04.05.2010 Feasibility Study Completed
Metals Exploration Plc (“Metals Ex” or the “Company”), the Pacific Rim natural resources exploration and development company, announced today the results of its Feasibility Study and a resource update for the Runruno gold-molybdenum project on the island of Luzon in the northern Philippines.
Overview:
- Study confirms the viability of a project producing an average of 96,700 ozs of gold per annum over a mine life of 10.4 years
- Average production Years 1-5: 101,800 ozs gold per annum; Years 6-10: 92,700 ozs gold per annum
- 780,000 ozs gold classified, for the first time, as Proven and Probable Mining Reserve
- Average forecast operating cost $477/oz gold
- Capital cost forecast to be US$149.3 million - payback within 3.5 years at US$1,000 gold
- IRR 20% at $1,000/oz gold (ungeared and after tax)
- Moly credits not included – testwork continues
Summary
The Feasibility Study has been project managed by the Company, with all material components undertaken by independent external consultants including Mining Associates (Resource and Mining), Goldfields and SGS (Metallurgical and Testwork), Lycopodium (Process Engineering), Leighton (Constructability and Capital Cost Review), GHD (Tailings Storage Facility, Detailed Pit Design, Mine Schedule), Aboitiz (Power Supply), AECOM (Roads, Environment and Permitting) and SGV (Taxation).
The study has been 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.
Key Project Fundamentals
A summary of the key project fundamentals is presented below:
|
Description
|
Item
|
|
Capital Cost
|
US$149.3m
|
|
Average Mining Rate
|
12.2 Mtpa
|
|
Average Operational Strip Ratio
|
5.9:1
|
|
Design Milling Rate
|
1.75 Mtpa
|
|
Average Gold Grade
|
1.89 g/t
|
|
Gold Recovery
|
91.9%
|
|
Average Gold Production
|
96,700 ozs/yr
|
|
LOM Gold Production
|
1,006,000 ozs
|
|
Average Operating Cost
|
US$46.2m/yr
|
|
LOM Operating Cost
|
US$477 /oz Gold
|
Project Economics
The Company’s technical and financial model has been sent to an external consultant for audit, but the Company’s internal IRR and NPV results (ungeared, after tax) are as follows:
|
Discount Rate
|
US$900 Gold
|
US$1,000 Gold
|
US$1,100 Gold
|
|
0%
|
US$155m
|
US$210m
|
US$256m
|
|
5%
|
US$80m
|
US$120m
|
US$154m
|
|
10%
|
US$34m
|
US$64m
|
US$89m
|
|
IRR
|
16%
|
20%
|
24%
|
These results will be developed further as financing options are explored, with the value to shareholders being potentially enhanced by the effects of gearing.
The average effective LOM tax rate under the FTAA is approximately 33%.
Molybdenum Recovery
The Company continues to pursue the recovery of molybdenum from the circuit, so as to enhance the economic returns of the project further. The target remains to achieve recoveries of at least 45%, equating to average annual production of approximately 900,000 lbs contained molybdenum.
To date testwork has demonstrated 60% recoveries through flotation into the bulk concentrate, and 80% recovery of the balance into the BIOX® solution. However, to date testwork at the pilot plant has been prioritised for the achievement of gold recoveries (91.9%), and it is only now, with the gold testwork substantially complete, that resources can be directed towards demonstrating molybdenum recovery from solution into a saleable product.
Assuming production of 900,000 lbs of contained molybdenum and a molybdenum price of $15/lb, finally resolving the molybdenum circuit has the potential to reduce the annual operating cost base by $7.5 - $10.0m resulting in net operating costs falling below $400/oz gold. Any molybdenum recovery circuit is not integral to the gold circuit and would be a modular "add on" after the BIOX® process.
