24 January 2024

Xtract Resources Plc

("Xtract" or the "Company")

Proposed disposal of the Manica Gold Project

Notice of General Meeting

The Board of Xtract Resources Plc ("Xtract" or the "Company") is pleased to announce that the Company has agreed terms for the disposal of the Manica Gold Project. Xtract has today entered into the conditional MMP Agreements with its Mozambique partner, MMP, and parties related to MMP, which comprise:

(i)           The Share Purchase Agreement in relation to the sale by Xtract of its entire interests in the Manica Gold Project pursuant to which, inter alia, Xtract has agreed to sell Xtract's 23% net profit share interest in the Manica Gold Project (by way of a sale of the entire issued share capital of Mistral) to the Buyers for a consideration of up to US$15 million in cash in regular staged payments by the Buyers over the period to 1 March 2027; and

(ii)       The Settlement and Restructuring Agreement in relation to the termination of Xtract's mining collaboration agreement with MMP dated 28 May 2019 in relation to the Manica Gold Project under which the Xtract Parties are to be paid US$3.325 million in cash to settle all monies due under the Mining Collaboration Agreement from MMP to Xtract and Explorator, Xtract's local Mozambique subsidiary, of which US$2 million has already been paid; and to terminate the Mining Collaboration Agreement.

The proposed Disposal would constitute a fundamental change of business of the Company under Rule 15 of the AIM Rules and is therefore conditional on, inter alia, Shareholder approval which is being sought at a General Meeting of the Company. On completion of the Disposal, the Company will however, remain an operating minerals company under the AIM Rules given its remaining material minerals interests in  two large scale early-stage exploration copper projects in Northeast Zambia and the Bushranger copper Project in Australia.

A Circular setting out further details on the proposed Disposal, and the Notice convening the General Meeting to be held at the offices of Fladgate LLP at 16 Great Queen Street, London, WC2B 5DG at 10.00 a.m. on 13 February 2024, is being sent to shareholders today. The text of the Letter from the Chairman of Xtract in the Circular is reproduced in full in Appendix I to this announcement without material adjustment or amendment. Shareholders should read the whole of this announcement, including Appendix I.

The MMP Agreements are also conditional on Mozambique regulatory approval and other conditions customary for agreements of this nature.

Colin Bird Executive Chairman said:

"The Manica Project will be transitioning to the complex ore phase which has not yet been fully scoped or technically and financially modelled. We do not want to be exposed to this risk, particularly in exciting copper times for our Company. The President of Zambia is targeting annual production of 3Mt of Cu per annum and the discovery of Western Foreland - Kamoa style mineralisation in Zambia will do much to achieve this goal. The predictive rise in copper use notwithstanding electric vehicles ("EVs") is forecast to be substantial and whilst EVs are important, developing world emergence and growth is providing significant additional copper demand.  We believe that the resulting copper supply shortage is becoming more acute and Xtract is determined to be a major player in the copper discovery arena.  Viewing worldwide exploration activities, the Xtract Board is even more convinced that its southern African copper focus, and particularly on the Western Foreland, exploration and small mine opportunities, is the optimum strategy for our shareholders. The two projects in the Xtract copper portfolio in NW Zambia hold a pivotal position in the Western Foreland geological architecture and present a significant potential opportunity for both our shareholders and our copper portfolio in general."

Copies of the Circular and Notice of General Meeting will be available on the Company's website www.xtractresources.com

Unless the context otherwise requires, capitalised terms of this announcement shall have the same meaning ascribed to them in the Circular, as reproduced in Appendix II.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

The person who arranged for the release of this announcement on behalf of the Company was Colin Bird, Executive Chairman and Director.

Enquiries:

Beaumont Cornish Limited ("Beaumont Cornish"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as nominated adviser to the Company in connection with this announcement and will not regard any other person as its client and will not be responsible to anyone else for providing the protections afforded to the clients of Beaumont Cornish or for providing advice in relation to such proposals. Beaumont Cornish has not authorised the contents of, or any part of, this announcement and no liability whatsoever is accepted by Beaumont Cornish for the accuracy of any information or opinions contained in this announcement or for the omission of any information. Beaumont Cornish as nominated adviser to the Company owes certain responsibilities to the London Stock Exchange which are not owed to the Company, the Directors, Shareholders, or any other person.

