JOHANNESBURG (miningweekly.com) – Xtract Resources’ decision to no longer provide finance to Minera Polar Limitada, the owner of the Chepica gold/copper mine, in Chile, has stopped the severe financial haemorrhaging the company suffered over the past year.

In September, Xtract decided to pull the plug on its investment in the mine, as costs and technical challenges made it unviable.

“The underlying fundamentals and the risk associated with the project are no longer supportive of continuing investment,” the company said at the time, noting that it did not foresee the mine consistently producing 10 000 t/m of ore.

Xtract chairperson Colin Bird on Monday reiterated that the company’s decision to cease funding against the unsatisfactory performance at Chepica stopped serious cash deficit funding requirements.

“Our focus now is on the Manica mine to determine the capital expenditure required against the optimum technical plan and, therefore, restore certainty to the company.”

The Manica gold mine, in Mozambique, is expected to produce about 48 000 oz/y of gold. Xtract is targeting April 2017 for the start of production.

Meanwhile, Xtract had also reduced its operating expenses and overheads to be consistent with a junior resources publicly listed company. “During the [mine’s] work programme, we will continue to consider all options with a view to restore shareholder value.”

The Manica mine is now completing a social and environmental impact study, while Minxcon has been appointed to complete openpit optimisation modelling.

Xtract earlier this year engaged in talks to sell the Manica mine to Nexus Capital and Mineral Technologies International for $17.5-million; however, the deal fell through when the conditional sale and purchase agreement lapsed.

Xtract remains financed through a standby equity distribution agreement and a loan note facility with YA Global Master.