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Metals Exploration Plc: THE INVESTMENT CASE

Metals Exploration poised to switch on Runruno plant

First ore to be loaded shortly with all construction work scheduled to complete by August.
Metals Exploration poised to switch on Runruno plant
2014 was another year of significant and progressive development of the mine site
-- adds broker comment, share price--
Metals Exploration (LON:MTL) expects to commission the process plant at its new Runruno gold mine in the Philippines this month.
The plant is now 82% finished, it said, and on schedule to be switched on at the end of June. Commissioning will commence in stages.
The camp site and power infrastructure are in place already while work is ongoing on pre-stripping, the run of mine ore pad and various access roads.
Costs are within budget and all construction work at the site will be completed by the end of August, Metals Ex added.
A mini operations plant, meanwhile, has been constructed and commissioned for in-house training and testing of the BIOX liberation process.
Discussions have also started with refineries for gold dore production.
Overall, Runruno’s construction is about six months behind its original timetable but Ian Holzberger, Metal Ex’s chairman, said the problems that caused the delays are now in the past.
“Last year and Q1 2015 was a tumultuous period of advancement, achievement and learning for our group. The project is in a great position and I am confident the shareholders will begin to realise value in 2016 provided the price of gold does not retreat excessively.”
Losses in 2014 fell to £4.77mln from £5.2mln. At end December, cash at bank was £12.3mln with sufficient working capital for operations through commissioning and into operations commencing.
Metals Ex remains in dispute over its VAT bill and other taxes but has paid US$6.8mln under protest to the Philippines authorities. In February, the president’s office appointed a lawyer to look into its challenge.
House broker SP Angel Runruno is now close to commissioning and is fully funded for completion and ramp up. 
Of the US$75mln senior debt facility, US$72.8mln has been drawn with a balance of US$2.16mln still available, while the US$8mln cost overrun facility remains undrawn.
The loan requirements for hedging will result in 35% of the annual forecast gold production for the following three years on a rolling quarterly basis.
Once in full production Runruno will be targeting an average of 101,800 oz in the first five years and 92,700 oz over a 10 year mine life. 
Cash costs are in the first quartile, which provides scope for cash generation as production builds up.
Shares rose 4% to 6.63p, valuing the fledgling miner at £91mln.
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