REG - Metals Exploration - Quarterly Update to 31 December 2023

Metals ExplorationAnnouncement

24/01/2024 07:00

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RNS Number : 6731A  Metals Exploration PLC  24 January 2024

METALS EXPLORATION PLC

 

QUARTERLY UPDATE TO 31 DECEMBER 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 Q4 2023.

 

Finance and corporate

Ø Record annual gold revenue of US$166.7 million (FY2022: US$124.4 million).

Ø Record annual gold sales of 85,744 ounces sold at an average realised gold
price of US$1,944 per ounce (FY2022: 69,249 ounces at an average US$1,797 per
ounce).

Ø Record annual positive free cash flow of US$72.3 million (FY2022: US$35.7
million).

Ø Q4 2023 gold revenue of US$34.7 million (Q3 2023: US$42.4 million).

Ø Q4 2023 gold sales of 17,514 ounces sold at an average realised gold price
of US$1,980 per ounce (Q3 2023: 22,034 ounces at an average US$1,926 per
ounce).

Ø Q4 2023 positive free cash flow of US$11.5 million (Q3 2023: US$19.0
million).

Ø Elevation of mezzanine debt to secured status remains outstanding for the
determination of the interest rate which will be applied to the outstanding
loan in the period prior to completion of the elevation, as well as the date
of its application.

Ø Mezzanine debt repayments of US$11.5 million (Q3 2023: US$18.5 million).

Ø Net debt as at 31 December 2023 was US$19.9 million (30 September 2023:
US$30.6 million).

Ø Post period end the Company announced the acquisition (subject to
shareholder and lender approval) of an extensive exploration tenement in the
 prospective Abra area of the Philippines.

 

Mining Operations

Ø No lost time injuries occurred during the period - over 21 million hours
worked without a reportable injury.

Ø Annual mining production of ore and waste was above forecast at 12.36Mt
(FY2022: 13.72Mt), with a total of 1.95Mt of ore mined in FY2023 (FY2022:
2.29Mt).

Ø Q4 2023 mining production of ore and waste was slightly below forecast at
2.83Mt (Q3 2023: 3.30Mt), with a total of 534Kt of ore mined in Q4 2023 (Q3
2023: 568Kt).

Ø Received several government and industry awards in recognition of
outstanding levels of dedication, initiatives and innovations in the pursuit
of excellence in environmental protection, safety and health, management and
social/community development.

 

Processing Operations

Ø Record annual gold production of 85,194 ounces (FY2022: 72,537 ounces)
recovered from 2.10Mt at a head grade of 1.42g/t (FY2022: 2.07Mt at a head
grade of 1.27g/t).

Ø Q4 2023 gold production of 17,626 ounces (Q3 2023: 22,034 ounces) recovered
from 553Kt at a head grade of 1.15g/t (Q3 2023: 483Kt at a head grade of
1.60g/t).

Ø FY2023 gold recovery of 88.7% (FY2022: 85.7%); Q4 2023 gold recovery of
85.9% (Q3 2023: 88.7%).

FY2023/FY2024 Production Guidance

Ø FY2023 gold production of 85,194 ounces exceeded the revised FY2023 upper
guidance forecast of 81,000 ounces at an AISC of US$1,126 per ounce which was
slightly above the FY2023 lower guidance forecast of US$1,120 per ounce.

Ø FY2024 gold production forecast: 74,000 - 80,000 ounces.

Ø FY2024 AISC forecast: US$1,175 - US$1,275 per ounce.

 

 

Darren Bowden, CEO of Metals Exploration, commented:

 

"This was another very strong quarter for MTL, leading us to achieve record
annual gold revenues and production, exceeding the upper production guidance
of our revised 2023 forecasts.  Throughout the year, we also maintained our
excellent safety record while delivering higher gold recovery levels and
strong cash flows, which have enabled us to continue to further deleverage the
Company.

 

"We were also delighted to announce, post the year end, the first steps of
delivering our strategy to grow MTL within the Philippines, and ultimately the
broader region, through the conditional acquisition of the Abra Tenement. The
Abra tenement is an extensive exploration tenement covering some 16,200
hectares with multiple prospective targets in both gold and copper. We believe
this project has the potential to provide us with an extensive future project
growth pipeline.

 

"The Company is in an excellent position as it enters the new year. Runruno
continues to deliver safe, strong performances and provide a solid platform
from which to grow as we look to add further assets to our portfolio to
deliver our strategy and value to shareholders.

 

"We look forward to providing further updates on our progress in the coming
months."

