, operational cash flow exceeded cost. The higher gold price and increased profit share resulted in overall earnings to the Company being higher than the same period of last year and indeed the second half of the prior year.
www.ii.co.uk/news/half-year-report-rnsLSE20190927152804_14245410


#2

Here’s a reminder of the of the two powerful tropical cyclones that struck Mozambique in quick succession during the first half of 2019 and of course the liquefied natural gas resource the country holds .
www.bloomberg.com/news/articles/2019-09-28/mozambique-sees-880-million-tax-windfall-from-occidental-deal

When Xtract Resources chairman Mr.Colin Bird decided to buy the Manica Gold Project , 10th Sept 2015 it was a gamble since the company had so much debt left through failed efforts to make a go of the Chepica Gold Mine in Chile under the CO of Mr.Jan Nelson I along with many were glad to see a change . In ousting Mr.Nelson from the company Mr. Colin Bird took the helm with a promise to deliver value for money for XTR share holders after the company had experienced a lot of dilution .

Then Mozambique had a debt default after a $2 billion loan scandal erupted in 2016 . Making business ventures more risky in Mozambique but Mr.Colin Bird pulled the company through by sub-contracting alluvial processing companies to generate a revenue stream minimising the need for more dilution . If it wasn’t for the two powerful tropical cyclones hitting the Mozambique coast line with extensive flooding I’m sure Half Year results 2019 would have been much better . Alas the raising of £1,000,000 (before expenses) announced on the 25th July 2019 at 1.20p /share safeguarded the company and allowed exploration of copper mines in Zambia on very favourable terms to XTR .

On 15 July 2019 the Company announced that it had concluded a Memorandum of Agreement (“Agreement”) with KPZ International Ltd. (“KPZ”) for Xtract to act as contractor for the Kalengwa Processing project on the large-scale exploration license number 24401-HQ-LEL (“Licence”) located in the Central part of The Republic of Zambia (“Kalengwa Project”).

On 20 August 2019 preliminary sampling of mine tailings at the Kalengwa Copper Project Zambia (“Kalengwa” yields an average grade of 1.03% Cu, 4.44ppm Ag . Mr Colin Bird, Executive Chairman said: "This is a very pleasing result confirming copper grades in tailings over a large sample population, similar to results reported in archive information.

The 90-day due diligence period for XTR to become a contractor to oversee and commence initial production from the Kalengwa dumps of approximately 1.34 million tonnes with a potential to contain 25,000 tonnes of copper metal is coming to an end around the 13th October 2019 . If Xtract wish to proceed to act as contractor, Xtract will pay USD200,000 to KPZ to be settled through the issuance of new Xtract ordinary shares . Xtract will receive, if it elects to proceed as Contractor, 33.33% of net profits from the operations .

The result of the 90 day due diligence whether to proceed is in my mind a catalyst for a strong Market Cap gain for Xtract Resources . The 3rd quarter alluvial production figures by Sino 2 should be known within days even though I doubt we get to know how much profit Xtract Resources gets until November 1st with gold being sold in Dubai but one never knows . In the Half Yearly report other alluvial miners are interested in the Manica terraces where nuggets were found in sampling previously . Profit split for these new alluvial miners might also be a catalyst . Then there’s the hard rock at Guy Fawkes area of the Manica prospect ear marked for the Omnia hard rock processing plant … the list goes on with news to come that could substantially increase Market Cap but will this news arrive before the 90 day due diligence is up at Kalengwa minimising the dilution of the USD200,000 in Xtract Resources shares Mr.Colin Bird would have to pay for accepting the agreement .

A lot to consider when it comes to dilution since the £1,000,000 recently raised at 1.20p /share did little harm to the Market Cap since just weeks before it’s announcement you could buy XTR shares at 0.74p /share . Appears confidence was inspired by that placing , first in a long time I must add . The USD200,000 of shares needed to accept the Kalengwa agreement is far less dilution than the placing shares with a near term revenue stream to support such a move .

I’m one of many share holders who’s glad to have stuck by Mr.Colin Bird by holding a fair wad of shares in my long term hold position . Having gained many more shares by trading some of my shares rather than holding all as the company transformed it’s starting to feel like a hold for all my XTR shares over the next three months would be the best move .