Interim Results
Metals Exploration PLC
30 June 2006
Metals Exploration plc
('Metals Ex' or 'the Company')
Unaudited interim results for the 6 months to 31 March 2006.
LONDON - 30 June 2006 - the Directors of Metals Exploration plc (AIM: MTL) ('
Metals Ex' or 'the Company'), the UK based gold exploration company with a focus
on the Philippines, are pleased to announce its unaudited interim results for
the 6 months ended 31 March 2006.
Highlights - up to 31 March 2006
• 25 January 2005 - A Joint Venture Agreement signed with Medusa
Mining Limited and Philsaga Mining Corporation over the former Lacandola gold
mine on Masapelid Island, (the 'Masapelid Project').
• 7 March 2006 - An Exploration Permit Application lodged at the
Minerals and Geosciences Bureau for a property located in the district of
Northern Luzon, Philippines, covering an area of approximately 5,845 hectares
and to the north of the Santo Nino property, previously a copper- gold producer.
Highlights - post 31 March 2006
• 11 May 2006 - JORC inferred mineral resource for Runruno of 23
million tonnes estimated at an average grade of 2.3 grams per tonne gold and
0.07% molybdenum. Management believe that the resource appears to be able to be
extended in all directions, although this can only be determined with more
certainty with further exploration.
• 20 June 2006 - Historical data had been obtained and collated in
respect of the Baguio Exploration Permit Application, where a non-JORC compliant
resource had previously been estimated of approximately 150Mt at an average
grade of 0.3% Cu and 0.2 g/t Au.
Commenting on the results, Steven Smith, Chairman of Metals Exploration plc
said:
'It has been a very exciting time for Metals Exploration since coming to AIM in
October 2004. We recently announced a JORC-compliant resource for the Runruno
Project of 23 million tonnes at an average grade of 2.3 grams per tonne gold and
0.07% molybdenum. The 'in-ground' value of this resource is already significant
and we are looking forward to upgrading this resource both in size and resource
categories in the near future. We are most encouraged by how the determination
of the resource has developed in a such a short period of time considering the
first drill hole commenced in November 2005, just seven months ago.
'We are now planning to commence scoping studies contemporaneously with the
drilling programmes to determine the potential viability of the resource defined
so far and to increase the resource base respectively.'
For more information:
Steven Smith Chairman + 44 (0) 7797 721 858
Gary Powell Executive Director (technical) + 63 (02) 894 4173
Jonathan Anderson Investor Relations + 44 (0) 7950 410 680 or + 63 (0) 917 560 6654
Philip Haydn-Slater/Paul Dudley WH Ireland Limited + 44 (0) 20 7220 1666
Metals Exploration plc
CHAIRMAN'S STATEMENT
Following the Metal Ex's admission to AIM in October 2004 the Company has
focused its efforts on the acquisition of significant interest in exploration
projects in the Philippines which, the Company considers to have substantial
exploration opportunities.
MASAPELID PROJECT
On 23 December 2004, Metals Ex signed an agreement with the claim owner of the
Masapelid Project (San Manuel Mining Corporation). The agreement allowed Metals
Ex to earn a 70% economic interest in the Project by paying San Miguel Mining
Corp US$ 105,000 and issuing 1,250,000 ordinary shares in Metals Ex over a three
year period.
On 25 January 2005, Metals Ex announced that it has signed a Joint Venture
Agreement ('JVA') with Medusa Mining Limited ('Medusa') and Philsaga Mining
Corporation ('Philsaga') (together the 'Medusa Group') over the Masapelid
Project.
Medusa is a company listed on the Australian Stock Exchange ('ASX: MML') and, in
conjunction with Philsaga, is processing ore at its Co-O plant, which is being
supplied by Philsaga from the Co-O gold mine in Agusan del Sur, approximately
240 kilometres to the south-south-west of Masapelid Island.
In summary the principal terms of the JVA are:
• the Medusa Group has the right to earn an 84% share of the
Interest, with Metals Ex retaining a 16% share of the Interest or alternatively
retaining a 10% Net Profit Interest ('NPI') from Medusa in any mining operation;
• the Medusa Group is to expend the first US$1million on the
Masapelid Project and is to partly fund MTL's remaining acquisition cost of the
Interest;
• the Medusa Group is to operate the Masapelid Project;
• the remaining shares and cash consideration to acquire the
Interest will be shared 84% by Medusa and 16% by MTL with the following payments
to be made:
(i) on or before 27 February 2006, proportionate payments to a total
of US$25,000 cash and the issue of 40,000 shares by MTL and shares equivalent in
value to 210,000 MTL shares by Medusa, such value to be determined with
reference to the average price of one ordinary share in MTL during the 5 days of
trading on AIM immediately preceding 24 January 2006;
(ii) on or before 27 January 2007, proportionate payments to a total of
US$25,000 cash and the issue of 40,000 shares by MTL and shares equivalent in
value to 210,000 MTL shares by Medusa; and
(iii) on or before 27 January 2008, proportionate payments to a total of
US$30,000 cash and the issue of 80,000 shares by MTL and shares equivalent in
value to 420,000 MTL shares by Medusa.