Forward Looking Statements

Certain statements in this announcement are or may be deemed to be forward looking statements. Forward looking statements are identi?ed by their use of terms and phrases such as ''believe'' ''could'' "should" ''envisage'' ''estimate'' ''intend'' ''may'' ''plan'' ''will'' or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth results of operations performance future capital and other expenditures (including the amount. Nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward looking statements re?ect the Directors' current beliefs and assumptions and are based on information currently available to the Directors. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward looking statements.

Qualified Person:

Colin Bird: The technical information contained in this announcement has been reviewed, verified, and approved by Colin Bird, C.Eng, FIMMM, South African and UK Certified Mine Manager and Director of Xtract Resources plc, with more than 40 years' experience mainly in hard rock mining.

APPENDIX I

A copy of the Chairman's letter in the Circular is set out in full below without material adjustment or amendment

"Proposed disposal of the Manica Gold Project and Notice of General Meeting

1.            Introduction

As announced on 24 January 2024, the Company has entered into the conditional MMP Agreements with its Mozambique partner, MMP, and parties related to MMP. The MMP Agreements comprise:

(i)     the Share Purchase Agreement in relation to the sale by Xtract of its entire interests in the Manica Gold Project pursuant to which, inter alia, Xtract has agreed to sell Xtract's 23% net profit share interest in the Manica Gold Project (by way of a sale of the entire issued share capital of Mistral) to the Buyers for a consideration of up to US$15 million in cash in regular staged payments by the Buyers over the period to 1 March 2027; and

(ii)     the Settlement and Restructuring Agreement in relation to the termination of Xtract's mining collaboration agreement with MMP dated 28 May 2019 in relation to the Manica Gold Project under which the Xtract Parties are to be paid US$3.325 million in cash to settle all monies due under the Mining Collaboration Agreement from MMP to Xtract and Explorator, Xtract's local Mozambique subsidiary, of which US$2 million has already been paid; and to terminate the Mining Collaboration Agreement.

The proposed Disposal would constitute a fundamental change of business of the Company under Rule 15 of the AIM Rules and is therefore conditional on, inter alia, the passing of the Resolution at the General Meeting. The MMP Agreements are also conditional on Mozambique regulatory approval and other conditions customary for agreements of this nature. On completion of the Disposal, the Company will however, remain an operating minerals company under the AIM Rules given its remaining material minerals interests in the Bushranger copper Project in Australia, and the Company's interest in two larger scale early- stage exploration copper projects in Northeast Zambia.

Shareholder approval of the Disposal is being sought at a General Meeting of the Company to be held at 10.00am on 13 February 2024. The Notice convening the General Meeting and setting out the Resolution to be considered is set out at the end of this document. A summary of the action you should take is set out in paragraph 8 of this letter.

Further details of the Disposal are set out below.

The purpose of this document is to give you the background to and further details of the proposed Disposal, including why the Directors consider the Disposal to be in the best interests of the Company and its Shareholders, and recommend that you vote in favour of the Resolution to be proposed at the General Meeting of the Company to be held at the offices of Fladgate LLP at 16 Great Queen Street, London, WC2B 5DG at 10.00 a.m. on 13 February 2024.

2.            Background to and reasons for the Disposal

The Company's Manica Gold Project in Mozambique is held by the Company's wholly owned subsidiary, Explorator and comprises gold deposits (both hard rock and alluvial) which the Company has been progressing towards production since June 2015.

The Company initially appointed a number of independent contractors in 2017 to exploit the alluvial deposits and, as recently reported, the gold mined from these alluvial deposits has now been scaled down as the alluvial mineable resource has been significantly reduced. Production at the Manica Gold Project is now dominated by the Fair Bride hard rock deposit.

In May 2019, the Company's wholly owned subsidiary, Explorator, entered into the Mining Collaboration Agreement with MMP pursuant to which it appointed MMP as the independent mineral processing contractor to provide a technical solution to conduct hard rock mining on the Manica Gold Project permitted area, and to process the mined ore for the recovery of gold for a period of 10 years with an option to extend. MMP agreed to contribute its hard rock processing plant and committed to the purchase and commission of suitable Carbon in Leach plant.

