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Today's RNS .. the Company has today informed KPZ International Ltd ("KPZ") that it intends to exercise its option to act as contractor for the Kalengwa Processing project

lse:xtr

#1

Yes , fantastic news , after 90 day’s due diligence XTR has opted to act as contractor for the Kalengwa Processing project on the copper large scale mining license number 24401-HQ-LEL located in the central part of the Republic of Zambia .
www.ii.co.uk/news/kalengwa-update-rnsLSE20191021152115_14274190


#2

To appreciate today’s RNS it’s worth reading the " Kalengwa Processing Copper Project Agreement " RNS Number : 5640F . Dated 15th July 2019
www.ii.co.uk/news/kalengwa-processing-copper-project-agreement-rnsLSE20190715124604_14149660

Which after 90 days of due diligence proved to Mr.Colin Bird it was worth Xtract taking on the role as contractor for the Kalengwa Processing project on the copper large scale mining license number 24401-HQ-LEL (“Licence”)

Key terms of the Agreement

KPZ has agreed to incorporate a local Zambian special purpose vehicle (the “SPV”) to carry out the processing of copper concentrates from ores obtained from the Kalengwa Mine.

The Company will act as a contractor and funder to the SPV (“Contractor”), and will be responsible for either identifying a third party, or use its own resources, to build a small scale processing copper concentrate plant (“Initial processing Plant”), and then subsequently an enlarged plant capable of producing not less than 6,000 tonnes of copper metal in concentrate per annum (“Large Scale processing Plant”)

On commencement of production, the Company as the Contractor, will be entitled to a monthly payment equal to 33.3% of SPV’s net profits (“Xtract Profit Share”). Xtract has estimated that its capital costs to act as Contractor are up to USD 1 million, which Xtract intends to fund from its 33.3% share of SPV’s net profit from processing and existing resources.

Cost to Xtract Resources to become the Contractor, Xtract will pay KPZ USD200,000 to be settled through the issuance of new Xtract ordinary shares (“New Xtract Shares”). The share price used to determine the number of New Xtract Shares shall be the volume weighted average share price for the month ended 30 June 2019. From the date of issue until the date six months thereafter, KPZ may not dispose of any New Xtract Shares.

My Summary of today’s agreement

With Tailings sampling at Kalengwa Copper Project Zambia yielding an average grade of 1.03% Cu, 4.44ppm Ag .
Found in the " Tailing Sampling at Kalengwa " RNS Number : 6637J . Dated 20th August 2019 .
www.ii.co.uk/news/tailings-sampling-at-kalengwa-rnsLSE20190820124228_14195961

I feel KPZ who have agreed to incorporate a local Zambian special purpose vehicle (the “SPV”) to carry out the processing of copper concentrates from ores obtained from the Kalengwa Mine. Will use this SPV to process Tailings already identified in the Tailing sample results outlined in above RNS . Whilst Xtract build a small scale processing copper concentrate plant (“Initial processing Plant”), and then subsequently an enlarged plant capable of producing not less than 6,000 tonnes of copper metal in concentrate per annum (“Large Scale processing Plant”). With Xtract funding it’s capital costs to act as Contractor of up to USD 1 million, from its 33.3% share of SPV’s net profit from processing and existing resources.

With the 90 day due diligence minimising any risk along with a new revenue stream on signing the agreement to act as contractor . I feel Xtract Resources has not only de-risked itself by having two projects in two countries but has built on solid foundations with no debt , owner of the Manica prospect license , sub contractor Sino 2 alluvial income due within days . More alluvial mining sub contractors due to sign up at Manica , the list of positives goes on and on