Philippines focused nickel and copper miner Metals Exploration (AIM: MTL) reported on a busy full-year to end-December 2009, a period which saw continued progress for its flagship Runruno gold-molybdenum project in the Philippines.
The company converted the exploration permit for Runruno into a Financial and Technical Assistance Agreement (FTAA) with the government and confirmed a JORC-compliant resource of 1.42 Moz of gold and 25.6 Mlb (million pounds) of molybdenum. A two-stage placing conducted during the year raised £12 million to allow the completion of the bankable feasibility study without further funding, the cancellation of an existing debt facility and step-out drilling outside of the current project area. Meanwhile, Solomon Capital increased its interest in the Company from 29.9% to 44.1%.
Metals Exploration’s administrative expenses increased from £0.5 million in 2008 to £4.2 million, leading to pre-tax losses of £4.3 million compared to £0.52 million for the previous year.
Post-period, the company confirmed an independently verified proven & probable mining reserve consisting of 780,000 oz gold and secured an environmental compliance certificate in March 2010. The results of feasibility study confirmed the viability of a project producing an average of 96,700 oz of gold per annum over 10.4 years with an estimated average operating cost of US$477/oz not including potential molybdenum credits.
Runruno project capital cost is forecast to be US$149.3m with an IRR (internal return rate) of 20% at US$1,000/oz gold.
“The timing of this report is auspicious, as shareholders will be aware that the company has recently announced the significant milestone of completing a full feasibility study on the Runruno project. This is an important and material achievement - in the heady excitement of exploration it is often forgotten that very few discoveries actually make it into production, and yet the company is now in possession of a study, validated by independent experts, into all the aspects required to build a mine,” said executive chairman Ian Holzberger.
Metals Exploration is now aiming to continue moving Runruno towards production, reviewing available financial options, and “demonstrate additional potential” within the unexplored area of the volcanogenic system at Runruno with the ongoing step-out drilling programme.