Under the terms of the Mining Collaboration Agreement, MMP receive 77% of all the operating profit produced from the permitted area through the performance of the contract by MMP when the prevailing price of gold is greater than US$1,250 per ounce. MMP's entitlement increases to 78.5% at a prevailing gold price less than US$1,250 and more than US$1,175 per ounce, and to 80% when the prevailing price of gold is less than US$1,175 per ounce. Profit is defined as revenue on sale less deductible costs (excluding non- cash items) and corporation tax. At the current gold price per ounce the Company is due 23% of operating profit of gold produced.

MMP commenced mining operations in May 2022, and the plant was commissioned and produced the first gold from Fair Bride during July 2022. Production increased steadily through commissioning, with just over 110kg of gold produced by December 2022. Production increased at the beginning of 2023 (further details are set out in paragraph 3 below). Known oxide and weathered transitional ore within the Fair Bride concession were expected to provide up to approximately two years of mine life for the current processing plant configuration and, as previously reported, the Company intended to work with MMP to decide on the strategy around extending oxide mine life and how and when best to exploit the deeper underlying sulphide resource.

The Board of Xtract has assessed the potential transition of the Manica Gold Project to the more complex sulphide ore phase, which has not yet been fully scoped or technically and financially modelled, and has concluded that it does not want to be exposed to this risk. Whilst Xtract is confident in the Manica Gold Project, Xtract is in effect a minority participant (with a net 23 per cent. operating profit share as described above) and has limited influence over decision making where there is short to medium-term uncertainty. Management control of the Manica operation is vested in MMP, a private unlisted Mozambique company and associated management, while Xtract, as the holder of the Manica Licence, indirectly assumes responsibility and potential liability without sufficient measure of control or influence over operating plans and procedures.

Given continuing difficult market conditions for junior exploration companies, the Disposal consideration of up to US$15 million would provide a significant boost to the Company's treasury over the next 3 years, and the current intention is to allocate additional funding to accelerate the Company's highly prospective existing copper projects in Zambia, and provide additional funding to take advantage of new opportunities in Southern Africa where they offer considerable upside in those metals in which Xtract is focused. The Company will also continue to support Xtract's development of its Bushranger project in Australia in a way that optimises value for shareholders.

3.            Manica Gold Project

The Fair Bride gold deposit is within the Manica Gold Project situated 270km NW of the city of Beira within Licence 3990C in the Odzi-Mutare-Manica Greenstone Belt of Mozambique.

The registered owner of Licence 3990C, which was issued in March 2011, is Explorator, which is 98 per cent. owned by Xtract's wholly owned subsidiary Mistral, with the balance of 2 per cent. held directly by Xtract. The registered owner of Licence 7569L, an alluvial licence which is effectively mined out and which was issued in June 2018, is Chinhamapere, which is also 98 per cent. owned by Mistral with the balance held directly by Xtract.

In February 2017, Xtract announced the results of a definitive Feasibility Study for the open pit operation of the Fair Bride deposit of the Manica Gold Project which had been completed by Minxcon (Pty) Ltd and which was based on a SAMREC-compliant open pit resource of 13.95Mt at 1.76g/t Au for 789Koz Au and an underground resource of 5.66Mt at 2.6g/t Au for 473Koz Au. The Mineral Resource was classified into Measured, Indicated and Inferred Mineral Resource categories as defined in the SAMREC Code. The Mineral Resource estimation for the Fair Bride open pit was declared to a depth of 280m with a resource cut-off of

0.5 g/t. The open pit contains predominantly Measured and Indicated Mineral Resources.

Gold mined from the alluvial deposits has now been significantly scaled down as the alluvial mineable resource has been significantly reduced, grades have declined and production at the Manica Gold Project is now dominated by the Fair Bride hard rock deposit. As set out above, in May 2019, the Company's wholly owned subsidiary, Explorator, entered into the Mining Collaboration Agreement with MMP pursuant to which it appointed MMP as the independent mineral processing contractor and the plant was commissioned and produced its first gold during July 2022. Table 1 below sets out shows the quarterly gold production and sales prices for the three-month periods ended 30 September 2023 for the Fair Bride project and year to date figures for 2023.

