Xtract Resources

New licenses, fully funded & assays to come

Good Morning Team.

I want to briefly revisit Xtract Resources (LON: XTR) - which now sports a market cap in the region of £9 million after doubling in March.

Happy days - but potentially there’s more to come.

Consider.

Under the recently amended share purchase agreement for the Manica asset:

Xtract is entitled to a total purchase price of $12 million, to be paid by the buyers in instalments.

To date, the buyers have made four quarterly payments of $750,000 each, totaling $3 million. The remaining balance consists of $6 million, to be paid in quarterly instalments of $750,000 until 1 December 2026, and a restructured balloon payment of $3 million, now divided into three payments of $1 million due on or before 1 March 2027, 1 June 2027, and 1 September 2027.

In addition, an additional Deferred Consideration of $3 million is payable upon the buyers' decision to build a sulphide plant.

The deferred payments are scheduled across six instalments, beginning with $250,000 due within 14 days of the decision to build or by 1 December 2026, and concluding with the final US$500,000 due within nine months of the plant achieving commercial production or by 1 December 2028.

This is a well-funded stock.

Morocco expansion

Xtract recently took a significant step in expanding its footprint by acquiring an initial 50% stake in Wildstone SARL (a Moroccan-based mineral exploration and development company) for a cash consideration of $500,000.

Xtract’s investment follows an exclusive collaboration agreement with Wildstone, signed on 24 February 2025. Under the agreement, Xtract will increase its stake in Wildstone in phases - in the first 12 months, Xtract has committed $150,000 for initial exploration to earn an additional 10% share.

A further $250,000 will be invested in the second year, primarily in drilling and assay work, earning another 10% stake. In the third year, Xtract will allocate $500,000 for further drilling, resource evaluation, and potential JORC-compliant resource definition, securing a total ownership interest of up to 80% through further phased investments, totaling $2.7 million.

Morocco remains a well-established mining hub, hosting both large and small mining operations across multiple commodities, including copper, silver, and antimony - and is a favored trading partner of the United States, China, and the European Union.

You should be now know all about the copper supply gap, the silver-gold pricing mechanism gap, and the soaring antimony price due to Chinese export controls…

There’s money to be made.

Wildstone holds 15 exploration licenses for these minerals, strategically positioned in Central Morocco. The licenses, which are non-contiguous, are set to expire in October 2026.

To date, minimal exploration has taken place, and Wildstone plans to evaluate all licenses before prioritizing key areas for further work. Exploration, including drilling, should start soon.

And if the results support commercial development, selected projects will be advanced into small-scale production, with potential evaluation for large-scale mining.

Small-scale mining operations are expected to begin within six months of the agreement’s signing, contingent on obtaining necessary mining licenses and reaching agreements with artisanal miners.

Xtract has committed $200,000 to fund this initial development phase, with the ore to be processed using existing equipment easily sourced in Morocco.

Xtract will receive 75% of the free cash flow until capital repayment is completed, after which profits will be split, with 60% allocated to Xtract. Should larger deposits be confirmed, Xtract will fund the development of a more advanced processing plant, estimated at $1 million.

A larger-scale mining operation will require at least:

• a five-year mine life

• a minimum annual throughput of 150,000 tonnes

• discounted cash flow model with an 18-month payback period

• and a return on investment of no less than 20%.

Xtract will receive 60% of the cash flow from this larger operation for capital recovery, shifting to an 80% share of profits thereafter.

Xtract and Wildstone will jointly manage the venture through an operating committee comprising one representative from each company. Additionally, Xtract will hold two seats on Wildstone’s board and appoint the chairman, who will have a casting vote.

Until Xtract achieves an 80% ownership stake, the existing shareholders retain the right to nominate a non-executive director to Xtract’s board. This director will receive options in Xtract Resources and a salary of $1,500 per month, with the possibility of continued service beyond the earn-in phase.

Basically, Xtract calls the shots.

And with structured exploration, phased investment, and a clear operational strategy, the company is well-positioned to unlock significant value.