• on completion of the expenditure of US$1 million, MTL has the
exclusive right to choose to contribute 16% of the on-going expenditure or to
dilute to a 10% NPI (in which case Medusa would then own 100% of the Interest);
and
• on commencement of any production, the present shareholders of
San Manuel Mining Corp ('SMMC') will receive a 1.5% Net Smelter Royalty ('NSR').
The Masapelid Project has a history of narrow vein mining commencing before
World War II. Records indicate that 20,666 tonnes at 15 g/t Au were produced by
the Km73 Mining Company from the Layong Vein on the eastern side of the island
before the mine closed prematurely prior to World War II. A further 133,000
tonnes were reported to have been outlined by underground development in the
parallel No.6 Vein. Two shafts were sunk approximately 300 metres apart to
depths of 122 metres and 30 metres with horizontal development completed on 3
levels. The parallel veins are interpreted to be approximately 900 metres long,
strike in a north-easterly direction, are commonly approximately 1 metre wide
and contain ancillary silver, lead, zinc and minor copper minerals.
The island contains extensive zones of clay-pyrite alteration in andesitic
volcanics suggestive of a large hydrothermal system. Younger calcareous
sediments also exhibit signs of alteration and are potential host rocks for
disseminated style deposits.
In 1983 Benguet Exploration Inc. examined the property and collected four
samples which averaged 1.52 oz/t Au, 4.34 oz/t Ag, 3.77% Pb, 1.56% Zn and 2.14%
Cu.
In early 1986 a four hole diamond drilling programme was undertaken under a
United Nations Development Program ('UNDP') in conjunction with the Mines and
Geoscience Bureau ('MGB') to test the vein extensions on the western side of the
island. These holes returned 1 metre @ 22.5 g/t Au in DDH 1, 1 metre @ 35 g/t Au
in DDH 2 and 1 metre @ 72 g/t Au in DDH 4.
In the early 1990s Western Mining Corporation ('WMC') undertook extensive
exploration focused on discovering porphyry copper-gold mineralisation involving
stream sediment sampling, grid based soil sampling, 141 kilometres of ground
magnetics, a gravity survey, an IP survey in 3 areas, and 9 diamond drill holes.
The soil sampling outlined coherent gold anomalies over 900 metres of strike,
corresponding to the projected strike of the Layong and No.6 Veins.
WMC's hole MSI-D1 on the western side of the island near the UNDP-MGB drilling
described above also intersected vein mineralisation of 1.48 metres @ 11.81 g/t
Au.
Three diamond drill holes were completed by WMC in the Sampotan area at the
southern tip of the island where porphyry copper mineralisation was intersected
including 264.82 metres @ 0.32% Cu in hole MSI-D7 with the last sample in the
hole assaying 1% Cu and 0.5 g/t Au over 0.5 metres
A previous sample of remnant ore from a shaft collar returned 24.2 g/t Au, 154 g
/t Ag, 7.86% Pb, 6.81% Zn and 0.55% Cu.
RUNRUNO PROJECT
On 2 February 2005, Metals Ex had signed an option agreement over the Runruno
Project. The agreement allows Metals Ex to earn up to a 70% economic interest in
the project by paying the FCF Mining Corporation US$210,000 and 1,600,000
ordinary shares in Metals Ex over a three year period.
On 23 November 2005, Metals Ex announced that the Company has agreed with
Christian Mining Inc ('CMI') the terms of an option that gives MetalsEx the
exclusive option to purchase up to an additional 15% shareholding in FCF Mining
Corporation ('FCF') (the 'Option'). FCF is the holder of the Runruno Exploration
Permit.
MetalsEx, through a Memorandum of Agreement dated 1 February 2005, currently
holds a 70% shareholding in FCF. Therefore the Option allows the Company to
increase its holding in FCF to up to 85%. This will effectively give the Company
the opportunity to acquire up to 85% of its Runruno gold and molybdenum project.
A summary of the key terms of the Option are:
1 MetalsEx shall pay to CMI an annual Option fee of US$65,000
until the Option is either exercised or withdrawn by MetalsEx. MetalsEx has sole
discretion to terminate the Option;
2 MetalsEx can exercise the Option, at any time, by acquiring
CMI's remaining shareholding of FCF anywhere from 1% to 15%. The exercise price
is the amount of US$400,000 for every 1% of CMI's shareholding of FCF, up to a
maximum of US$6 million for all of CMI's remaining 15% shareholding of FCF, and
3 In the event that MetalsEx decides to exercise the Option but
only for a part of and not the entirety of CMI's 15% shareholding in FCF,
MetalsEx has the right to continue to have the Option to acquire the balance, by
maintaining the terms and conditions of the Option. The exercise period of the
Option is unlimited.