Mining Reserve and Resource Update
For the first time the Company is able to announce a proven and probable mining reserve. The mining reserve is summarised below and fully reported in Appendix 1. It was prepared by Mining Associates from the current mineral resource estimate summarised below and fully reported in Appendix 1. This resource 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 in the mine schedule after applying the same mining parameters inclusive of dilution and mine recovery used in estimating the mining reserve.
|
April 2010 Mining Reserve and Schedule Resource for the Runruno Gold Project
|
|
Reserve
|
Ore
|
Gold
|
Molybdenum
|
|
Category
|
Mt
|
g/t
|
M Oz
|
ppm
|
M lbs
|
|
Proven
|
8.7
|
1.94
|
0.54
|
657
|
12.6
|
|
Probable
|
3.9
|
1.89
|
0.24
|
406
|
3.5
|
|
2P Reserves
|
12.6
|
1.93
|
0.78
|
579
|
16.1
|
|
Additional Inferred Resource in-pit
|
5.5
|
1.81
|
0.32
|
338
|
4.1
|
|
April 2010 Mineral Resources for the Runruno Gold Project
|
|
Resource
|
Ore
|
Gold
|
Molybdenum
|
|
Category
|
Mt
|
g/t
|
M Oz
|
ppm
|
M lbs
|
|
Measured
|
9.9
|
1.89
|
0.60
|
626
|
13.7
|
|
Indicated
|
5.4
|
1.74
|
0.30
|
387
|
4.6
|
|
Inferred
|
10.0
|
1.59
|
0.51
|
327
|
7.2
|
|
Total
|
25.4
|
1.74
|
1.42
|
457
|
25.6
|
Jonathan Beardsworth, Managing Director, commented:
“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. 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.
We now move into the optimisation phase, and further value to shareholders can be expected to accrue through the beneficial effects of gearing once banking discussions have progressed, confirmation that molybdenum recovery to a saleable product has been secured, and the continuing potential to add to the resource through step-out drilling”,
Enquiries:
| Metals Exploration plc |
+ 44 (0)20 7963 9540 |
| Jonathan Beardsworth (Managing Director) |
+ 44 (0)7747 101 552 |
| www.metalsexploration.com |
|
|
|
|
| Nominated Adviser / Broker |
|
| Westhouse Securities Limited |
+ 44 (0)20 7601 6100 |
| Tim Feather / Matthew Johnson |
|
|
|
|
| Public Relations |
|
| Conduit PR Limited |
+44 (0)20 7429 6607 |
| Edward Portman / Leesa Peters |
+44 (0)7733 363 501 |
RUNRUNO GOLD – MOLYBDENUM PROJECT
FEASIBILITY STUDY AND RESOURCE UPDATE
Metals Exploration Plc (“Metals Ex” or the “Company”), the Pacific Rim natural resources exploration and development company, announced today the results of its Feasibility Study and a resource update for the Runruno Gold-Molybdenum Project on the island of Luzon in the northern Philippines.
Overview:
??
Study confirms the viability of a project producing an average of 96,700 ozs of gold per annum over a mine life of 10.4 years
??
Average production Years 1-5: 101,800 ozs gold per annum; Years 6-10: 92,700 ozs gold per annum
??
780,000 ozs gold classified, for the first time, as Proven and Probable Mining Reserve
??
Average forecast operating cost $477/oz gold
??
Capital cost forecast to be US$149.3 million - payback within 3.5 years at US$1,000 gold
??
IRR 20% at $1,000/oz gold (ungeared and after tax)
??
Moly credits not included – testwork continues
Summary
The Feasibility Study has been project managed by the Company, with all material components undertaken by independent external consultants including Mining Associates (Resource and Mining), Goldfields and SGS (Metallurgical and Testwork), Lycopodium (Process Engineering), Leighton (Constructability and Capital Cost Review), GHD (Tailings Storage Facility, Detailed Pit Design, Mine Schedule), Aboitiz (Power Supply), AECOM (Roads, Environment and Permitting) and SGV (Taxation).
The study has been 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.
