REG - Metals Exploration - Quarterly Update to 31 March 2024

Metals ExplorationAnnouncement

29/04/2024 07:00

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RNS Number : 2865M  Metals Exploration PLC  29 April 2024

METALS EXPLORATION PLC

 

QUARTERLY UPDATE TO 31 March 2024

 

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 Q1 2024.

 

Finance and Corporate

Ø Q1 2024 gold revenue of US$44.4 million (Q4 2023: US$34.7 million).

Ø Q1 2024 gold sales of 21,465 ounces sold at an average realised gold price
of US$2,069 per ounce (Q4 2023: 17,514 ounces at an average US$1,980 per
ounce).

Ø Q1 2024 positive free cash flow of US$21.6 million (Q4 2023: US$11.5
million).

Ø Mezzanine debt fully repaid by quarter end (subject to resolution of
interest dispute noted below).

Ø Debt repayments of US$21.0 million (Q4 2023: US$11.5 million).

Ø Acquisition  of an extensive exploration tenement in the prospective Abra
area of the Philippines (subject to shareholder and lender approval).

Ø Appointment of Nick von Schirnding as Independent Non-Executive Chairman.

 

Mining Operations

Ø No lost time injuries occurred during the period - over 22 million hours
worked without a reportable injury.

Ø Q1 2024 mining production of ore and waste was above forecast at 3.31Mt (Q4
2023: 2.83Mt), with a total of 678Kt of ore mined in Q1 2024 (Q4 2023: 534Kt).

 

Processing Operations

Ø Q1 2024 gold production of 23,006 ounces (Q4 2023: 17,626 ounces) recovered
from 581Kt at a head grade of 1.35g/t (Q4 2023: 553Kt at a head grade of
1.15g/t).

Ø Q1 2024 gold recovery of 90.0% (Q4 2023: 85.9%).

Darren Bowden, CEO of Metals Exploration, commented:

 

"The first quarter of the year has continued to see a strong performance at
Runruno. Production was above forecast with excellent gold sales and continued
high average recovery rates at 90%.

 

Whilst Runruno has continued to perform strongly, the first quarter of the
year has seen two highly significant corporate events. Firstly, we announced
our first Board approved acquisition, the proposed acquisition of the YMC
Group; the first step in delivering our strategy of growing MTL within the
Philippines and ultimately the broader region, evolving to a new future for
the Company.

 

The second event relates to the repayment of the Group's mezzanine facilities.
The interest dispute with the RHL Group is frustrating and we hope it can
quickly be resolved to everyone's satisfaction.  Since restructuring the debt
in October 2020, the Group has made US$171.3 million in debt repayments. This
is an outstanding achievement in such a short time and is a testament to the
team's ability to deliver such a sustained strong performance from Runruno.
This will considerably strengthen our balance sheet in the future and enable
us to drive forward the growth of the business.

 

Finally, as we welcome our new independent chairman Nick von Schirnding to the
board, the Company is very well set for the year ahead and we look forward to
providing further updates on our progress in the coming months."

 

 

Production and Finance Summary

 

 Runruno Project Report                       Quarter                      Quarter      FY 2024                      FY 2023
 FY 2024                                      Actual                       Actual       Actual                       Actual
 PHYSICALS                      Units         Q1 2024                      Q1 2023      3 Months                     3 Months
 Mining
 Ore Mined                      Tonnes        677,663                      282,256      677,663                      282,256
 Waste Mined                    Tonnes        2,630,225                    2,457,153    2,630,225                    2,457,153
 Total Mined                    Tonnes        3,307,888                    2,739,409    3,307,888                    2,739,409
 Au Grade Mined                 g/tonne       1.35                         1.53         1.35                         1.53
 Strip Ratio                                  3.99                         8.17         3.99                         8.17
 Processing
 Ore Milled                     Tonnes        580,719                      546,083      580,719                      546,083
 Au Grade                       g/tonne       1.37                         1.30         1.37                         1.30
 S(2) Grade                     %             1.41                         1.28         1.41                         1.28
 Au Milled (contained)          Ounces        25,574                       22,806       25,574                       22,806
 Recovery                       %                            90.0          93.4                        90.0          93.4
 Au Recovered/Poured            Ounces        23,006                       21,299       23,006                       21,299
 Sales
 Au Sold                        Ounces        21,465                       21,442       21,465                       21,442
 Au Price                       US$/oz        2,069                        1,887        2,069                        1,887
 FINANCIALS (Unaudited)
 Revenue
 Gold Sales                     (US$000's)    44,401                       40,458       44,401                       40,458
 Operating Costs - Summary
 Mining                         (US$000's)    5,160                        5,244        5,160                        5,244
 Processing                     (US$000's)    9,136                        9,232        9,136                        9,232
 G&A                            (US$000's)    2,950                        2,952        2,950                        2,952
 Total Operating Costs          (US$000's)    17,246                       17,428       17,246                       17,428
 Excise Duty                    (US$000's)    1,774                        1,635        1,774                        1,635
 UK/Philippine G&A              (US$000's)    1,671                        1,680        1,671                        1,680
 Total Direct Production Costs  (US$000's)    20,691                       20,743       20,691                       20,743
 Net Cash Income                (US$000's)    23,710                       19,715       23,710                       19,715
 Total Capital Costs            (US$000's)    2,143                        1,872        2,143                        1,872
 Total non-cash costs           (US$000's)    9,204                        7,852        9,204                        7,852
 Free Cashflow                  (US$000's)    21,567                       17,843       21,567                       17,843
 Cash Cost / oz Sold - C1       US$/oz        791                          928          791                          928
 Cash Cost / oz Sold - AISC     US$/oz        1,051                        1,170        1,051                        1,170