Runruno is located approximately 200 km north of Manila in Nueva Viscaya
Province. Geologically, the area is underlain by prominent alkaline syenite and
monzonite intrusives and alkaline volcanic flows and tuffs. Gold mineralization
has been know to exist in Runruno since the early 1960's and the property has a
long history of exploration.
From 1969 - 1972 a local company (Fil-Am) completed a total of 69 diamond drill
holes for a total of 7,300 meters. Using the results from this program they
calculated a 13.4 million tonne resource at an average grade of 1.41 g/t gold,
and 0.8 g/t gold cutoff, for a total contained 607,500 ounces gold.
In 1974, Consolidated Goldfields of Australia optioned the property from Fil-Am
for one year and drilled 9 widely spaced diamond drill holes. Following this
work approximately 9,000 meters of drilling had been completed on Runruno. In
1978 Fil-Am commissioned a feasibility study from Kurimoto Ironworks and Nissho
Iwai and Co Ltd of Japan to be based on the available diamond hole data. The
study found that the property was economically viable with an estimated resource
of approximately 450,000 ounces of gold mineable by block-caving method.
Golden Arrow Mining took out an option over the property in 1980 and carried out
further drilling until they relinquished the option in 1998 due to financial and
internal management problems. Base Metal Mineral Resources signed an exclusive
agreement with Fil-Am in 1995 allowing them to explore, develop and operate the
property. In 1996 ACA Howe International Ltd was engaged to calculate a resource
estimate for the property. In their report ACA Howe estimated an inferred
resource containing 607,000 ounces of gold, and that the resource might be
understated by up to 30% due to poor core recovery.
In 2000 Greenwater Mining Corporation together with others carried out further
work on the resource. Unpublished reports suggested that with further work a 2
million ounce gold resource was achievable. Mr Powell was given access to core
samples drilled by Greenwater during his due diligence visit in November 2004
and his conclusion was that the quality of work carried out was of a very high
standard and therefore their results can be regarded as not requiring any
substantial verification process.
Metals Ex has, since acquiring its option over Runruno in February 2005, carried
out a careful review of all previous works and reports, a basic structural
analysis of the deposit, field mapping and sampling and extensive sampling of
the small scale miner's tunnels.
Results of sampling and mapping of the local miners' tunnels located at the
Balcony 1, Balcony 2, Main Runruno, Tayab and Malilibeg areas have confirmed the
existence of the high grade (>1.4g/t Au) potential of gold mineralisation (and
molybdenum) in the hanging-wall and foot-wall zones of the main Runruno
mineralisation.
The local miners' tunnels are located predominantly in the hanging-wall or
foot-wall zones of the main Runruno mineralisation, which has been mapped at
surface over a strike distance of 2.5 kilometres. The local miners' tunnels
occur over a distance of approximately 2 kilometres.
After the completion of the underground tunnel sampling programme, a diamond
drilling programme commenced in November 2005 to define a resource with better
grades than previously obtained in the 1970s and to increase the known resource
size.