Table 1: Operator's Report - Total Gold production and sales prices - Fair Bride (Xtract 23% share of net profit)

Note: Source - The production statistics for Fair Bride are provided by contract miner, MMP

Gross monthly mine production from Fair Bride has increased month-on-month as the operation has bedded down and post-commissioning issues have been resolved, with an increase reported in fine gold poured, as set out in table 2 below while ore processed reduced in September 2023 as set out in Table 3 below:

Table 2: Fine Gold Poured Q3 2022 to Q3 2023

Note: Source - The fine gold statistics for Fair Bride are provided by contract miner, MMP

Table 3: Ore Tonnes Processed Q4 2022 to Q3 2023

Note: Source - The ore processed statistics for Fair Bride are provided by contract miner, MMP

4.            MMP Agreements

On 24 January 2024, the Company entered into the conditional MMP Agreements with MMP, and parties related to MMP. The MMP Agreements comprise:

i)      the Share Purchase Agreement in relation to the sale by Xtract of its entire interests in the Manica Gold Project pursuant to which, inter alia, Xtract has agreed to sell Xtract's 23% net profit share interest in the Manica Gold Project (by way of a sale of the entire issued share capital of Mistral) to the Buyers for a consideration of up to US$15 million in cash in regular staged payments by the Buyer over the period to 1 March 2027; and

ii)      the Settlement and Restructuring Agreement in relation to the termination of Xtract's mining collaboration agreement with MMP dated 28 May 2019 in relation to the Manica Gold Project under which the Xtract Parties are to be paid US$3.325 million in cash: to settle all monies due under the Mining Collaboration Agreement from MMP to Xtract and Explorator, Xtract's local Mozambique subsidiary, of which US$2 million has already been paid; and to terminate the Mining Collaboration Agreement

The MMP Agreements are both subject to the laws of England and Wales and a summary of the agreements is set out below.

Share Purchase Agreement

The Share Pruchase Agreement was entered into between the (i) the Buyers and the Guarantors; and (ii) Xtract on 24 January 2024, pursuant to which Xtract has agreed to sell all the share capital of Mistral, together with any shares in the subsidiaries of Mistral owned directly by Xtract, and to assign the Xtract Loans, to the Buyers.

The Buyers have agreed to pay the Price of US$12 million, of which US$9 million is to be paid in 12 quarterly instalments of US$0.75 million commencing on 1 March 2024, with the last payment due on 1 December 2026, and a further US$3 million to be paid on or before 1 March 2027. In addition, the Buyers have also agreed to pay the Deferred Consideration of up to a further US$3 million on the following basis:

(i)         If by 28 February 2025 MMP has not notified Xtract in writing that it has made a decision to build a Sulphide Plant, then Deferred Consideration is payable as follows;

-          US$1 million by 7 March 2025;

-          US$1 million by 31 August 2025; and

-          US$1 million by 31 December 2025.

(ii)      If by 28 February 2025 MMP has notified the Seller in writing that it has made a decision to build a Sulphide Plant then Deferred Consideration is payable as follows:

-          US$1 million within 14 days of the decision to build Sulphide Plant;

-          US$1 million within the earlier of: (a) 14 days of commencement of dry commissioning of the Sulphide Plant; and (b) 1 December 2025; and

-          US$1 million within the earlier of: (a) 14 days of the Sulphide Plant achieving commercial production defined as processing 30,000 tonnes in any 30-day period; and (b) 1 February 2026.

(iii)     If MMP or any of the Buyers or any of their associates enters into an agreement to sell the rights to any of the Sulphides at the Manica Project or give any other party the right to build or finance a Sulphide Plant or use any other party's sulphide plant to process ore from the Manica Project, then the Deferred Consideration automatically becomes immediately payable in full with no further action or notice required to be given by Xtract.

Up until 31 October 2024, the Buyers have the option to avoid paying the Deferred Consideration by electing to pay the Increased Price Election by increasing the Price by US$1 million to US$13 million provided that all amounts due beforehand pursuant to the MMP Agreements have been paid by their due date and the Buyers pay in full any unpaid amount of the increased Price of US$13M and any unpaid amounts still due under the Settlement and Restructuring Agreement within 14 days.

