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Market: AIM
Sector: General Mining - Gold
EPIC: MTL
Latest Price: 9.50p  (-2.56% Descending)
52-week High: 19.38p
52-week Low: 9.75p
Market Cap: 65.99M
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Metals Exploration
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%.

Full Metals Exploration profile here
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Metals Exploration: All ready to go at Runruno, says analyst

25th Oct 2011, 11:53 am by Jon Mainwaring Fairfax expects Runruno to be producing 106,000 ounces of gold from 2014

Metals Exploration (LON:MTL) is “all ready to go” at its Runruno gold project in the Philippines now that final permitting is in place, according to the firm’s house broker Fairfax.

Yesterday, Metals Exploration said that it had received mining feasibility project approval, which means that it can now move the project into the development and construction stage.

In a research report on Metals Exploration today, Fairfax noted that first production at Runruno is targeted for the second half of 2013.  Fairfax said that Metals Exploration’s team has “a well thought out approach to the project” and that “it is unlikely that the company will need to raise any additional equity for the project” given that US$70 million of cash is already in place for investment with the balance to be debt funded.

Meanwhile, Fairfax also noted that ongoing exploration around the Runruno mine site will add to the resource base, improving the net present value of the project over time.

Despite this potential for extra assets, Fairfax’s valuation for the company is based solely on the net present value of the Runruno mine. This is for 30 pence, using a discount rate of 10 per cent.

The broker’s forecast is based on a long-term gold price of US$1,250 per ounce, with first gold production due to begin in 2013. This is for 53,000 ounces in that year, rising to 106,000 ounces from 2014. Fairfax said that such a production rate is similar to other large gold producers within the Philippines.

Meanwhile, Fairfax said that revenues from molybdenum production are forecast to start 18 months after first gold production. The broker is using a long-term price of US$12 million for molybdenum sales.

In addition, Fairfax said that although Runruno’s mine life is currently assumed to be 10.3 years, actual mine life is expected to exceed this.

Shares in Metals Exploration were trading up 2.8 per cent at 13.75 pence each late this morning.


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