On 31st March 2006, the Company announced that it continues to receive
encouraging results from the drilling programme at Runruno. The table below
summarises the key results returned from the Company's drilling program since
November 2005, including the 2 Greenwater drill holes completed in 2000-2001:
Drill-hole Collar Coordinates Intercept (metres) Au Mo
2
Number 1 mE mN From to Width g/t %
RUD-001 21204 14753 44 48 4 2.71 0.032
54 56 2 1.09 0.046
60 66 6 3.83 0.291
88 92 4 1.25 0.007
104 108 4 1.23 0.012
132 136 4 1.93 0.114
140 152 12 2.06 0.043
total combined intercept 3 36 2.18 0.084
RUD-004 21293 15134 4 14 10 3.91 0.025
28 36 8 4.45 0.041
72 90 18 2.48 0.099
94 102 8 2.07 0.053
total combined intercept 3 44 3.09 0.063
MXD1 21219 15084 38 40 2 1.82 0.068
42 50 8 4.00 0.059
107 110 3 2.57 0.041
116 120 4 1.44 0.002
122 135 13 1.68 0.039
total combined intercept 3 30 2.37 0.038
MXD2 21318 15272 72 80 8 1.86 0.079
MXD3 21219 15084 37 40 3 2.20 0.044
45 46 1 1.54 0.018
47 53 6 3.31 0.045
total combined intercept 3 10 2.80 0.042
MXD4 21361 15453 39 40 1 1.30 0.105
88 90 2 2.32 0.024
92 98 6 1.98 0.012
total combined intercept 3 9 1.98 0.025
MXD5 21279 15187 37 40 3 2.33 0.027
84 95 11 4.33 0.079
total combined intercept 3 14 3.90 0.068
MXD6 21295 15383 114 116 2 2.07 0.012
120 125 5 1.39 0.026
156 166 10 2.05 0.026
total combined intercept 3 17 1.86 0.024
MXD7 21205 14988 116 121 5 2.64 0.083
123 125 2 1.86 0.111
131 135 4 2.09 0.164
148 156 8 2.36 0.045
total combined intercept 3 19 2.32 0.087
MXD8 21261 15478 83 88 5 2.93 0.029
112 119 7 6.62 0.044
138 148 10 2.29 0.098
total combined intercept 3 22 3.81 0.065
MXD9 21192 15409 77 85 8 1.91 0.052
MXD10 21098 15200 93 97 4 1.08 0.011
MXD11 21019 15117 33 38 5 5.03 0.087
MXD12 10992 15052 100 103 3 2.60 0.019
MXD13 21182 14813 65.4 70 4.6 2.31 0.163
77 83 6 3.80 0.401
130 138 6 3.00 0.057
146.1 154 7.9 2.20 0.075
162 165.2 3.2 1.00 0.118
total combined intercept 3 27.7 2.60 0.161
MXD14 20985 15345 60 68 8 0.61 0.081
Notes:
1. Drillholes prefixed with RUD were drilled by Greenwater during
2000-2001. Drillholes prefixed with MXD were drilled by the MetalsEx since
November 2005.
2. Collar Coordinates are the coordinates of the collar of the
drillholes. The drillholes are inclined -60degrees from horizontal, excepting
MXD3 (-70degrees), and orientated towards a grid azimuth of 100degrees
(easterly). In general the drillholes are spaced 100 metres apart.
3. Reporting of the above composited intercepts was determined by
applying an upper and lower boundary defined by a low grade cut-off of 0.7g/t
Au. Some composited intercepts include single metre, internal intercept grades
of less than 0.7g/t Au. Isolated single metre intercepts are not reported unless
considered to be significant. No high grade cut-off has been applied to the
individual gold or molybdenum assays.
So far the results have been obtained from drilling on a 100m x 100-200m grid
spacing over a surface area of approximately 1000 metres x 700 metres. The
mineralised zones still appears to be approximately 100 metres thick with higher
grade zones at the hangingwall and footwall positions within the zone. This area
encompasses the southern-most portion of the area previously drilled by Fil-Am
during the 1970s, upon which their resource calculation was based.
On 09 May 2006, Metals Ex announced that a preliminary resource estimate has
just been completed for the Runruno gold-molybdenum deposit.
The results of the Company's first 17 diamond drill holes were combined together
with together with the two drillholes of Greenwater to calculate a JORC
compliant Inferred Resource totaling an estimated 23 million tonnes at an
average grade of 2.3 g/t gold and 0.07% molybdenum for a total contained 1.7
million ounces of gold and 34 million pounds of molybdenum.
The Resource estimate is classified as an Inferred Resource as defined by the
JORC Code, the Australasian Code for Reporting of Identified Mineral Resources
and Ore Reserves.
RUNRUNO RESOURCE ESTIMATE
The preliminary Resource estimate was completed using the assay data collected
from the Company's drilling program (drillholes MXD01-MXD17) and two of the
Greenwater diamond drillholes completed in 2000-01 (RUD-001 & RUD-004). The
Resource estimate was carried out using the results of Greenwater's bulk density
measurements of 2.5 tonnes per cubic metre. The Resource estimate is contained
within a surface area measuring 1,100 metres x 500 metres.
On 12 June 2005, the Company announced the results of drillholes MXD16 to MXD25.
Drill-hole Collar Coordinates Intercept (metres) Au Mo
2
Number 1 mE mN From to Width g/t %
MXD16 21014 14944 74 77 3 2.10 0.003
85 87 2 11.25 0.059
total combined intercept 3 5 5.76 0.025
MXD17 21174 14898 79 83 4 3.91 0.523
98 104 6 1.05 0.064
136 138 2 1.03 0.006
total combined intercept 3 12 2.00 0.207
MXD20 21075 14771 80.25 86 5.75 3.04 0.313
MXD21 21131 15352 67 69 2 1.70 0.019
MXD22 20996 14695 59.7 62 2.3 2.90 0.113
MXD23 21177 14634 0 3 3 1.57 0.040
48 68 20 1.41 0.037
157 165 8 5.92 0.054
total combined intercept 3 31 2.59 0.042
MXD25 4 21273 14799 58 60 2 3.33 0.059
71 78 7 2.27 0.106
total combined intercept 3 9 2.51 0.096
Notes:
1. Drillholes prefixed with MXD have been drilled by MetalsEx since
November 2005 and consist of diamond drill core with a minimum core diameter
size of HQ3 (61mm).