In aggregate, the Price and the Deferred Consideration amount to between US$13 million (the minimum) and US$15 million (the maximum).

The Guarantors have jointly and severally guaranteed all amounts due to Xtract under the Share Purchase Agreement and the Settlement and Restructuring Agreement.

The Buyers are responsible for obtaining any approvals required from the Mozambique Ministry of Mineral Resources and Energy, registering the change of control with the Mozambique National Directorate of Mines and for paying any transfer costs payable in relation to this approval and registration. The Share Purchase Agreement is conditional on completion on or before the Long Stop Date or such other date agreed to in writing and, inter alia, (i) Shareholder approval; and on completion (ii) proof that the Mozambique Ministry of Mineral Resources and Energy consent has been obtained or a legal opinion that it is not required; and (iii) proof that the Mozambique National Directorate of Mines has approved the registering of the sale of the Mining Licence has been obtained or a legal opinion that it is not required and or can be obtained after the completion date.

The Buyers have warranted and undertaken that until the Price and the Deferred Consideration are fully paid in accordance with this agreement they will, amongst other undertakings:

a)        not sell or assign or enter into any agreement to sell or assign any of the Sale Shares; or

b)        not create any Security Interest over or enter into any agreement to create a Security Interest over any of the Sale Shares; or

c)        will not sell or enter into any agreement to sell any direct or indirect interest in the Manica Project; or

d)        will not make any distributions or payments to their shareholders unless:

i)         the Guarantees are in place and valid and the Seller has not made any claim against a Guarantor under any of the Guarantees; and

ii)        all monies due to be paid by the MMP Parties under the Settlement and Restructuring Agreement have been paid to the Xtract Parties

e)        will ensure Explorator does not sell or assign or relinquish the Mining Licence or enter into any agreement to sell, assign, or relinquish the Mining Licence.

If there is any breach of these security provisions or the late payment of any of the amounts due to be paid by the Buyers under the MMP Agreements that is not rectified within 14 days, then: (i) all outstanding amounts will become due and payable; (ii) interest will from the date of the breach accrue on all unpaid amounts at the rate of 2% per cent per month compounded monthly on the last day of each calendar month; and (iii) the Buyers irrevocably grant to the Seller (or its nominated representative) an option to acquire the Mining Licence and / or all the issued shares of Explorator for US$1 such option to remain valid until all amounts including accrued interest due under the MMP Agreements have been paid in full.

Xtract has provided customary warranties and undertakings in respect of Mistral and its subsidiaries, subject to a de minimis of US$50,000 per claim and overall cap on Xtract's liability under all warranty claims of US$1.5 million.

Settlement and Restructuring Agreement

The Settlement & Restructuring Agreement, entered into between (i) MMP and its related parties, Meteor and Horizon ("MMP Parties"); and (ii) Xtract and Explorator ("Xtract Parties") on 24 January 2024, settles all monies due and conditionally terminates the Mining Collaboration Agreement.

Under the terms of the Settlement and Restructuring Agreement, Explorator's agreed net profit share due in respect of the nine-month period ended 30 September 2023 under the Mining Collaboration Agreement, amounts to US$3 million, of which US$2 million has been paid since 30 September 2023, and the balance of US$1 million is payable to Xtract as to US$0.5 million by 30 January 2024 and the balance by 28 February 2024. The MMP Parties have provided warranties and indemnities to the Xtract Parties, in consideration for which the Xtract Parties have agreed to forgo any net profit share due for the three-month period ended 31 December 2023.

The Settlement and Restructuring Agreement is conditional inter alia on completion of the Share Purchase Agreement on or before the Long Stop Date or such other date agreed to in writing between the MMP Parties and the Xtract Parties. If the Long Stop Date is extended beyond 15 February 2024 and at the date of the extension of the Long Stop Date either: (i) the MMP Parties are in default of their obligations under the Settlement and Restructuring Agreement; and / or (ii) the Buyers under the Share Purchase Agreement have not met all their obligations due to be met on or by the completion date of the Share Purchase Agreement, then for every month or part thereof that the Long Stop Date is later than 15 February 2024, a payment will be due from the MMP Parties of US$0.5 million (if the average LME spot gold price is less than US$1,950 per oz) or US$0.65 million (if the average LME spot gold price is equal to or greater than US$1,950 per oz). The parties have agreed that US$0.325 million is now due to Xtract in respect of the Long Stop Date of 15 February 2024.

