Xtract, Nexus amend mining agreement

JOHANNESBURG (miningweekly.com) – Xtract Resources and Nexus Capital have agreed to revise the terms of their collaboration agreement for the exploitation of alluvial gold deposits at the Manica project, in Mozambique.

The parties in February agreed that the alluvial gold interest would be developed jointly through the appointment of third-party contract miners, who would have the exclusive right to mine unconsolidated alluvial deposits on specified areas of the mining concession area.

Xtract chairperson Colin Bird on Tuesday said the addendum represents a practical working arrangement between the two companies.

Under the amended agreement, the parties will use their "best endeavours" to procure that each contract miner pays an entry fee and if no entry fees are paid, the obligation for Nexus to receive the first $1-million of entry fees, which was previously mandatory, will lapse.

The agreement further provided that at least two alluvial mining agreements are signed by no later than December 1, or all previous agreements with Nexus will lapse.

Xtract completed its first contract mining agreement earlier this month and expected to complete the second agreement by the end of July.

“The alluvial mining contracts may differ considerably in structure and it was, therefore, deemed appropriate to modify the terms of the agreement to allow the parties to enter into various contracts,” he said, adding that Xtract would now put technical monitoring systems in place to ensure that the company receives its due income.

Xtract is currently also negotiating the eastern part of the gold alluvial deposit with other contract miners, as well as reviewing financing alternatives for the hard rock deposit.

The parties have also agreed that Xtract will be responsible for unpaid historic costs of $95 000, all transportation costs and 40% of the smelter costs capped at $16 000 a month, in addition to other operating costs.

Nexus would be responsible for all refining costs, 60% of the smelter costs capped at $24 000, as well as all capital costs, including project equipment and project vehicles.

Nexus would also receive a refining administration fee equal to 5.5% of all alluvial gold delivered on Explorator's account to a refiner for refining, and a service fee equal to 60% of all alluvial contract mining proceeds received by the company from contract miners less the applicable refining administration fee and Nexus's 60% share of the smelter costs.