2. Collar Coordinates are the coordinates of the collar of the
drillholes. The drillholes are inclined -60degrees from horizontal, excepting
MXD22,23 (-70degrees) and MXD25 (-58degrees), and orientated towards a grid
azimuth of 100degrees (easterly). Each drillhole is planned to intercept the
mineralisation at 90 thus mineralisation 'interception' widths are close to
actual or 'true' widths. In general the drillholes are drilled on a grid spacing
of 100 metres apart.
3. Reporting of the above composited intercepts was determined by
applying an upper and lower boundary defined by a low grade cut-off of 0.7g/t
Au. Some composited intercepts include single metre, internal intercept grades
of less than 0.7g/t Au. Isolated single metre intercepts are not reported unless
considered to be significant. No high grade cut-off has been applied to the
individual gold or molybdenum assays.
4. MXD25 is a re-drill of hole MXD24 which was abandoned after
intercepting a cavity near the surface. It is also the first drillhole results
to be obtained outside of the current resource area. The mineralisation
intercepted is from the footwall zone only. The hangingwall zone was not
intercepted as it is interpreted as having been eroded away.
The results from drillholes MXD16 to MXD22 are located within the JORC inferred
mineral resource of 23 million tonnes at an average grade of 2.3g/t Au and 0.07%
Mo. Drillhole MXD25 is the first drillhole to be drilled outside of the
boundary of the resource.
The Company is conducting further testing on the results of drillholes MXD15,18
and 19 including check assaying and multi-element analysis. The results of which
will be announced in due course.
The Company is currently extending the resource by drilling areas uphill to the
east and to the north. The results from the latest drillholes have confirmed
the size and grades of the recently announced JORC inferred mineral resource
estimate thus indicating the potential to upgrade the current resource from JORC
inferred to JORC indicated category.
The results of MXD25 have demonstrated the immediate potential to expand on the
size of the current resource towards the east. It is important to note that the
drillhole has been interpreted as having only intercepted the footwall zone of
the mineralisation. It is interpreted that the hangingwall mineralisation has
already been eroded away, thus was not able to be intercepted by the drillhole.
Metals Ex maintains an active camp at Runruno with staff that includes
geologists, samplers and field workers. Current activities in the field is
dominated by diamond drilling to increase the size of the current resource base
and it is intended to carry out some infill drilling within the current resource
area to upgrade the status of the JORC 'inferred' mineral resource to '
indicated'.
The Company intends to commence a desk-top study into the economics of the
Runruno deposit given that it believes that there is potential to significantly
increase the Resource.
PURAY PROJECT
On 28 June 2005, the Company announced the signing of an option to purchase
agreement for the Puray copper-zinc-silver-gold project located in the
Philippines ('the Puray Project').
The Puray Project comprises one Exploration Permit Application covering some
6,075 hectares, and is located only 28 kilometres from the city of Manila. The
Puray property has been explored and partially mined since the 1930's. The
mineralisation is polymetallic, containing high-grade and disseminated
copper-zinc-silver-gold. The style of mineralisation is similar to the Kuroko
style of massive sulphide deposits, which have been major producers of copper,
zinc, silver, gold and lead in Canada (e.g. Kidd Creek, Ontario, Canada). The
high grade and commonly high precious metal content of Kuroko deposits continue
to make them attractive exploration targets.
During 1969 to 1972 mining of massive sulphide-copper ore was carried out by
Eastern Rizal Copper Corporation. Approximately 700 tonnes of bornite ore was
mined of which a 200 tonne parcel was shipped directly to Japan for smelting.
The grade of the shipment reportedly averaged 20% Cu, 5.75 g/t Au and 196g/t Ag.
The remaining 500 tonnes of the massive bornite ore stockpile was lost in a
hill-slide during a typhoon in 1972.
In 1981, Eastern Rizal Copper Corporation reported that there remained in the
underground workings several thousand tonnes of massive sulphide ore grading
10-50% Cu. They also reportedly calculated a proven and probable resource of 8
million tonnes at an average grade of >0.7% Cu and an additional 28 million
tonnes of possible resources at an unspecified grade for the remaining
disseminated sulphide mineralisation. The resources calculations were derived
from the results of sampling surface trenches and tunnels, although they are not
verifiable, and do not necessarily comply with the JORC guidelines for the
reporting of mineral resources.
