www.metalsexploration.com
Metals Exploration is a natural resources exploration and development company operating in the Pacific Rim, with particular focus on the Philippines.
The Company’s principle asset is the Runruno gold-molybdenum project on the island of Luzon in the northern Philippines. The Company acquired the project in February 2005 and holds an 85% interest with an exclusive option over the remaining 15%.
Metals Exploration completes feasibility study for Runruno
Metals Exploration (AIM: MTL) has completed its feasibility study for the RunRuno gold-molybdenum project in the Philippines, confirming the project’s viability with average production of 96,700oz gold per annum for a ten-year mine life. Additionally, the company classified 780,000oz gold as Proven and Probable Mining Reserves.
"Completion of the feasibility study together with the declaration, for the first time, of an independently verified Mining Reserve (as opposed to a Mineral Resource) provides investors with a definitive basis on which to assess an appropriate valuation for the company”, Metals Exploration MD Jonathan Beardsworth commented.
Mining Associates has partially converted RunRuno’s mineral resource estimate into Ore Reserves. The initial estimate was updated in April to include all drill holes completed and assays returned by the end of February 2010, comprising 741 drill holes for a total of 104,718 metres.
“The combined Measured and Indicated resource containing 900,000oz gold now comprises 63% of the total resource. In addition to the 2P reserves the company has included a further 5.5 Mt @ 1.81 g/t Au; 0.034% Mo of inferred mineral resource”, Metals Exploration stated.
“What is certain from the results of the feasibility study is that we have transformed Runruno from a promising resource into a mine-in-waiting”, Beardsworth said.
The feasibility study foresees average production of 101,800oz per annum for the first five years of operation at RunRuno, with 92,700oz p.a. expected in years 6-10. In terms of costs, the study anticipates an average forecast operating cost of $477 per ounce of gold, and a capital costs are forecast to be US$149.3 million.
Assuming a US$1,000 per ounce gold price, the study anticipates that capital costs will be paid back within 3.5 years, and RunRuno’s IRR (Internal Rate of Return) is projected to be 20% (ungeared and after tax). Metal’s Exploration highlighted that the project’s Molybdenum credits were not included in these projections and it is continuing its test-work.
The ongoing test-work, for molybdenum recovery, is targeting recoveries of at least 45%, equating to average annual production of approximately 900,000 lbs contained molybdenum.
Metals Exploration noted that, to date, the test-work has demonstrated 60% recoveries through flotation into the bulk concentrate, and 80% recovery of the balance into the BIOX solution. Until now, the pilot plant has prioritised gold recovery but with the gold test-work now substantially complete, the company can direct its resources to demonstrating molybdenum recovery from solution into a saleable product.
The company emphasised that any molybdenum recovery circuit would not be integral to the gold circuit and it would be a modular ‘add-on’ after the BIOX process.
According to Metals Exploration, the molybdenum circuit has the potential to reduce the annual operating cost base by US$7.5 - US$10.0m resulting in net operating costs falling below $400/oz gold - assuming production of 900,000lbs of contained molybdenum and a molybdenum price of US$15/lb.
“We now move into the optimisation phase ... confirmation that molybdenum recovery to a saleable product has been secured, and the continuing potential to add to the resource through step-out drilling", Beardsworth added.
Metals Exploration project managed the feasibility study, with the study's material components carried out by a number of external consultants - Mining Associates, Goldfields and SGS, Lycopodium, Leighton, GHD, Aboitiz, AECOM and SGV.
The study was based on a mineable reserve, prepared by Mining Associates, with an open pit mining operation and biological leaching using the proven BIOX process combined with conventional carbon in leach treatment, to recover gold to doré bullion and molybdenum to a saleable molybdenum product.
In March, Metals Exploration was awarded the Environmental Compliance Certificate (ECC) for RunRuno. The ECC certified that the project has complied with all the requirements of the Environmental Impact Statement (EIS) system and will not cause significant negative environmental impact.
The company said that the certificate award is a significant milestone for the project, showing support from the Philippine government for the development of the project.
