REG - Metals Exploration - Quarterly Update To 30 September 2023

Metals ExplorationAnnouncement

17/10/2023 07:00

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RNS Number : 2781Q  Metals Exploration PLC  17 October 2023

METALS EXPLORATION PLC

 

QUARTERLY UPDATE TO 30 September 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 Q3 2023.

 

Finance and corporate

Ø Gold revenue of US$42.4 million (Q2 2023: US$49.1 million).

Ø Gold sales of 22,043 ounces sold at an average realised gold price of
US$1,926 per ounce (Q2 2023: 24,744 ounces at an average US$1,984 per ounce).

Ø Positive free cash flow of US$19.0 million (Q2 2023: US$24.1 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$18.5 million (Q2 2023: US$20.7 million).

Ø Net debt as at 30 September 2023 was US$30.6 million (30 June 2023: US$48.3
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 3.30Mt (Q2 2023:
3.49Mt), with a total of 568Kt of ore mined in Q3 2023 (Q2 2023: 566Kt).

 

Processing Operations

Ø Gold production of 22,034 ounces (Q2 2023: 24,235 ounces) recovered from
483Kt at a head grade of 1.60g/t (Q2 2023: 522Kt at a head grade of 1.66g/t).

Ø Gold recovery of 88.7% (Q2 2023: 86.9%).

 

Darren Bowden, CEO of Metals Exploration, commented:

 

"This has been another very strong operational quarter at Runruno with mining
production above forecast with excellent gold recovery in our processing
operations. Although a lower head grade is expected in the remaining quarter
of the year we look forward to a strong finish to the year; whilst maintaining
focus on our exceptional health and safety standards.  I would also like to
congratulate the team for being nominated as the Philippines national
representative in the Association of Southeast Asian Nations ("ASEAN") mining
industry awards in both the mining and processing categories; and further
being shortlisted in the final three candidates in both categories."

 

 

Production and Finance Summary

 

 Runruno Project Report                       Quarter    Quarter                              FY 2023                          FY 2022
 FY 2023                                      Actual     Actual                               Actual                           Actual
 PHYSICALS                      Units         Q3 2023    Q3 2022                              9 Months                         9 Months
 Mining
 Ore Mined                      Tonnes        567,816    380,071                              1,415,839                        1,669,194
 Waste Mined                    Tonnes        2,731,344  3,264,442                            8,117,273                        7,212,607
 Total Mined                    Tonnes        3,299,160  3,644,513                            9,533,112                        8,881,802
 Au Grade Mined                 g/tonne       1.49       1.49                                 1.55                             1.19
 Strip Ratio                                  4.48       8.57                                 5.43                             45.24
 Processing
 Ore Milled                     Tonnes        482,743    455,907                              1,551,133                        1,473,165
 Au Grade                       g/tonne       1.60       1.26                                 1.51                             1.15
 S(2) Grade                     %             1.46       1.80                                 1.43                             1.23
 Au Milled (contained)          Ounces        24,850     18,541                               75,551                           54,283
 Recovery                       %             88.7                      84.8                                89.4                              86.7
 Au Recovered/Poured            Ounces        22,034     15,715                               67,568                           47,063
 Sales
 Au Sold                        Ounces        22,043     14,980                               68,230                           45,641
 Au Price                       US$/oz        1,926      1,714                                1,935                            1,825
 FINANCIALS (Unaudited)
 Revenue
 Gold Sales                     (US$000's)    42,448     25,676                               131,999                          83,298
 Operating Costs - Summary
 Mining                         (US$000's)    5,280      5,907                                15,747                           19,214
 Processing                     (US$000's)    8,322      7,675                                26,135                           21,971
 G&A                            (US$000's)    2,816      2,557                                8,718                            7,873
 Total Operating Costs          (US$000's)    16,419     16,139                               50,599                           49,059
 Excise Duty                    (US$000's)    1,708      1,045                                5,318                            3,362
 UK/Philippine G&A              (US$000's)    2,180      1,684                                6,841                            6,467
 Total Direct Production Costs  (US$000's)    20,307     18,869                               62,658                           58,888
 Net Cash Income                (US$000's)    22,141     6,807                                69,241                           24,410
 Total Capital Costs            (US$000's)    3,150      2,634                                8,357                            6,672
 Total non-cash costs           (US$000's)    6,340      4,030                                21,704                           11,712
 Free Cashflow                  (US$000's)    18,991     4,173                                60,885                           17,737
 Cash Cost / oz Sold - C1       US$/oz        736        989                                  792                              970
 Cash Cost / oz Sold - AISC     US$/oz        1,055      1,347                                1,092                            1,332

Note: AISC includes all UK Corporate costs.

 

 

 

Review of Operations

 

Q3 2023 operations produced another strong quarter result for the Company.
Gold sales for Q3 2023 were US$42.4 million (Q2 2023: US$49.1 million), at an
average realised gold price of US$1,926 per ounce (Q2 2023: average realised
gold price of US$1,984 per ounce); producing a positive free cash flow of
US$19.0 million (Q2 2023: US$24.1 million).

 

Finance

 

The process of elevating the status of the mezzanine loans to that of secured
debt continues and the process of executing the relevant documents is expected
to be completed during Q4 2023.

 

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.

 

Total mezzanine debt payments of US$18.5 million were made during Q3 2023 (Q2
2023: US$20.7 million).

 

The net debt position of the Group as at 30 September 2023 was US$30.6 million
(30 June 2023: US$48.3 million). Cash holdings as at 30 September 2023 were
US$0.9 million (30 June 2023: US$1.0 million).

 

Mining Operations

 

Mining production of ore and waste for Q3 2023 was above forecast at 3.30Mt
(Q2 2023: 3.49Mt), with a total of 568Kt of ore mined in Q3 2023 (Q2 2023:
566kt).

 

An additional six drill holes are planned to complete the exploration
programme in Stages 4 and 5, undertaken 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 significantly reducing
the potential for life of mine extensions.

 

Process Plant

 

During Q3 2023, most aspects of the process plant performed adequately,
although BIOX continues to under-perform, however ongoing engineering
improvements to the cooling circuits within the BIOX process are expected to
deliver a sustained increase in performance.

 

Gold produced during Q3 2023 was 22,034 ounces for the quarter (Q2 2023:
24,235 ounces). Throughput for Q3 2023 was 483Kt at a head grade of 1.60g/t
(Q2 2023: 522Kt at a head grade of 1.66g/t) and had a recovery rate of 88.7%
(Q2 2023: 86.9%). The expectation is that, in Q4 2023, the trend of decreasing
head grade is set to continue.

 

Planned downtime included scheduled maintenance on the SAG mill, while
unplanned downtime consisted mainly of repairs to tails lines, tails line pump
change overs and temporary BIOX failure due to power outages.

 

Residual Storage Impoundment ("RSI")

 

The RSI dam-wall is at its final height and the dam water freeboard remains
well above design minimum levels. Earthworks for the construction of the RSI
final in-rock spillway are well advanced and continuing.

 

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

 

The Company continues to receive strong support from local communities and
government agencies. The operations have been nominated for several government
industry awards which will be awarded before the end of the year.

 

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.

 

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-

 

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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