ERCC did not consider other metals such as zinc, gold or silver as being
significant, therefore it appears that assaying for these metals were not always
carried out. The current metal prices for these other metals, however is
considered by the Company to be of some economic importance when reviewing the
potential for this project. Samples obtained from the surface during a recent
field visit by the Company returned assays ranging up to 8.9% Cu, 1.7% Zn and
1.3g/t Au.
The occurrence of 'direct shipping' bornite and chalcopyrite ore indicates the
potential for the delineation of high-grade Kuroko-style mineralisation of
significant size over a potential strike length of up to 6 kilometres.
Upon granting of the Exploration Permit Application, it is the intention of
Metals Exploration to exercise the option to purchase agreement and apply modern
exploration techniques to define the project's size and grade potential. The
Company considers the acquisition of the Puray polymetallic project an exciting
opportunity to enhance its projects portfolio and ultimately deliver increased
value to the shareholders.
EXPLORATION PERMIT APPLICATION - BAGUIO DISTRICT ('WORLDWIDE')
On the 7th March 2006, the Company announced that the Baguio regional office of
the Mines & Geosciences Bureau ('MGB') accepted an Application for an
Exploration Permit ('EPA') from the Company. The application is for a property
located in the district of Northern Luzon, Philippines, and adjoins the Santo
Nino property, previously a copper- gold producer.
The EPA covers an area of approximately 5,845 hectares and is located about 10
kilometres to the northeast of Baguio City. The property is underlain by quartz
diorite and andesite rock types and was previously the object of extensive
exploration for copper+gold+molybdenum porphyry mineralisation during the 1970s.
On 20 June 2006, the Company further announced that certain historical data had
been obtained and collated in respect the EP Application.
In 1974, the MGB carried out a trial IP survey over the area comprising porphyry
style mineralisation. Subsequently, Worldwide Mineral and Industrial Corporation
('Worldwide'), a Philippine corporation, in conjunction with the MGB, carried
out a programme of soil geochemistry (645 samples) to follow up the interpreted
IP anomalies. Results of the soil survey produced best results of 4,481ppm Cu
with 28 samples returning results greater than 1,000ppm Cu.
Between 1974 and 1981, Worldwide reputedly completed 44 diamond drill holes for
an aggregate total of 12,989 metres over a surface area of 600m x 1,200m. The
data package obtained so far relates to 34 of these holes, drilled on a grid
spacing of between 100 to 200 metres, for an aggregate total of 10,407 metres.
Worldwide estimated a positive and possible resource for each drill hole based
on the polygonal method of resource estimation. Their non-JORC compliant
resource totals approximately 150Mt at an average grade of 0.3% Cu and 0.2 g/t
Au.
It should be noted, that Worldwide's estimate is not compliant with the
reporting guidelines as defined by the JORC Code, the Australasian Code for
Reporting of Identified Mineral Resources and Ore Reserves.
The first 18 drill holes were only drilled to an average depth of 175 metres.
Later, three diamond drill holes were drilled to confirm some of the better
mineralisation encountered in the earlier drilling and to test the
mineralisation at depth. The results of these three confirmatory holes are
tabulated below:
Drill-hole ID Depth (metres) Intercept (metres) Cu Au Ag
(%) (g/t) (g/t)
From To Width
C1 510 18 474 456 0.35 0.22 2.41
C2 255 21 255 234 0.41 0.33 4.11
C3 506 0 468 468 0.31 0.26 3.22
In 1982, Worldwide submitted a small batch of samples (21kg) to the nearby
Philex Metallurgical and Assay Laboratory for metallurgical testing. The samples
were mixed and split into two x 2kg test batches for flotation testwork. It was
reported that the second test batch averaged head grades of 0.36% Cu, 0.09 g/t
Au, 3.76 g/t Ag and 0.006% Mo. The concentrate produced by flotation method
assayed at 23.2% Cu, 2.3 g/t Au, 55 g/t Ag and 0.17% Mo. The laboratory reported
that 'the submitted sample was fast-floating and no problem was encountered in
producing separate concentrates of copper and molybdenum of marketable grade'.
The molybdenite concentrate produced was about 0.01% by weight of the total
sample and assayed 45-55% MoS2 with a recovery of 45-55%.
Subsequent to 1980, very little work has been carried out within the EP
Application area. Given the limited nature of the data collated so far, no
assurance or implication is being given, or should be assumed to be being given,
by the inclusion of this historical data that the mineralisation has been, or
will in the future be, deemed to be economic.
The Company intends to carry out some confirmatory drilling if and when the EP
Application is granted and will then evaluate the results of the drilling to
determine the next phase of exploration.
OUTLOOK
The Directors believe that it is clear from the above descriptions of Masapelid,
Runruno, Puray and Worldwide, that each of the projects have considerable merit.
Metals Ex will keep its shareholders fully informed as these projects advance.
