TIDMMTL
RNS Number : 0822M
Metals Exploration PLC
26 July 2017
METALS EXPLORATION PLC
Quarterly Update To 30 June 2017
Metals Exploration plc (AIM: MTL) ("Metals Exploration" or "the
Company"), the natural resources exploration and development
company with assets in the Pacific Rim region, today provides a
quarterly update on matters relating to the construction and
development of its Runruno gold-molybdenum project (the "Project")
in the Philippines.
As described in our results statement the Company's mining
operations continue to perform broadly satisfactorily. Overall gold
production levels remain hampered by the ongoing suboptimal
performance of the processing facilities. The BIOX circuit in
particular has been a frustrating mix of progress and setbacks as
we continue to seek stability and a sustained production ramp up.
The Company is seeking to finalise in the near term a $20m
mezzanine funding facility to be used for its immediate working
capital requirements and to repay recent short term loans.
AIM Code: MTL Summary:
At: 19 July 2017
Shares in Issue: Mining Operations
2,071,334,586
* Mining operations performed satisfactorily across the
Directors: quarter and are now operating at design forecast
Ian Holzberger, levels.
Executive Chairman
Timothy Dean
Guy Walker * The ore mined during the Quarter was largely
Julian Wilson sulphidic with only minor tonnages of oxide ore
Eduard Simovici mined.
Management:
Ian Holzberger, * Permits have been secured allowing "drive in drive
Executive Chairman out" blasting operations to be undertaken pending the
Liam Ruddy, Company issue of the site magazine permits.
Secretary
Stephen Kelly,
CFO * The long-term application to the DENR for a third
Peter Storey, GM tree cutting permit remains outstanding.
Operations
Ian Moller, GM
Runruno Project
Roland Taganas, Processing Operations
Legal Counsel
Tommy Alfonso, * 7,319 ounces of gold were recovered during the
Financial Controller quarter vs 8,366 in Q1
For further Information
please contact: * At times when operations were stable and sulfidic ore
was being made available to the plant, the processing
Metals Exploration performance exceeded that observed in Q1, but several
plc interruptions caused by power outages and operator
Ian Holzberger: errors dropped the overall average performance.
+61 41 888 6165
Liam Ruddy; +44
7911 719 960 * The BIOX(R) circuit achieved 30% of design throughput
Stephen Kelly; at the end of the quarter increasing to 55% in July
+61 415 719 695 before an operator error delayed the BIOX(R) ramp up.
Nominated Adviser
& Broker: * Operational team continuing to seek improvement and a
Canaccord Genuity more stable ramp up.
Limited
Martin Davison;
James Asensio +44 (0) 20 7523 4689 Finance
Public Relations: * Company requires near term working capital financing
Tavistock and is continuing to advance discussions to put in
Barnaby Hayward; place a funding facility of up to $20 million.
Jos Simson
+44(0) 207 920
3150 * 8,342 ounces of gold were sold during the quarter at
an average realised gold price of US $1,255.46 per
ounce.
* Poured gold inventories at 30 June 2017 totalled
1,233 ounces.
* Cash at bank at 30 June 2017 was US $1.8 million.
* Total interest-bearing liabilities as at 30 June 2017
were US $87.28 million.
Production Summary
Key metric Unit of measure Quarter ended Quarter ended Year to date Period to 31 Project to
30 June 2017 31 Mar 2017 2017 Dec 2016 date
--------------- ---------------- -------------- -------------- --------------- --------------- ---------------
Mining
activities
Ore mined tonnes 399,024 545,734 944,758 490,558 1,435,316
waste mined tonnes 2,178,921 2,162,074 4,340,995 7,920,205 12,261,200
Total material
movements tonnes 2,577,945 2,707,808 5,285,753 8,410,763 13,696,516
-------------- -------------- --------------- --------------- ---------------
Strip ratio waste / ore 4.46 2.96 3.59 15.15 7.54
Au grade mined grams / tonne 1.35 1.56 1.47 1.42 1.45
Ctd. ounces
gold mined ounces 17,319 27,371 44,690 22,396 67,086
S Grade % 0.78 0.80 0.79 0.29 0.62
Processing
activities
Tonnes milled tonnes 425,303 389,724 815,027 468,170 1,283,197
S Feed grade % 0.74 0.34 0.55 0.53 0.54
Au feed grade grams / tonne 1.33 1.29 1.31 1.29 1.30
Gold recovery % 48% 56% 52% 51% 52%
Change in GIC ounces 1,410 466 1,876 1,737 3,613
Gold in feed ounces 18,186 16,199 34,385 19,417 53,802
Gold in tails ounces (9,457) (7,169) (16,626) (9,514) (26,140)
Gold recovered ounces 7,319 8,366 15,685 8,166 23,851
Mining Operations
Mining operations performed satisfactorily across the quarter
and are now operating at design forecast levels. Mining movements
during the quarter totalled 2.58 million tonnes (ore and waste)
with the waste to ore strip ratio averaging 4.5:1 which is in line
with the Q2 forecast. The ore mined during the Quarter was largely
sulphidic with only minor tonnages of oxide ore mined.