With effect from execution of the Settlement and Restructuring Agreement, the MMP Parties have assumed full liability for ongoing compliance with all applicable Mozambique mining environmental, tax and other applicable laws and regulations relating to mining activities at the Mining Licence area and have jointly and severally indemnified Xtract and Explorator for any liabilities which they directly or indirectly become liable for as a result of (i) any of the mining or other activities performed or due to be performed by the MMP Parties; and/or (ii) the MMP Parties not meeting any of their obligations under the Settlement & Restructuring Agreement.

5.            Use of proceeds & strategy

On completion of the Disposal, Xtract will continue to retain its advanced exploration and development projects in both Zambia and Australia - the capitalised exploration value of these projects amounted to £8.7 million as at 30 June 2023, the date of the last published balance sheet.

The Board intends to use the Disposal consideration of up to US$15 million to fund the exploration programmes on the Company's existing copper projects in Zambia, and to take advantage of new opportunities in Southern Africa offering considerable upside in those metals in which Xtract is focused. The consideration will also continue to support Xtract's development of its Bushranger project in Australia.

Zambia

The Board believes that the demand for copper will continue to grow with in the medium-term, a potential shortfall in supply. Consequently, the Company will continue to seek additional small to larger scale copper mining projects in Zambia and Southern Africa consistent with its current policy.

As announced in August 2023, Xtract entered into a joint venture agreement with Cooperlemon Consultancy Limited in relation to the exploration for copper at large scale exploration licenses 29123-HQ-LEL and 30459- HQ-LEL in Northwest Zambia. The two exploration licences are located within the Western Foreland geological district that hosts the Kamoa - Kakula deposit and the Central Fold and Thrust Belt in Northwest Zambia and in aggregate cover 107,000 hectares in a highly prospective part of Northwest Zambia where competition for exploration licences is acute.

The Company believes that the two licences are well situated within the Western Foreland geological district that hosts potential Kamoa style mineralisation as confirmed by recent exploration and drilling on nearby licences. As previously notified, Xtract intends to spend an initial US$2 million over a two-year exploration period, starting with surface exploration works with a view to defining potential drill targets for 2024.

Australia

The Bushranger copper gold exploration project has been the Company's principal focus over the last three years. Xtract completed an extensive drilling campaign of over 32,000 meters at the Bushranger project and published in November 2022 a JORC compliant Mineral Resource for the Racecourse Prospect of 512Mt @ 0.22% CuEq, at a cut-off grade of 0.1% CuEq, containing 1.1Mt of copper equivalent metal and classified as Inferred and Indicated in accordance with JORC (2012).

In November 2023, Xtract published the results of the Pit Optimisation & Financial Modelling Study to examine the economics of open pit extraction. Xtract had engaged independent consultants, Optimal Mining Solutions (Pty) Ltd of Australia to investigate the economics of a 5Mtpa, 20Mtpa or 25Mtpa open pit mining operation, focussed on the extraction of shallow higher-grade mineralisation from the Bushranger Project.

As previously reported, the Company believes that the final results from the Bushranger Pit Optimisation & Financial Modelling Study show that the currently defined Mineral Resources on the Bushranger Project have the potential to be the basis of a large scale, economic mining operation.

The Board identified key further work that may benefit shareholder value being metallurgical studies that could in turn lead to improvements in both capital and operating cost. The Company is continuing with these studies working towards the ultimate mine and operating plan to identify the best scenario for development of the Bushranger resource.

6.            Financial effects of the Disposal

The Company's interest in the Manica project is recognised as an intangible asset in the Group's accounts and at 31 December 2022 had a carrying value of £11.439 million compared to the aggregate proceeds under the Share Purchase Agreement of up to US$15 million (approximately £11.8 million at the current exchange rate of £1: US$1.266).

In the year ended 31 December 2022, the Company recognised a net loss of £0.235 million attributable to the Manica Gold Project (comprising a mine development loss of £0.357 million and gold mining profit of £0.122 million).