SM Smith
Chairman
QUALIFIED PERSON
Gary Powell (a Director of the Company) has been involved in the mining and
exploration industry for more than 20 years. He has a Bachelor of Applied
Science degree in geology and is a member of the Australasian Institute of
Mining and Metallurgy and the Australasian Institute of Geoscientists. He has
compiled, read and approved the technical disclosure in this regulatory
announcement.
EXPLANATION OF TERMS
Au chemical symbol for gold
Ag chemical symbol for silver
Cu chemical symbol for copper
Mo chemical symbol for molybdenum
g, kg gram, kilogram
t, Mt tonne, million tonnes
g/t grams per tonne, which is equivalent to parts per million (g
/t Au = grams of gold per tonne)
ppm parts per million
oz troy ounce (= 31.103477 grams)
% percent (0.1% Cu = 1,000 parts per million of copper)
IP survey Induced Polarisation survey - An electrical geophysical survey
technique measuring the magnetic field spontaneously induced in a volume of rock
by the application of an electric current. A technique often used to identify
disseminated sulphide deposits
Consolidated Profit and Loss Account
for the 6 months ended 31 March 2006 - Unaudited
Note 6 months 6 months Year ended
ended 31 March ended 31 30 September 2005
2006
March 2005 (audited)
(unaudited)
(unaudited)
£ £ £
Turnover - - -
Administrative expenses (226,319) (66,023) (187,378)
OPERATING LOSS (226,319) (66,023) (187,378)
Interest Receivable 18,705 6,580 10,819
Interest Payable (784) - (355)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (208,398) (59,443) (176,914)
Tax on loss on ordinary activities - - -
LOSS FOR THE FINANCIAL PERIOD AFTER (208,398) (59,443) (176,914)
TAXATION
Loss per ordinary share - basic and fully 2 (0.42p) (0.25p) (0.67p)
diluted
Consolidated Balance Sheet
31 March 2006 - Unaudited
At 31 At 31 At 30 September
March 2006 March 2005 2005
(unaudited) (unaudited) (audited)
Note £ £ £
FIXED ASSETS
Intangible fixed assets 5 1,675,932 287,115 1,587,992
Investments 202,443 - -
1,878,375 287,115 1,587,992
CURRENT ASSETS
Debtors 19,596 45,299 11,204
Cash at bank and in hand 962,171 328,567 1,178,687
981,767 373,866 1,189,891
CURRENT LIABILITIES
Creditors: amounts falling due within one 216,196 64,736 193,021
year
NET CURRENT ASSETS 765,571 309,130 996,870
TOTAL ASSETS LESS CURRENT LIABILITIES 2,643,946 596,245 2,584,862
TOTAL NET ASSETS 2,643,946 596,245 2,584,862
CAPITAL AND RESERVES
Called up share capital 7 510,064 266,433 471,683
Share premium 2,291,000 292,255 1,694,271
Shares to be issued 101,000 97,000 288,000
Profit and loss account (385,312) (59,443) (176,914)
EQUITY SHAREHOLDERS FUNDS 2,516,752 596,245 2,277,040
Minority interests 127,194 - 307,822
2,643,946 596,245 2,584,862
Consolidated Cash Flow Statement for the
6 months ended 31 March 2006 - Unaudited
6 months ended 6 months ended Year ended 30
31 March 2006 31 March 2005 September 2005
(unaudited) (unaudited) (audited)
Note £ £ £
Net cash outflow from operating activities 3 (211,536) (46,586) (35,131)
Returns on investment 17,921 6,580 10,464
Capital expenditure - Exploration and (609,011) (190,115) (858,956)
development costs
Cash outflow before financing (802,626) (230,121) (883,623)
Financing:
Issue of shares 586,110 483,688 2,116,073
(Decrease)/Increase in cash (216,516) 253,567 1,232,450
Notes to the Financial Statements
for the Period ended to 31 March 2006 - Unaudited
1. ACCOUNTING POLICIES
Accounting convention
The financial statements have been prepared in accordance with applicable
accounting standards generally accepted in the United Kingdom and with the
policies which the company will adopt for its annual accounts and which are
detailed below. The figures and the financial information for the year ended 30
September 2005 do not constitute the statutory accounts for that year. Those
accounts have been delivered to the Registrar and included the auditors' report
which was unqualified and did not contain a statement either under section 237
(2) or 237(3) of the Companies Act 1985.
Basis of Accounting
The accounts have been prepared under the historical cost convention.
Basis of Consolidation
The group accounts consolidate those of the company and its subsidiary
undertakings using the acquisition method of accounting.
Exploration and development costs
Costs relating to the acquisition, exploration and development of mineral
properties are capitalised until such time as an economic reserve is defined and
mining commences or the mining property is abandoned.
Once mining commences the asset is amortised on a depletion percentage basis.
