Xtract Resources (LON:XTR)  said its Mozambican subsidiary, Explorator Limitada (“Explorator”), has concluded an additional mining contractor agreement with Longhau Tianci Mining Co.

The London-based producer said the contract agreement will enable Explorator to exploit the Boa Esperanza hard rock gold deposit at its Manica mining concession in Mozambique.

Boa Esperanza is a steeply north-dipping Archean Greenstone Belt Orogenic Gold deposit within the 10km long west-northwest trending Mutamborico shear zone in Mozambique.

The agreement - known as the “Boa Esperanza Agreement” will see Explorator receiving 20% of gold production, after the settlement by Explorator of the Mining Production Tax.

Explorator will also remit 35% of its share of Boa Esperanza gold production to Mutapa Mining and Processing LDA, Explorator's existing hard rock collaboration partner.

Longhau, has been appointed to mine the Boa Esperanza hard rock gold deposit for six years ‘or until the ore body is depleted or no longer viable’ it noted.

Shares in Xtract Resources have risen gradually over the past month and closed on Monday afternoon at 1.825p.

The Boa Esperanza project was mined historically since at least 1936, with total production of 4,800oz of gold reported from two small open pits and underground workings.

A previous 2016 technical report commissioned by Xtract Resources has estimated SAMREC Code (2009) compliant Inferred Mineral Resource of 143,000 tonnes @ 0.77g/t of Gold.

The drilling at Boa Esperanza, as well as underground sampling, has since indicated that there are potentially pockets or shoots of higher-grade ore within the overall resource.

Further gold potential was also identified, highlighting the potential for additional discoveries here the zone has been only sparsely drilled or remains untested by drilling, the group added.

“Boa Esperanza has had only limited drilling and as such the contractor plans to open the veins progressively and follow the vein and ore shoot,” said Colin Bird, Executive Chairman.

Bird said the new agreement will provide Xtract with another potential source of cash flow concurrent with the Guy Fawkes agreement which the Company secured last Wednesday.

“We are also pleased to report that the previous onerous Covid-19 lockdown protocols in South Africa have been reduced and we are confident that border restrictions will be lifted to allow the importing of machinery from South Africa to Mozambique,” he added.

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