To optimise mining rates and improve productivity selective
blasting operations have commenced. Permits have been secured
allowing "drive in drive out" blasting operations to be undertaken
pending the issue of the site magazine permits.
The long-term application to the DENR for a third tree cutting
permit remains outstanding. The permit is required for the
establishment a planned alternate waste dump for the disposal of
overflow waste materials and materials not suitable for use as
engineered fill in the construction of the Residual Storage
Impoundment wall. The lack of the waste dump impacts on the
efficiency of the mining operation. The Company is continuing to
work with the DENR for the release of the permit which has been
through the assessment and verification stages and it is understood
is recommended for issue.
Process Plant
The process plant remained in the commissioning, "test running
and debugging" phase of operations during the Quarter.
The overall plant performance improved across the Quarter as an
increased tonnage of sulphide ore became available. This provided
the basis for a step change in the recoveries being recorded in the
flotation circuit to near design levels. Following two setbacks in
the BIOX(R) circuit caused by a power outage, ramp-up of the
circuit recommenced and achieved 30% of design throughput at the
end of the quarter. The BIOX(R) ramp-up continued into July having
achieved 55% before an operator error caused further delay. As the
circuit is generally stronger than it has been to date it recovered
more quickly and once again is being ramped up from a lower
throughput base.
After a more stable period of ramp up can be established it is
expected that production levels of 75% or above will be reached
during Q3.
Residual Storage Impoundment
The facility is operating to design and is being continuously
uplifted using waste materials produced by the mining
operation.
Occupational Health & Safety
At the end of the Quarter the operation had achieved 1,681,309
man hours without lost time incident.
Training in investigative reporting, categorisation,
understanding and identifying incidents and how they manifest is an
ongoing initiative. This training involves in house and a third
party accredited training organisation. A Health & Safety
culture at work is one of the Project's guiding principles which is
reinforced continually by training and action.
Environment and Compliance
The operation remains compliant with all environment and
regulatory requirements with no incidents recorded. It maintains
very high environmental standard with a number of unique aspects
installed to ensure these standards.
FCF Minerals Corporation participated in a regional forum with
the two other mining companies in its region promoting the theme,
'Understanding Policies that Govern Mining Operations and Best
Practices in Mining that Promote Responsible Mining' in Santiago
City, Nueva Vizcaya. This forum incorporated a wide cross-section
of government agencies, NGOs, residents of mining host communities,
academia.
22,587 assorted seedlings were withdrawn from the Project's
nursery and planted across a number of rehabilitation and
re-afforestation programs supported by the Company.
Community & Government Relations
Sound community relations were maintained across the
Quarter.
The Operation's programs focus on sustainable development in
education, health services, infrastructure, livelihood, and farm
productivity, preservation of cultural identity and values and
capacity building.
The livelihood program initiatives are currently linked with the
municipal and provincial government for community based
organizations accreditation. They are also acknowledged by the
Department of Labor and Employment (DOLE) livelihood assistance
program because of their sustainability qualities.
Regulatory Environment
The Company continues to work closely with its primary regulator
the MGB a bureau under the DENR to measure its compliance
performance and to implement continuous improvement programs across
all aspects the Project to underwrite its continued performance as
a "Responsible Miner".