The Manica Gold Project will be treated in the Company's 2023 accounts as an asset held for sale provided Shareholders approve the Resolution at the General Meeting. Xtract anticipates that the disposal of its interest in the Manica Gold Project will record a profit on disposal in Xtract's accounts for the relevant reporting period, which will be determined at that time.

Unaudited proforma financial information

The unaudited pro forma statement of net assets of the Group has been prepared based on the unaudited balance sheet of the Group as at 30 June 2023 to illustrate the effect on the net assets of the Group as if the Disposal had taken place on 30 June 2023.

The unaudited pro forma statement of net assets has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and does not, therefore, represent the Group's actual financial position or results. The unaudited pro forma statement of net assets has been prepared in a manner consistent with the accounting policies and presentation adopted by the Group in preparing its unaudited interim financial statements for the six-month period ended 30 June 2023 and on the basis of the notes set out below. The unaudited pro forma statement of net assets set out below does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006.

Unaudited pro forma net assets of the Group as at 30 June 2023

Notes to the unaudited net assets statement:

1.       The net assets of Xtract as at 30 June 2023 have been extracted, without adjustment, from the consolidated unaudited interim financial statements of Xtract for the six-month period ended 30 June 2023.

2.       The net assets of the Manica Gold Project as at 30 June 2023 have been extracted, without adjustment, from the consolidated unaudited interim financial statements of Xtract for the six-month period ended 30 June 2023.

3.       The maximum consideration of US$15 million has been converted to pounds sterling at the period end exchange rate at 30 June 2023 of $1.267:£1.00.

4.       No account has been taken of costs relating to the Disposal.

5.       No account has been taken of the financial performance of Xtract or the Manica Gold Project since 30 June 2023, nor the monies due under the Settlement and Restructuring Agreement or any other events save as disclosed above.

7.            General Meeting

A notice convening a General Meeting of the Company, to be held at the offices of Fladgate LLP at 16 Great Queen Street, London, WC2B 5DG at 10.00 a.m. on 13 February 2024 is set out at the end of this Circular. At the General Meeting, the following Resolution will be proposed as an ordinary resolution:

That the Disposal and the Company entering into the MMP Agreements (all as defined in the circular to the Company's shareholders dated 24 January 2024 of which this notice forms part) be and is hereby approved, confirmed and ratified and that the directors of the Company are hereby authorised for and on behalf of the Company to approve the signature of any document and/or taking of any action they deem necessary or appropriate in relation to affecting or facilitating the transactions contemplated by the MMP agreements.

8.            Action to be taken by Shareholders

Whether or not you intend to be present at the General Meeting, you are requested to complete the Form of Proxy in accordance with the instructions printed on it and to return it as soon as possible and, in any case, so as to be received by the Company's registrars, Link Group at 65 Gresham Street, London EC2V 7NQ no later than 10 a.m. on 9 February 2024.

You can submit your proxy electronically through the website of our registrar, Link Group, at www.signalshares.com. The electronic submission of proxy must be received by no later than 10.00 a.m. on 9 February 2024. To vote online you will need to log in to your share portal account or register for the share portal if you have not already done so and you will require your investor code. Once registered, you will be able to vote immediately. Voting by proxy prior to the General Meeting does not affect your right to attend the General Meeting and vote in person should you so wish. Further information regarding the appointment of proxies and online voting can be found in the notes to the Notice of General Meeting.

Instructions for voting by proxy through CREST are set out in paragraph 9 of the notes to the Notice of General Meeting.

In the case of the beneficial owners of Ordinary Shares who receive these materials through their broker or other intermediary, the beneficial owner should complete and send a letter of direction in accordance with the instructions provided by their broker or other intermediary.

The return of the form of proxy or transmission of a CREST Proxy Instruction will not prevent you from attending the meeting and voting in person if you wish.

9.            Directors' Recommendation

The Board of Xtract considers the Disposal and the entering into the MMP Agreements to be in the best interests of the Company and its Shareholders as a whole and therefore the Directors will be unanimously recommending at the General Meeting that Shareholders vote in favour of the Resolution as they intend to do in respect of their own shareholdings of, in aggregate, 17,472,415 Ordinary Shares (representing approximately 2.05 per cent. of the Existing Ordinary Shares).

Yours faithfully,

Colin Bird

Executive Chairman"