 

 

Production and Finance Summary

 

 Runruno Project Report                       Quarter    Quarter      FY 2023     FY 2022
 FY 2023                                      Actual     Actual       Actual      Actual
 PHYSICALS                      Units         Q4 2023    Q4 2022      12 Months   12 Months
 Mining
 Ore Mined                      Tonnes        533,815    623,245      1,949,654   2,292,439
 Waste Mined                    Tonnes        2,295,472  2,484,760    10,412,735  11,422,847
 Total Mined                    Tonnes        2,829,287  3,108,004    12,362,398  13,715,286
 Au Grade Mined                 g/tonne       1.27       1.65         1.47        1.31
 Strip Ratio                                  3.99       3.95         5.03        4.89
 Processing
 Ore Milled                     Tonnes        533,074    594,866      2,104,207   2,068,031
 Au Grade                       g/tonne       1.15       1.59         1.42        1.27
 S(2) Grade                     %             1.18       1.68         1.36        1.36
 Au Milled (contained)          Ounces        20,517     30,394       96,068      84,677
 Recovery                       %             85.9       83.8          88.7       85.7
 Au Recovered/Poured            Ounces        17,626     25,474       85,194      72,537
 Sales
 Au Sold                        Ounces        17,514     23,608       85,744      69,249
 Au Price                       US$/oz        1,980      1,742        1,944       1,797
 FINANCIALS (Unaudited)
 Revenue
 Gold Sales                     (US$000's)    34,684     41,113       166,683     124,411
 Operating Costs - Summary
 Mining                         (US$000's)    5,172      5,972        20,919      25,186
 Processing                     (US$000's)    8,591      9,491        34,725      31,462
 G&A                            (US$000's)    2,992      2,486        11,709      10,359
 Total Operating Costs          (US$000's)    16,755     17,948       67,354      67,007
 Excise Duty                    (US$000's)    1,392      1,661        6,710       5,023
 UK/Philippine G&A              (US$000's)    2,384      1,824        9,225       8,291
 Total Direct Production Costs  (US$000's)    20,531     21,433       83,289      80,321
 Net Cash Income                (US$000's)    14,153     19,680       83,394      44,090
 Total Capital Costs            (US$000's)    2,695      1,669        11,051      8,341
 Total non-cash costs           (US$000's)    5,468      7,620        27,172      19,332
 Free Cashflow                  (US$000's)    11,457     18,011       72,343      35,748
 Cash Cost / oz Sold - C1       US$/oz        890        829          812         922
 Cash Cost / oz Sold - AISC     US$/oz        1,260      1,047        1,126       1,235

Note: AISC includes all UK Corporate costs.

 

 

 

Review of Operations

 

Project Acquisition

Since the period end, the Company announced the acquisition (subject to
shareholder and lender approval) of an extensive exploration tenement in the
prospective Abra area of the Philippines, covering 16,200 hectares, which is
approximately 200km north of the Company's Runruno mine. For further details
on the proposed acquisition, please refer to the 12 January 2024 announcement.

 

Runruno operations

FY2023 operations achieved record gold production of 85,194 ounces, which
exceeded the revised FY2023 upper guidance forecast of 81,000 ounces at an
AISC of US$1,126 per ounce, which was just above the FY2023 lower guidance
forecast of US$1,120 per ounce. This led to record annual gold revenue of
US$166.7 million, record annual gold sales of 85,744 ounces, at an average
realised gold price of US$1,944 per ounce, and record annual positive free
cash flow of US$72.3 million.

 

Q4 2023 operations produced another strong quarter result for the Company,
notwithstanding lower head grades. Gold sales for Q4 2023 were US$34.7 million
(Q3 2023: US$42.4 million), at an average realised gold price of US$1,980 per
ounce (Q3 2023: average gold price of US$1,926 per ounce); producing a
positive free cash flow of US$11.5 million (Q3 2023: US$19.0 million).

 

Finance

The process of elevating the status of the mezzanine loans to that of secured
debt continues.

 

As previously announced, 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 debt 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$11.5 million were made during Q4 2023 (Q3
2023: US$18.5 million).

 

The net debt position of the Group as at 31 December 2023 was US$19.9 million
(Q3 2023: US$30.6 million). Cash holdings at 31 December 2023 were US$0.9
million (30 September 2023: US$0.9 million).

 

Mining Operations

Extended wet weather periods resulted in mining production of ore and waste
for Q4 2023 being slightly below forecast at 2.83Mt (Q3 2023: 3.49Mt), with a
total of 534Kt of ore mined in Q4 2023 (Q3 2023: 566kt). Mining activities
were also impacted from encountering illegal miners unmapped old underground
workings.

 

The exploration drill 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, was completed with no material gold discoveries that have
the potential for a significant increase in the projected life of mine.

Process Plant

During Q4 2023 most aspects of the process plant performed adequately,
although a combination of low head grade and high sulphur resulted in lower
recoveries.

 

Gold produced during Q4 2023 was 17,626 ounces (Q3 2023: 22,034 ounces).
Throughput for Q4 2023 was 533Kt (Q3 2023: 483Kt) at a recovery rate of 85.9%
(Q3 2023: 88.7%).

 

Planned downtime included scheduled maintenance to replace the SAG mill
liners. Unplanned downtime consisted mainly of repairs to the SAG mill girth
gear and pinion and to tails lines.

 

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 21 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, receiving several government and industry awards. Please
refer to the 11 December 2023 announcement.

 

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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