Key Project Fundamentals
A summary of the key project fundamentals is presented below:
Description
Item
Capital Cost
US$149.3m
Average Mining Rate
12.2 Mtpa
Average Operational Strip Ratio
5.9:1
Design Milling Rate
1.75 Mtpa
Average Gold Grade
1.89 g/t
Gold Recovery
91.9%
Average Gold Production
96,700 ozs/yr
LOM Gold Production
1,006,000 ozs
Average Operating Cost
US$46.2m/yr
LOM Operating Cost
US$477 /oz Gold
Project Economics
The Company’s technical and financial model has been sent to an external consultant for audit, but the Company’s internal IRR and NPV results (ungeared, after tax) are as follows:
Discount Rate
US$900 Gold
US$1,000 Gold
US$1,100 Gold
0%
US$155m
US$210m
US$256m
5%
US$80m
US$120m
US$154m
10%
US$34m
US$64m
US$89m
IRR
16%
20%
24%
These results will be developed further as financing options are explored, with the value to shareholders being potentially enhanced by the effects of gearing.
The average effective LOM tax rate under the FTAA is approximately 33%.
Molybdenum Recovery
The Company continues to pursue the recovery of molybdenum from the circuit, so as to enhance the economic returns of the project further. The target remains to achieve recoveries of at least 45%, equating to average annual production of approximately 900,000 lbs contained molybdenum.
To date testwork has demonstrated 60% recoveries through flotation into the bulk concentrate, and 80% recovery of the balance into the BIOX® solution. However, to date testwork at the pilot plant has been prioritised for the achievement of gold recoveries (91.9%), and it is only now, with the gold testwork substantially complete, that resources can be directed towards demonstrating molybdenum recovery from solution into a saleable product.
Assuming production of 900,000 lbs of contained molybdenum and a molybdenum price of $15/lb, finally resolving the molybdenum circuit has the potential to reduce the annual operating cost base by $7.5 - $10.0m resulting in net operating costs falling below $400/oz gold. Any molybdenum recovery circuit is not integral to the gold circuit and would be a modular "add on" after the BIOX® process.
Mining Reserve and Resource Update
For the first time the Company is able to announce a proven and probable mining reserve. The mining reserve is summarised below and fully reported in Appendix 1. It was prepared by Mining Associates from the current mineral resource estimate summarised below and fully reported in Appendix 1. This resource 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 in the mine schedule after applying the same mining parameters inclusive of dilution and mine recovery used in estimating the mining reserve.
April 2010 Mining Reserve and Schedule Resource for the Runruno Gold Project
Reserve
Ore
Gold
Molybdenum
Category
Mt
g/t
M Oz
ppm
M lbs
Proven
8.7
1.94
0.54
657
12.6
Probable
3.9
1.89
0.24
406
3.5
2P Reserves
12.6
1.93
0.78
579
16.1
Additional Inferred Resource in-pit
5.5
1.81
0.32
338
4.1
April 2010 Mineral Resources for the Runruno Gold Project
Resource
Ore
Gold
Molybdenum
Category
Mt
g/t
M Oz
ppm
M lbs
Measured
9.9
1.89
0.60
626
13.7
Indicated
5.4
1.74
0.30
387
4.6
Inferred
10.0
1.59
0.51
327
7.2
Total
25.4
1.74
1.42
457
25.6
Jonathan Beardsworth, Managing Director, commented:
“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. 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.
We now move into the optimisation phase, and further value to shareholders can be expected to accrue through the beneficial effects of gearing once banking discussions have progressed, confirmation that molybdenum recovery to a saleable product has been secured, and the continuing potential to add to the resource through step-out drilling”,
Enquiries:
Metals Exploration plc
+ 44 (0)20 7963 9540
Jonathan Beardsworth (Managing Director)
+ 44 (0)7747 101 552
www.metalsexploration.com
Nominated Adviser / Broker
Westhouse Securities Limited
+ 44 (0)20 7601 6100
Tim Feather / Matthew Johnson
Public Relations
Conduit PR Limited
+44 (0)20 7429 6607
Edward Portman / Leesa Peters
+44 (0)7733 363 501