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Xtract Resources shares fall as heavy rain disrupts operations
Xtract Resources reported that its Manica project in Mozambique achieved an increase in first quarter gold sales but production took a hit from poor weather.
Despite an increase sales income, the company said a total of 1,200 equivalent ounces of alluvial gold were produced in the quarter, down from 1,279 the prior quarter as the heavy rain took its toll on operations.
Executive chairman Colin Bird said: "Alluvial production in the first quarter was disappointing, although real progress was made which was frustrated by prolonged heavy rains. One alluvial mining contractor was partially able to combat the effects of rain, whilst the other alluvial mining operator (using traditional alluvial processing methods) was unable to produce for a significant part of the quarter."
The AIM-traded company's share of revenues and costs for the project is 40% under a collaboration agreement with subsidiary company Explorator Ltd and Nexus Capital Limited since June last year.
As such, its share of attributable income from gold sales jumped to $133,200 from $87,200.
Explorator signed an agreement with mining contractor Omnia Mining Ltd for the exploration of alluvial gold deposits at Manica in February, and the contractor had been appointed to mine the O block of the western half of the project area.
However, Xtract said on Friday that Omnia has cancelled the agreement, electing to continue operations on their own nearby concession.
"Xtract is also adapting its operational approach to the alluvials based on the experience built up over the last six months reflecting the random nature of alluvial gold distribution. The Manica alluvials are typical in that the presence of gold is often random, supporting our assessment that volume is the key to a successful alluvial operation," said Bird.
As of 1539 BST, Xtract Resources' shares were down 25.45% at 2.05p.