REG - Metals Exploration - Quarterly Update to 30 June 2023

Metals ExplorationAnnouncement

20/07/2023 07:00

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RNS Number : 5642G  Metals Exploration PLC  20 July 2023

METALS EXPLORATION PLC

 

QUARTERLY UPDATE TO 30 JUNE 2023

 

Metals Exploration plc (AIM: MTL) ("Metals Exploration", the "Company" or the
"Group"), a gold producer in the Philippines, is pleased to announce its
quarterly results for Q2 2023.

 

Finance and corporate

Ø Record half-year and quarterly gold sales:

·    H1 2023 - 46,186 ounces sold at an average realised gold price of
US$1,939 per ounce (H1 2022: 30,676 ounces at an average US$1,878 per ounce)

·    Q2 2023 - 24,744 ounces sold at an average realised gold price of
US$1,984 per ounce (Q1 2023: 21,442 ounces at an average US$1,887 per ounce).

Ø Record half-year and quarterly gold revenue:

·      H1 2023 - US$89.6 million (H1 2022: US$57.6 million).

·      Q2 2023 - US$49.1 million (Q1 2023: US$40.5 million).

Ø Record half-year and quarterly positive free cash flow:

·      H1 2023 - US$41.9 million (H1 2022: US$13.6 million).

·      Q2 2023 - US$24.1 million (Q1 2023: US$17.8 million).

Ø Elevation of mezzanine debt to secured status is progressing to execution
stage, however uncertainty remains over the interest rate, as well as the date
of its application, which will be applied to the outstanding loan in the
period prior to completion of the elevation.

Ø Mezzanine debt repayments of US$20.7 million in Q2 2023 (Q1 2023 - US$14.3
million).

Ø Net debt as at 30 June 2023 was US$48.3 million (31 March 2023: US$69.0
million).

 

Mining Operations

Ø No lost time injuries occurred during the period - over 20 million hours
worked without a reportable injury.

Ø Mining production of ore and waste was above forecast at 3.49Mt (Q1 2023:
2.74Mt), with a total of 566Kt of ore mined in Q2 2023 (Q1 2023: 282Kt).

 

Processing Operations

Ø Record half-year gold production of 45,533 ounces (H1 2022: 31,348 ounces)
recovered from 1.07Mt at a head grade of 1.48g/t (H1 2022: 1.02Mt at a head
grade of 1.09g/t).

Ø Q2 2023 gold production of 24,235 ounces (Q1 2023: 21,299 ounces) recovered
from 522Kt at a head grade of 1.66g/t (Q1 2023: 546Kt at a head grade of
1.30g/t).

Ø Record half-year gold recovery of 89.8% (H1 2022: 87.7%)

Ø Q2 2023 gold recovery of 86.9% (Q1 2023: 93.4%).

FY2023 Production Guidance Update

Ø Operations in H1 2023 have exceeded expectations with head grade, tonnes
milled and recovery rates all above forecast. Although the head grade for H2
2023 is forecast to drop, the Company has updated its FY2023 production
guidance as follows:

·    FY2023 updated gold production forecast: 78,000 - 81,000 ounces
(previous guidance: 68,000 - 72,000 ounces).

·     FY 2023 updated AISC forecast: US$1,120 - US$1,200 per ounce
(previous guidance: US$1,250 - US$1,300 per ounce).

 

Darren Bowden, CEO of Metals Exploration, commented:

 

"This was an excellent quarter at Runruno with record performances in a number
of key metrics, leading to a first half that has exceeded our expectations
operationally. The Company's cash flows remain strong, and we continue to make
substantial debt repayments, whilst also looking to finalise the mezzanine
debt position as soon as is practicable.

 

"Given Runruno's strong performance in the first half of the year, we are
delighted to announce that we have updated our production guidance, as well as
our forecast all-in sustaining costs - increasing our production range and
further reducing our costs.

 

"This has been an excellent first half of 2023 for the Company and we expect
the second half of this year to continue to deliver our strategy both from an
operational and a corporate perspective."