Colin Bird notes:

‘This acquisition has been carefully considered and ticks all the boxes for Xtract's mission to explore and where appropriate develop small mines in strategic and critical minerals. The business will be progressed along traditional lines i.e. exploration into feasibility study and development where appropriate. We strongly believe the entry into Morocco will establish a firm base for shareholder value enhancement and we will keep shareholders updated as the project progresses.’

Keep an eye on…

Beyond these new licenses, late last year Xtract announced the start of preliminary reconnaissance diamond drilling at the Chilibwe Licence in Zambia, following extensive data compilation and fieldwork, which have identified drill-ready targets.

The Chilibwe Licence (22118-HQ-LEL) is a large-scale exploration licence covering 27,203 hectares in Zambia’s North Central province, and is prospective for cobalt, copper, gold, and nickel. The site is strategically located northwest of Eurasian Resources Group’s Frontier mine, near the Zambian-DRC border, and southeast of the historic Mufulira copper mine.

On 10 October 2024, Xtract entered into an exclusive 24-month collaboration agreement with Chilibwe Mining to assist with exploration and development of the licence- including preparing a work program and budget, overseeing exploration activities, and seeking project funding.

Xtract will provide technical, financial, and legal due diligence services and oversee both on-site and desktop exploration work. In return, Xtract is receiving a 25% shareholding in Chilibwe Mining, as well as 25% of any dividends paid by Chilibwe from the project’s proceeds.

Xtract will receive its 25% stake immediately if any of the following occur:

• project funding is secured

• Chilibwe undergoes a change of control

• Chilibwe enters into a new joint venture agreement related to the licence

Upon a trigger event, Xtract’s 25% interest will be issued based on the company’s fully diluted share capital.

Xtract is not obligated to provide any direct funding to the project. However, if it does provide financial support, these funds can be converted into equity in Chilibwe based on the total investment made by both parties.

Chilibwe has agreed to grant Xtract exclusive rights to the project for 24 months. If Chilibwe accepts alternative funding during this period, it must pay Xtract a $500,000 break fee within seven days, issue Xtract’s agreed 25% stake in Chilibwe, and issue any additional shares required under the loan conversion terms or repay any Xtract loans.

It is however worth worth noting that the licence is currently subject to legal proceedings due to a dispute between Chilibwe and a former joint venture partner, which has hindered development.

Chilibwe has filed a case with the High Court of Zambia seeking to terminate the existing joint venture and regain full control of the licence.

Western Foreland Updates

Then there’s the Western Foreland.

Recent discoveries by Ivanhoe in the DRC’s extension of the region have reaffirmed the stratabound nature of mineralisation.

For context, copper mineralisation in this setting is controlled by redox fronts—boundaries between oxidized and reducing strata. These fronts can be targeted based on the sequence of rock layers observed in local stratigraphy.

Which is Xtract’s plan.

The 2025 JV exploration programme with Cooperlemon will focus on potential redox boundaries inferred from the established stratigraphy.

Regarding recent exploration activities across Licence 29123-HQ-LEL,alongside 30458-HQ-LEL, 30459-HQ-LEL, 21850-HQ-LEL, and 21851-HQ-LEL, spanning both the Western Foreland and Fold & Thrust Belt domains: successful reconnaissance has led to an expanded programme targeting identified anomalies and regional analogues across all five licences.

Lithological drilling has defined the stratigraphy, confirming the presence of the necessary structures to host redox fronts and Western Foreland-type mineralization.

Mapping, geophysical interpretation, ground magnetic surveys, and stream sediment sampling has been completed across all licences, with three drill holes executed on Licence 29123-HQ-LEL.

And a total of eight stream sediment copper anomalies were discovered across four licences within the Fold & Thrust Belt.

The phase two exploration programme is set to begin at the end of the rainy season.

Bird noted ‘We have achieved our two objectives of firstly confirming that Licence 29123-HQ-LEL and part of 21851-HQ-LEL situated within the Western Foreland bordered by recent discoveries by Ivanhoe Mines within the DRC's extension of the Western Foreland host the requisite geological and structural characteristics required to create redox fronts and therefore Kamoa-style mineralisation. Secondly, our studies on Licences 30458-HQ-LEL, 30459-HQ-LEL and 21850-HQ-LEL and 21851-HQ-LEL coincident with the Fold & Thrust Belt domain all returned copper anomalies warranting further follow-up including drilling. The Western foreland in Zambia remains largely under-explored and we are excited to be at the forefront of exploration in this potential emerging copper district. We are completing our detailed exploration programme and logistical planning, so we are ready to launch a new campaign after the rainy season. We look forward to updating shareholders on future progress.’

