LONDON (ShareCast) - (ShareCast News) - Xtract Resources announced on Thursday that, after undertaking a review of the Chepica Gold and Copper Mine in southern Chile, it has determined that the underlying fundamentals and the risk associated with the project were no longer supportive of continuing investment.
The AIM-traded firm said that as a result, it has advised the option holder that it will not make future option payments.

Xtract's next option payment is due on 15 October, following which the company will relinquish its option and mining rights at Chepica.

"The Chepica mine has been challenged technically and commercially for an extended period," said executive officer Colin Bird.

"The technical challenges received a further set back in late 2015 when the region experienced a major earthquake and, separately, a tragic dual fatality at the surface plant."

Bird said the board's internal review concluded that a new operator, with a separate input capital structure and operating experience in Latin America, may be able to achieve the operating returns required for new investment.

"Shareholders will be advised on progress and exit discussions and identification of the new direction for the mine as soon as possible."

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