 

Production and Finance Summary

 

 Runruno Project Report                       Quarter    Quarter      FY 2023    FY 2022
 FY 2023                                      Actual     Actual       Actual     Actual
 PHYSICALS                      Units         Q2 2023    Q2 2022      6 Months   6 Months
 Mining
 Ore Mined                      Tonnes        565,767    509,825      848,023    1,289,123
 Waste Mined                    Tonnes        2,928,776  2,467,685    5,385,929  5,619,472
 Total Mined                    Tonnes        3,494,543  3,002,244    6,233,952  6,965,979
 Au Grade Mined                 g/tonne       1.62       1.18         1.59       1.10
 Strip Ratio                                  5.01       4.77         6.08       4.28
 Processing
 Ore Milled                     Tonnes        522,307    510,214      1,068,391  1,017,258
 Au Grade                       g/tonne       1.66       1.16         1.48       1.09
 S(2) Grade                     %             1.55       1.10         1.41       0.98
 Au Milled (contained)          Ounces        27,894     19,087       50,701     35,742
 Recovery                       %             86.9       86.6         89.8       87.7
 Au Recovered/Poured            Ounces        24,235     16,529       45,533     31,348
 Sales
 Au Sold                        Ounces        24,744     14,992       46,186     30,676
 Au Price                       US$/oz        1,984      1,858        1,939      1,878
 FINANCIALS (Unaudited)
 Revenue
 Gold Sales                     (US$000's)    49,093     27,849       89,552     57,622
 Operating Costs - Summary
 Mining                         (US$000's)    5,223      6,972        10,466     13,307
 Processing                     (US$000's)    8,580      6,926        17,813     14,296
 G&A                            (US$000's)    2,950      2,616        5,901      5,316
 Total Operating Costs          (US$000's)    16,753     16,515       34,181     32,919
 Excise Duty                    (US$000's)    1,975      1,099        3,610      2,317
 UK/Philippine G&A              (US$000's)    2,980      3,102        4,661      4,783
 Total Direct Production Costs  (US$000's)    21,708     20,716       42,452     40,019
 Net Cash Income                (US$000's)    27,385     7,133        47,100     17,603
 Total Capital Costs            (US$000's)    3,334      1,775        5,206      4,039
 Total non-cash costs           (US$000's)    7,512      3,009        15,364     7,682
 Free Cashflow                  (US$000's)    24,051     5,358        41,894     13,564
 Cash Cost / oz Sold - C1       US$/oz        723        938          818        960
 Cash Cost / oz Sold - AISC     US$/oz        1,058      1,336        1,110      1,323

Note: AISC includes all UK Corporate costs.

 

 

Review of Operations

 

Stable operations were maintained during H1 2023, which in combination with a
sustained period of higher grade material, and higher gold prices, has
produced a record H1 revenue of US$89.6 million (H1 2022: US$57.6 million).
Gold sales for Q2 2023 were US$49.1 million (Q1 2023: US$40.5 million), at an
average realised gold price of US$1,984 per ounce (Q1 2023: average gold price
of US$1,887 per ounce); producing a positive free cash flow of US$24.1 million
(Q1 2023: US$17.8 million).

 

Finance

 

The process of elevating the status of the mezzanine loans to that of secured
debt is continuing. The mechanics to achieve this requires new securities to
be created across several jurisdictions. The due diligence work sought by the
RHL Group as part of the elevation has been completed and the documentation to
achieve all aspects of the elevation is largely agreed. The process of
executing these documents is expected to begin shortly, but is likely to take
several weeks to complete, as the process involves the notarisation and
legalisation of multiple documents.

 

As previously advised, the October 2020 debt restructuring agreements envisage
the interest rate applicable to the mezzanine debt being reduced from 15% to
7% once the senior debt is repaid and the elevation of the mezzanine debt to
"new" senior debt is complete.

 

The majority mezzanine lender, MTL Luxemburg, Nick Candy's investment vehicle
(holding 70.7% of the mezzanine debt), has confirmed in writing that, subject
to completion of the elevation documents within a reasonable period, the
interest rate on its portion of the mezzanine debt will reduce to 7% per annum
from 15% per annum as from 3 November 2022 (being the date that the Company
could have fully repaid the Senior Facility, but for the requirements of the
elevation).

 

The minority 29.3% mezzanine lender, the RHL Group, has not confirmed the same
in writing; however, the Company is hopeful the RHL Group will apply the 7%
interest rate from 3 November 2022 and that this will be formalised once the
elevation documents are completed within a reasonable period.

 

Total mezzanine debt payments of US$20.75 million were made during Q2 2023 (Q1
2023: US$14.30 million).

 

The net debt position of the Group as at 30 June 2023 was US$48.3 million (Q1
2023: US$64.4 million). Cash holdings at 30 June 2023 were US$1.0 million (31
March 2023: US$4.6 million).

 

Mining Operations

 

Mining production of ore and waste for Q2 2023 was above forecast at 3.49Mt
(Q1 2023: 2.74Mt), with a total of 566Kt of ore mined in Q2 2023 (Q1 2023:
282kt).

 

An exploration programme in Stages 4 and 5 commenced in Q1 2023, with the
objective of identifying new gold resources both in and near-to the current
pit-shell design. To date, this drilling has not produced any material gold
discoveries.