This is just another feather in the cap.

Silverking Hopes

Last year, Xtract entered into a joint venture agreement with Oval Mining to work the Silverking Project. Silverking mineralisation is characterised by deep levels of intense oxidation, breccia, vein and stockwork hosted copper mineralisation and is distinguished by high-grade supergene enrichment, also diagnostic of the nearby Kitumba deposit.

The former Silverking open pit and underground mine extends to a mining depth of only 70m and based on underground mapping and drilling is believed to remain open both down-dip and along strike.

Historic peak Silverking reported drill intercepts including 50m @ 5.47% Cu in borehole SVKRC002 from 55m to 105m depth. The hole stopped in mineralisation. Mineralised intercepts peaked at 52.2% Cu over a 1m drilled interval.

A historical wide-spaced geochemical soil survey supplemented by magnetic and IP ground geophysical surveys undertaken by Glencore then identified a number of high priority targets warranting follow-up.

In particular, a second breccia pipe located 800m from the main Silverking mineralised body was identified and has not been explored. Evidence at surface suggested possible stockwork or disseminated copper mineralisation between the two breccia pipes.

The objectives remain to:

• Test the depth extension of the high-grade copper pipe.

• Establish the true mineralised width of the main pipe, where previous drilling ended in mineralisation.

• Assess wall rock alteration for potential lower-grade bulk tonnage copper mineralisation.

• Evaluate the second pipe structure, previously untested by historic drilling.

• Investigate ground magnetic anomalies near the main pipe for possible mineralised offshoots.

• Test a newly identified anomaly within the expanded licence area.

Bird notes that ‘Silverking benefits from past small-scale mining, which extracted high-grade copper at shallow depths. This provides us with valuable geological insights that can be applied to identify similar targets. Our initial drilling will determine the depth and shape of the main pipe, guiding future mine development. We anticipate a high-grade open pit, with underground extensions considered if depth warrants it. We look forward to sharing further updates as drilling progresses.’

Investors didn’t have to wait long. On 13 March, Xtract reported back on the initial three holes:

• SKIDD001: Intersected significant sulphide mineralisation (chalcopyrite, bornite, and chalcocite) over 46.4m from a depth of 93.6m.

• SKIDD002: Located 30m below SKIDD001, intersected 38.2m of strong oxide copper mineralisation and a further 56.8m sulphide intersection, totaling a 95m mineralised package from 28m depth.

• SKIDD003: Encountered semi-continuous oxide and sulphide mineralisation over 66.2m from 93m depth.

Drilling continues at the main pipe before the planned move to the second pipe and other targets.

The high copper content of bornite and chalcocite within the holes indicates promising grades, and Xtract has mobilised its in-house metallurgist for sample collection.

This could be huge when assays land - sulphides & oxides, with the right lengths.

The bottom line

Xtract Resources is, in my view, still undervalued with a market cap around £9 million, while the company holds valuable assets, including millions of dollars in outstanding payments from Manica.

Additionally, Xtract has expanded into Morocco with its stake in Wildstone, which could start generating revenue from the minnow very quickly.

In Zambia, drilling on the Chilibwe Licence may soon yield fruit - and then there’s drilling on Licences 29123-HQ-LEL, 30458-HQ-LEL, 30459-HQ-LEL, 21850-HQ-LEL and 21851-HQ-LEL located in NW Zambia to come.

Add in assays from Silverking - and even more drilling - and it all starts to look gravy.

Then there’s Bushranger - which can be economically mined if copper sustainably rises above $10,000 - I’ve covered this asset before and note that copper is at a record high and continuing to rise. Renewed interest is inevitable given its jurisdiction.

The USA is arguably going to whack tariffs on copper, China has ordered increased copper stockpiles and turned on the money taps.

With both superpowers attempting to control the world’s electrification metal amid a supply gap that was already going to become a massive problem…

This all looks very promising.