[miningmx.com] – XTRACT Resources CEO, Jan Nelson, is “buying back the farm’ with his latest deal to acquire the Fair Bride (Manica) open pit gold project in Mozambique for $12.5m from ASX-listed junior Auroch Minerals.
The Manica project was previously owned by Pan African Resources (Pan African) during Nelson’s watch there as CEO until his abrupt – and inadequately explained – departure in February 2013.
Pan African spun out the Manica project in 2011 to Auroch and Nelson said at the time “… it was decided that Manica was a good project but the capital cost cannot be funded by Pan African. Our major shareholders want us to focus on the development of our South African projects where we are also looking at further acquisitions.”
Speaking from London, Nelson told Miningmx today that: “… the former Metorex shareholders – like Simon Malone – were dead against developing Manica.
“We believe this mine will be a company maker for Xtract and it will come into operation within 18 months producing around 50,000 ounces of gold annually at a cash cost of $650/oz and all-in costs of $800/oz.
“At an assumed gold price of $1,250/oz this mine will is capable of generating annual earnings of about $15m before tax with significant opportunities to increase the gold resource and for further consolidation in the region.
“The main outstanding issue was the recovery process, but metallurgical recoveries of more than 90% in the oxides and 80% in the sulphides have been achieved from test work to date.”
Xtract is paying $4.5m in cash and $6.5m in shares to buy Manica and will also settle “project-related creditors’ up to a maximum of $1.5m.
The company has raised £4.4m through a share placing which will be used to help pay for the acquisition.
This is the second significant deal that Xtract has signed up this year following the announcement in March that it had acquired an option to buy the surface tailings dams at the former Carolusberg and O’Kiep copper mines in the Northern Cape which contain an estimated 33.8 million tons of copper tailings material.
The deals bear out the prediction made in Miningmx’s 2015 edition of Rainmakers and Potstirrers than Nelson appeared to be about to make a comeback into South African mining after keeping a low profile following his departure from Pan African.
During that time Nelson got heavily into surfing despite taking on the position as CEO of Xtract.
