7th Jun 2016 09:05
LONDON (Alliance News) - Xtract Resources PLC on Tuesday said it remains confident of delivering its five-year plan after reporting a wider loss in the third-year of that plan in 2015, as the company looks to offload one of its projects whilst progressing its other main asset.
Xtract said its pretax loss amounted to GBP4.6 million in 2015 compared to the GBP2.9 million loss reported in 2014, as revenue dropped to GBP350,000 from GBP1.1 million.
Administrative costs were slightly higher year-on-year, but a GBP2.2 million impairment was booked in 2015 and was the primary cause of the wider loss in the year. No impairments were booked in the previous year.
"In 2015 momentum continued, and the team has made significant progress to deliver on our five-year plan of becoming profitable gold producer. We are three years into this journey and are confident that we will deliver on our vision within the remaining 24 months," said Chief Executive Jan Nelson.
Xtract is focused on two operations, one being the Manica gold project in Mozambique that it acquired during 2015 but is now hoping to sell. The company also worked on its other asset, the Chepica mine in Chile, after addressing issues at the project. There also were two fatalities at the Chepica mine in December.
"We have resolved the flexibility issues at the Chepica mine and continue to invest capital to grow our production profile. The Manica asset will allow us to realise significant cash flow that will enable us to execute on our strategy and deliver shareholder value without any significant dilution," said Nelson.
"The progress made in improving mining flexibility and building up volume from underground was addressed in the period under review and represents a significant milestone in the development of the mine. The progress made at Chepica was temporarily impacted by the stoppage of the plant due to the reported fatalities, although the mine is now delivering forecasted gold grades as the team has resolved the issues in getting the recoveries in the plant back to the required levels. The team is committed to continuing to improve recoveries and good inroads are being made in this regard," he added.
Importantly, Xtract received an offer for the Manica project during 2015 worth USD17.5 million in cash, which was accepted by the board and still moving ahead.
"Whilst the board has considerable confidence in the Manica project there is a consensus opinion that such a cash offer will take the company into an arena of better earnings and prospects consistent with the expertise of the board and management," said the company.
"In addition the board has put in place several alternative plans should the Manica sale not realise as is expected that will allow us to achieve the same result but with slight changes," it added.
Xtract shares were down 1.0% to 0.154 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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