Note: AISC includes all UK Corporate costs.

 

 

Review of Operations

On 18 March 2024, the Company appointed Nick von Schirnding as its new
Independent Non-Executive Chairman. Mr von Schirnding has over thirty years'
experience in the mining industry. He has held senior Executive and
Non-Executive positions, including CEO and Chairman of a number of LSE and
internationally listed mining companies.

 

Project Acquisition

During Q1 2024, the Company announced the proposed acquisition  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 (subject to shareholder and lender approval). For
further details on the proposed acquisition, please refer to the Company's
announcement of 12 January 2024. The acquisition is in line with the Company's
strategy to grow MTL within the Philippines and ultimately the broader region,
leveraging the Company's established in-country knowledge, experience, and
strong technical team.

 

Runruno Operations

Q1 2024 operations produced another strong quarter result for the Company,
supported by an improved head grade. Gold sales for Q1 2024 were US$44.4
million (Q4 2023: US$34.7 million), at an average realised gold price of
US$2,069 per ounce (Q4 2023: average gold price of US$1,980 per ounce);
producing a positive free cash flow of US$21.6 million (Q4 2023: US$11.5
million).

 

Finance

Please refer to the Company's announcement of 27 March 2024 entitled "Update
on Debt Facilities". Total mezzanine debt payments of US$21.0 million made
during Q1 2024 (Q4 2023: US$11.5 million).

 

The Company's position is that the final payment due to the lenders under the
Company's mezzanine debt facilities was made on 25 March 2024, on the basis of
the lower interest rate of 7% (as opposed to 15%) which the Company believes
should apply under such facilities.

 

However, the Company's minority 29.3% mezzanine debt lenders, Runruno Holdings
Limited and D & A Holdings Limited (together the "RHL Group"), dispute
that the interest rate applicable to their portion of the mezzanine debt
reduced from 15% to 7% from 3 November 2022. As previously announced, MTL
Luxembourg S.a.r.l., Nick Candy's investment vehicle, the Company's majority
70.7% mezzanine debt lender has confirmed its agreement to the reduction in
interest rate. The Company remains in discussions with the RHL Group in an
endeavour to resolve this issue.

 

The Company's cash holdings at 31 March 2024 were US$1.1 million (31 December
2023: US$0.9 million).

 

Mining Operations

Mining production of ore and waste for Q1 2024 was above forecast at 3.31Mt
(Q4 2023: 2.83Mt), with a total of 678Kt of ore mined in Q1 2024 (Q4 2023:
534kt).

 

Process Plant

During Q1 2024 most aspects of the process plant performed adequately with a
high average recovery rate of 90.0% (Q4 2023: 85.9%).

 

Gold produced during Q1 2024 was 23,006 ounces (Q4 2023: 17,626 ounces) from
ore milled in Q1 2024 of 581Kt (Q4 2023: 533Kt).

 

Planned downtime included scheduled maintenance to the SAG mill girth gear.
Unplanned downtime consisted mainly of repairs to the SAG mill girth gear,
pinion and feed chute, to conveyor belt repairs/replacement, and to
tails/return water 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, although behind schedule are well advanced and
continuing.

 

Occupational Health & Safety

Runruno continues to record an exceptional safety record with over 22 million
hours worked without a lost-time reportable injury as at the date of this
announcement.

 

Environment & 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.

 

 

 

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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