Subsequent to the end of the Quarter the Mines and Geosciences
Bureau of the Department of Environment and Resources ("DENR")
approved the operation's Declaration of Commercial Operations. As
such and pursuant to the Company's Financial or Technical
Assistance Agreement ("FTAA") the operations now pass from the
"test running and debugging" phase to the "commercial operation"
phase.
Finance (Unaudited)
-- 8,342 ounces of gold were sold during the quarter at an
average realised gold price of US $1,255.46 per ounce;
-- Poured gold inventories at 30 June 2017 totalled 1,233 ounces;
-- Capital payments totalling US $10.72m and interest payments
totalled US $1.388m were made to the Lenders during the
Quarter;
-- Short term loans were secured from the Company's two major
shareholders (Runruno Holdings Limited and MTL (Luxembourg) Sarl)
amounting to US $12 million, to facilitate the payments due to the
senior lenders;
-- On 5 July 2017, the Group received cash proceeds of US $0.309
million in settlement of gold hedging totalling 7,500 ounces that
matured on 30 June 2017;
-- Remaining forward sales of gold ounces total 30,000 ounces
and four quarterly contracts remain outstanding each at an average
forward price of US $1,289 per ounce of gold; and
-- Total interest bearing liabilities as at 30 June 2017 were US $87.28 million.
-- As at 30 June 2017 the achieved mineral recoveries and
throughput levels for all production circuits in the Runruno
processing plant had not achieved expected or budgeted levels and
the project remained in the pre-"commercial operations" phase.
Accordingly, it is not considered appropriate to provide cash cost
per ounce information in this report as those costs would not be
reflective of the anticipated cash costs per ounce once the plant
is achieving when at design production levels. Gross operating
expenditure during the quarter, and for the project to date, are in
line with forecast expenditure; on this basis it is expected that
the forecast life of mine operating costs will not differ
materially from previously forecasts operating costs.
-- Cash at bank at 30 June 2017 was US $1.8 million. The
movement in cash balances during the quarter is summarised as
follows:
Quarter ended
30 June 2017
Cash movements & balances (unaudited) US$M
Receipts from gold sales 10.46
Operating expenditure (12.06)
Short term loan proceeds 12.00
Corporate costs/receipts -
----------------
Cash flows before finance costs 10.40
Interest and financing costs paid (2.00)
Principal repayments (10.72)
Gold hedge and interest rate swap settlements 0.30
----------------
Net movement for quarter (2.02)
Cash balance at start of quarter 3.82
----------------
Cash balance at end of quarter 1.80
----------------
-- The Group's operations remain cash constrained. Discussions
to put in place a funding facility of up to US $20 million are
continuing and the Company will keep the markets informed as it
progresses through a final commitment. Some of these new funds will
be immediately utilised to repay the lenders of the US $12 million
short term shareholder advances that were drawn down during the
quarter.
- END -
Mr Ian Holzberger, a director of the Company, who has been
involved in the mining industry for more than 44 years, is a Member
of the Australasian Institute of Mining and Metallurgy and the
Australian Institute of Geoscientists, has compiled, read and
approved the technical disclosure in this regulatory
announcement.
Forward Looking Statements
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 are forward-looking
statements. 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 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 forward-looking statements are necessarily based upon a
number of estimates and assumptions that, while considered
reasonable at the time they are made, are inherently subject to a
variety of risks and uncertainties which could cause actual events
or results to differ materially from those reflected in the
forward-looking statements, including, 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.
For further information please visit or contact
www.metalsexploration.com
Ian R. Holzberger (Executive +63 (0) 9189
Chairman) 795 992
+61 (0) 418 886
165
+63 (0) 918 979
Liam A. Ruddy (Company Secretary) 2931
+44 (0) 7911
719 960
Stephen Kelly (Chief Financial +61 (0) 415 719
Officer) 695
Nominated Adviser and Broker: CANACCORD GENUITY
LIMITED
+44 (0) 207 523
Martin Davison, James Asensio 4689
Public Relations: TAVISTOCK
+44 (0) 207 920
Barnaby Hayward, Jos Simson 3150
This information is provided by RNS
The company news service from the London Stock Exchange
END
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