Xtract Resources jumps after securing contractor agreement for Mozambique concession

Xtract Resources jumped on Wednesday after its wholly-owned Mozambican subsidiary, Explorator, concluded an additional mining contractor agreement with Huafei Gold Resources.

The contract states that the “established and experienced” alluvial mining contractor will exploit all of alluvial gold deposits at its Manica mining concession in Mozambique for an initial period of 10 years or until the depletion of alluvials, with an option to extend for a further 5 years.

An entry fee consists of an initial $0.15m to be paid to Xtract Resources, with a further $0.2m to be recovered through future alluvial gold production.

To this end, the agreement states that Explorator will be entitled to retain net percentage of the gold mined of 22% until the entry fee has been settled in full, and 20% thereafter.

Colin Bird, executive chairman of Xtract, said: "A number of contractors have expressed interest in mining the other areas of the alluvials in the Manica concession. Huafei Gold Resources was chosen because of their willingness to pay an upfront payment and demonstrated consistency of operation with their existing contract."

Bird added that Huafei has provided extra equipment for works on the concession and that the company anticipates increased production over the coming months and on completion of the rainy season.

Xtract Resources’ shares were up 10.34% at 0.80p at 1607 GMT.