Mozambique – Auroch Minerals has entered into a binding agreement to sell 100% of its Manica gold mining concession to AIM-listed Xtract Resources for US$12.5 million.
The sale will be through a combination of cash and equity in Xtract, plus assumption of project related creditors of up to $1.5 million and will the see the project return to its original owner which first acquired the project in 2006.
Xtract Resources is a gold and copper exploration development company with projects in Chile and South Africa with a current market capitalisation of approximately £22 million and is well funded. It aims to become a mid-tier gold and copper producer with a focus on low cost, high margin shallow/surface deposits.
Xtract’s Chairman Colin Bird and CEO Jan Nelson have a long history of involvement in Manica having initially acquired Manica whilst at Pan African Resources in 2006. In addition to extensive exploration work on Manica during his time at Pan African, Nelson is also a former director of Auroch.
Commenting on the sale agreement, chairman Glenn Whiddon states: “The agreement with Xtract is a great outcome for the Manica gold project. Colin Bird and Jan Nelson have been involved in the Manica project for many years prior to Auroch’s involvement and they appreciate the significant opportunity the project affords.”
“They have an excellent technical and operating team and have the ability, in the near future, to bring this project into production. From Auroch’s perspective, we are pleased to be a shareholder of Xtract and participate in the growth of the project going forward.”
Effective from the date of signing the agreement, Xtract will be responsible for the management supervision of operations of the Manica mining concession as well as funding associated costs and liabilities from 1 June 2015.
The agreement is conditional upon Auroch obtaining prior consent of the Government of Mozambique through the Ministry of Mineral Resources and Energy to the extent required under the Mozambique Mining Act and other applicable laws relating to the change of control of the company’s subsidiary and communicating such change of control to the Mozambican mining authorities.