Metals Exploration targets 100,000 oz gold and 1 million lbs molybdenum per yr at Runruno for 10 yrs

Metals Exploration (AIM: MTL) has announced guidance on the updated economic parameters of its Runruno gold and molybdenum project in the Philippines following the  resource update in November 2009, and it is now targeting a 10 year operation with a production of 100,000 oz (ounces) of gold and 1 million lbs (pounds) of molybdenum per year.

Since updating the resource of Runruno in November, when it was revised to 1.5 million oz of gold and 25.4 million lbs of molybdenum, the company has been engaged in reworking the parameters of its operation at the project to reflect the revision, ir said in a statement.

An updated resource estimate is currently expected from Mining Associates within two weeks to confirm the economic viability of the 10-year 100,000 oz of gold and 1 million lbs of molybdenum pa (per annum) operation.

The capital costs are now expected not to exceed US$150 million and operating costs to be less than the previously indicated US$463 per ounce of gold, with the company expecting to have less difficulty with securing bank project financing due to the lower capital cost.

The full feasibility study is expected in April with the company also anticipating a news flow over the next quarter in advance of the study results, which will most likely include resource updates, progress on step-out drilling, developments in the metallurgical testwork on both gold and molybdenum recoveries, and progress with the Environmental Clearance Certificate.

“I think this confirmation of the continued economic viability of the Runruno project is what investors have been waiting for since the resource update announcement in November. Indeed our internal calculations show little difference in NPV (net present value) between the original resource and this modified operation because of the lower capital and operating costs,” said managing director of Metals Exploration Jonathan Beardsworth.

In the resource update released in November, the exploration company said the measured ounces more than doubled to contained 560,000 oz of gold and the combined measured and indicated resource containing 850,000oz of gold now comprised 57% of the total resource, representing a 19% increase from the previous statement.

The updated resource of 1.5 million oz represented a reduction of 0.5 million oz in total resource from the previous update. Metals Exploration said that the reduction was due to previously inferred tonnage not being supported by recent drilling.

Shares in the company rose 6.2% on the comments in early London trade.