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Xtract Resources affected by major earthquake in Chile

The area that includes capital Santiago was hit by a major tremor.

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A new road will be built to access the ore-body from a different position.

Xtract Resources (LON:XTR) has scaled back its profit expectations for the current year after an earthquake in Chile undermined the haulage road at the Chepica mine.

The area, including capital Santiago, was hit by a major tremor, after which Chepica’s management decided it was not safe to use the mine's access road.

A new road will be built to access the ore-body from a different position, but this will delay stoping of the main areas.

No additional cash will be transferred by Xtract to the mine but its profits will be US$1.5m less than planned in the second half of the year.

Profits are now expected to be US$150,000 for the three months to September, compared to a previous forecast of US$1.2mln, and US$650,000 for the final quarter against US$1.2m. For the half year to June, Xtract's losses were £810,00 (£1mln).

Xtract is also planning to acquire the Manica gold deposit in Mozambique, with an almost completed Bankable Feasibility Study at less than US$6.25 per ounce of resource in the ground

Jan Nelson, chief executive, said: We are now well positioned for the next stage of development with the conditional acquisition of Manica to increase our gold output 8 fold within 18 months.

Further major upside is also anticipated from our copper projects, now that drilling is complete and we await the results. 

Further drilling is underway at Chepica and the BFS remains on track at Manica with major optimisation due. I look forward to providing further updates on our progress for the remainder of 2015."

"The impact of the earthquake is of course extremely disappointing, however safety is a major priority and we will not produce if we can not do so safely.

“We have an exemplary safety record at the mine, we have had no accidents or fatalities since we took operational control.

“Despite the impact the mine is still expected to make a net profit of US$650k in Q4 and the new access haulage will ensure we can continue to produce safely and therefore sustainably.”

Quick facts: Xtract Resources PLC

Price: 4 GBX

LSE:XTR
Market: LSE
Market Cap: £24.82 m
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