 

Process Plant

 

Record gold production in H1 2023 of 45,533 ounces (H1 2022: 30,676) was
achieved from a half-year record recovery rate of 89.8% (H1 2022: 87.7%), with
all aspects of the process plant performing adequately.

 

Gold produced during Q2 2023 was 24,235 ounces for the quarter (Q1 2023:
21.299 ounces). Throughput for Q2 2023 was 522Kt (Q1 2023: 546Kt) at a
recovery rate of 86.9% (Q1 2023: 93.4%).

 

Residual Storage Impoundment ("RSI")

 

Work on the final RSI dam-wall raise is expected to be completed in Q3 2023.
Notwithstanding this, the dam water freeboard remained well above design
minimum levels. Earthworks for the construction of the RSI final in-rock
spillway are well advanced.

 

Occupational Health & Safety

 

Runruno continues to record an exceptional safety record with over 20 million
hours worked without a lost-time reportable injury as at the date of this
announcement.

 

Environment and Compliance

 

Compliance matters continue to be successfully monitored, and the mine remains
compliant, with no outstanding material issues.

 

Community & Government Relations

 

In conjunction with relevant government agencies, the Company has largely
completed the removal of illegal miners, including their infrastructure and
dwellings, from mine plan Stages 4 and 5.

 

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014, which forms part of United Kingdom domestic law by
virtue of the European Union (Withdrawal) Act 2018 (as amended). Upon the
publication of this announcement, this inside information is now considered to
be in the public domain.

 

-       END    -

 

 

For further information please visit or contact:

 

 Metals Exploration PLC
 Via Tavistock Communications Limited     +44 (0) 207 920 3150
 Nominated & Financial Adviser:           STRAND HANSON LIMITED
 James Spinney, James Dance, Rob Patrick  +44 (0) 207 409 3494
 Financial Adviser & Broker:              HANNAM & PARTNERS
 Matt Hasson, Franck Nganou               +44 (0) 207 907 8500
 Public Relations:                        TAVISTOCK COMMUNICATIONS LIMITED
 Jos Simson, Nick Elwes                   +44 (0) 207 920 3150

 

Web:                      www.metalsexploration.com
(http://www.metalsexploration.com)

Twitter:                  @MTLexploration
(https://twitter.com/MTLexploration)

LinkedIn:               Metals Exploration
(https://www.linkedin.com/company/metals-exploration-plc)

 

 

Competent Person's Statement

Mr Darren Bowden, a director of the Company, a Member of the Australasian
Institute of Mining and Metallurgy and who has been involved in the mining
industry for more than 25 years, has compiled, read and approved the technical
disclosure in this regulatory announcement in accordance with the AIM Rules -
Note for Mining and Oil & Gas Companies.

 

 

Forward Looking Statements

Certain statements relating to the estimated or expected future production,
operating results, cash flows and costs and financial condition of Metals
Explorations, planned work at the Company's projects and the expected results
of such work contained herein are forward-looking statementswhich are based on
current expectations, estimates and projections about the potential returns of
the Group, industry and markets in which the Group operates in, the Directors'
beliefs and assumptions made by the Directors. Forward-looking statements are
statements that are not historical facts and are generally, but not always,
identified by words such as the following: "expects", "plans", "anticipates",
"forecasts", "believes", "intends", "estimates", "projects", "assumes",
"potential" or variations of such words and similar expressions.
Forward-looking statements also include reference to events or conditions that
will, would, may, could or should occur. Information concerning exploration
results and mineral reserve and resource estimates may also be deemed to be
forward-looking statements, as it constitutes a prediction of what might be
found to be present when and if a project is actually developed.

 

These statements are not guarantees of future performance or the ability to
identify and consummate investments and involve certain risks, uncertainties
and assumptions that are difficult to predict, qualify or quantify. Among the
factors that could cause actual results or projections to differ materially
include, without limitation: uncertainties related to raising sufficient
financing to fund the planned work in a timely manner and on acceptable terms;
changes in planned work resulting from logistical, technical or other factors;
the possibility that results of work will not fulfil projections/expectations
and realize the perceived potential of the Company's projects; uncertainties
involved in the interpretation of drilling results and other tests and the
estimation of gold reserves and resources; risk of accidents, equipment
breakdowns and labour disputes or other unanticipated difficulties or
interruptions; the possibility of environmental issues at the Company's
projects; the possibility of cost overruns or unanticipated expenses in work
programs; the need to obtain permits and comply with environmental laws and
regulations and other government requirements; fluctuations in the price of
gold and other risks and uncertainties.

 

The Company expressly disclaims any obligation or undertaking to disseminate
any updates or revisions to any forward looking statements contained herein to
reflect any change in the Group's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statements are
based unless required to do so by applicable law or the AIM Rules.

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