24th Oct 2016 07:48
LONDON (Alliance News) - Xtract Resources PLC on Monday said its decision to cease funding Minera Polar Ltd, the owner of the Chepica mine, has stopped the "severe financial haemorrhaging suffered over the last year".
In September, Xtract announced it would stop investing in the Chepica gold and copper mine in Chile and look to sell its interest because the "fundamentals and the risk" became unattractive.
The miner had launched a review of the Chepica mine and determined that the "underlying fundamentals and the risk associated with the project are no longer supportive of continuing investment by the company."
On Monday, Xtract said its decision to no longer provide finance to Minera Polar over the Chepica mine stopped serious cash deficit funding requirements.
"Our focus now is on the Manica mine to determine the capital expenditure required against the optimum technical plan and therefore restore certainty to the company. We have reduced our operating expenses and overheads to be consistent with a junior resources publicly listed company," said Executive Chairman Colin Bird.
Xtract said its corporate overheads have reduced to GBP650,000 from GBP1.6 million per annum, with further reductions being considered.
All aspects of its financial and technical control are currently being reviews and changes are being made "where appropriate", the company said.
Xtract noted that it currently finances its activities in "discrete tranches" for limited periods only and further funding will be required from time to time to finance those activities.
"The directors would then expect for the funds to be raised through project finance funding, the current standby equity distribution agreement, loan notes and further equity fund raising or a combination thereof," Xtract said.
Xtract added it has appointed Minxcon (Pty) Ltd to complete open pit optimisation modelling for its Manica gold mine in Mozambique, and said the social element of the environmental impact study has commenced.
Shares in Xtract were up 11% at 0.02 pence on Monday morning.
By Hannah Boland; [email protected]; @Hannaheboland
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