Modern Mining March 2016

GOLD

Pan African Resources which held the project for a number of years before selling it to Auroch in 2013. The Manica project can be divided into two stages. The first stage involves surface mining operations and is scheduled to commence in Q4 of 2017 with target production of 477 kt at a head grade of 2,62 g/t. This would recover approximately 32 koz of gold over a LOM of four years. Underground Mining Operations (UMO) will be the second stage of mining and with target production of 555 kt at a head grade of 3,06 g/t would recover approximately 43 koz of gold per annum. The LOM of UMO is eight years but the orebody is still open to depth and it is anticipated that with further drilling from underground once mining starts the LOM could potentially be increased. The DFS is still on schedule to be com- pleted by the end of Q2 2016. Most of the technical studies will be complete by the end of Q1 2016 and the environmental studies are expected to be finished in the first half of Q2 of 2016. Completion of the re-settlement study is expected to occur by the end of Q2 2016; however, this process has been influenced by a recent change in legislation and will be subject to certain approvals being granted by a govern- ment committee, which may require additional time and, in a worst case scenario, could pro- long completion of the DFS by three months. Apart from the Manica project, Xtract owns the small Chépica gold and copper mine in Chile. In recent months it has also been eval- uating the economic potential of the O’Kiep and Carolusberg copper tailings dams in the Northern Cape but said in February this year that recoveries were too low to produce a via- ble copper concentrate and that it would not be pursuing the project. 

estimate of US$28,4 million for open pit and plant. Additional capital of US$14 million, from cash flow, will be expended in years three and four of the Manica project as part of underground access development compared to US$8,7 million capital for underground devel- opment planned in the PEA. This allows for eight years of underground mining versus the three years contemplated by the PEA. The estimated cash cost is US$549/oz com- pared to a cash cost in the PEA of US$650/oz while the project delivers EBITDA of US$245 million (assuming a LOM of 12 years) com- pared to the PEA EBITDA of US$130 million (assuming a LOM of eight years). “The economic metrics of the Manica gold project remain robust and the company’s in house estimates of EBITDA have significantly increased relative to the increased capital requirement compared to the PEA,” comments Jan Nelson, Xtract’s CEO. “The Manica project remains at the low end of the cost scale and we are now focusing on completing the DFS and starting mine construction. “We are completing a new resource calcu- lation for the Manica project and expect to provide an update to the market as soon as pos- sible. We will also report on the alluvial mining plan for the project within Q2 2016.” The alluvial project referred to by Nelson was announced by Xtract in October last year. It said then it had entered into a joint ven- ture agreement with Mineral Technologies International (MTI) which would see MTI mining alluvial gold on the Manica property, with the anticipated level of production being 32 000 oz/a of gold a year over a possible mine life of 10 years. Although Xtract has only recently acquired the Manica project, it is well known to Nelson. A geologist by profession, he is a former CEO of

“The Manica project remains at the low end of the cost scale and we are now focusing on completing the DFS and

starting mine construction.”

Mine plan. The open pit op- eration will extend over the first four years of the project with underground mining following for a further eight years.

March 2016  MODERN MINING  23