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Metals Exploration (LON:MTL) is confident it will receive the permits necessary to switch on its Runruno mine in the Philippines, but remains unsure of exactly when.
October is now pencilled in as the date for the mine to be commissioned and the first gold to be poured, though Metals Ex admitted it could not be certain of the timeline.
“The company does not expect any impediments to receiving the permits apart from time constraints,” it said today.
The mine is all but built, but Metal Ex is waiting on a permit for occupancy, a permit to operate, water discharge permits, a chemical importation licence and general business permits.
The uncertainty over the switch-on date has affected the build costs, it added.
“The most recent forecast cost at completion is US $191mln, which is an overrun of US $8.2mln against the original budget.”
The delays have also meant a cash crunch and last week it announced it would raise up to US$10mln through share issues and US$5mlnin in additional debt to tide it over until production gets underway.
Metal Ex’s lenders have now agreed to make available the company’s US$6m operating expenses account, while the first capital repayment of US$13m in December 2015 has been rescheduled.
MTL will now only have to pay US$2m in March 2016, while the balance outstanding will be distributed over subsequent tranches.
A US$1.25mln fee will be payable for breaching covenants and the rescheduling agreement is dependent on the equity and debt raises and entering commercial production getting underway by 1 December.
Interim results published today showed a loss of US$1.95mln (US$5.6mln) in the first half of 2015.
Brokers commented the permit delays highlighted the difficulty of working in the Philippines, though Shore Capital said the support from lenders was good news.
SP Angel also saw it as encouraging that a term sheet to re-structure debt payments had been agreed and there were commitments by existing shareholders to support the share placement to cover the funding gap.
Shares were 3.35p today.