Provision is made for impairments to the extent that the asset's carrying value
exceeds its net recoverable amount.
Investments
Investments are stated at cost less provision for any impairment.
Deferred tax
Deferred tax is provided for on a full provision basis on all timing differences
which have arisen but not reversed at the balance sheet date. A deferred tax
asset is not recognized to the extent that the transfer of economic benefit in
future is uncertain. Any assets and liabilities recognized have been
discounted.
Foreign currencies
Monetary assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the balance sheet date.
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling at the date of transaction. Exchange differences are taken into
account in arriving at the operating result.
Going concern
The Company is in the early stages of development and has limited cash
resources, its success will depend largely upon the outcome of future mining
exploration and development programmes of Far East and in particular the
Philippines.
The directors believe they have considered all relevant information and have
concluded that it is appropriate to prepare these financial statements on the
going concern basis. The financial statements do not include any adjustments
that may be required if the funds are not available or if the trading plans were
not materially achieved.
Notes to the Financial Statements
for the Period ended to 31 March 2006 - Unaudited
2. LOSS PER ORDINARY SHARE
The basic loss per share is based on 48,734,058 ordinary shares, being the
weighted average number of ordinary shares in issue during the period, and on
the loss after taxation for the period of £208,398. The diluted loss per share
calculation is identical to that used for basic earnings per share as the
exercise of warrants would have the effect of reducing the loss per ordinary
share and therefore is not dilutive under the terms of the FRS22 'Earnings per
share'.
Basic loss per share is calculated by dividing the profit or loss after taxation
for the period available to the ordinary shareholders by the sum of the weighted
average number of ordinary shares in issue during the period.
3. RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS
£
Operating loss (226,319)
(Increase) in debtors (8,392)
Increase in creditors 23,175
Net cash outflow from operating activities (211,536)
4. MOVEMENT IN CASH BALANCES
£
Net cash balances as at 1 October 2005 1,178,687
Movement in 6 months ended 31 March 2006 (216,516)
Net cash balances as at 31 March 2006 962,171
5. EXPLORATION AND DEVELOPMENT COSTS
£
Cost
At 1 October 2005 1,587,992
Additions 87,940
At 31 March 2006 1,675,932
Notes to the Financial Statements
for the Period ended to 31 March 2006 - Unaudited
5. EXPLORATION AND DEVELOPMENT COSTS (continued)
On 23 December 2004 Metals Exploration plc concluded an agreement with the claim
owner of the Masapelid Project (Philippines), San Manuel Mining Corp. The
agreement allows Metals Exploration plc to earn a 70% economic interest in the
project on completion of the following payment schedule:
Cash
Shares in Metals Exploration plc
US$
On completion 25,000 250,000
1 year after completion 25,000 250,000
2 years after completion 25,000 250,000
3 years after completion 25,000 250,000
Metals Exploration plc is able to withdraw at any time in return for
relinquishing its earned interest.
On 25 January 2006 the company signed a joint venture agreement (JVA) with
Medusa Mining Limited and Philsaga Corporation in respect of the Company's
interest in the San Miguel Mining Corporation. The principal terms of the JVA
are that the company will retain a 16% share of the interest or alternatively
retain a 10% net profit interest, in return for a reduced payment schedule, as
follows:
Cash
Shares in Metals Exploration plc
US$
On completion 25,000 250,000
1 year after completion 4,000 40,000
2 years after completion 4,000 40,000
3 years after completion 4,800 80,000
On 2 February 2005 Metals Exploration plc signed an option agreement on the
Runruno Project. The agreement allows Metals Exploration plc to earn a 70%
interest in the project which is owned by FCF Mining Corp. The following
payment schedule has been agreed:
Cash
Shares in Metals Exploration plc
US$
On completion 100,000 400,000
1 year after completion 30,000 400,000
2 years after completion 40,000 400,000
3 years after completion 40,000 400,000
Notes to the Financial Statements
for the Period ended to 31 March 2006 - Unaudited
5. EXPLORATION AND DEVELOPMENT COSTS (continued)
On 23 November 2005, the company signed an option agreement with Christian
Mining Inc to acquire an additional 15% shareholding in FCF Mining Corp, which
if exercised would give the company an 85% interest. The company shall pay a
US$65,000 option fee until the option is either exercised or withdrawn, although
the company has sole discretion to terminate the option. The exercise price of
the option is US$400,000 for each additional 1% shareholding, subject to a
maximum fee of US$6 million. The exercise period of the option is indefinite.
Exploration and development costs included in the balance sheet represent the
completion payments on both the above projects together with the costs incurred
on due diligence, concluding the contracts and subsequent exploration.
6. WARRANTS IN ISSUE
Exercisable Exercisable Exercisable Exercisable Exercisable
at £0.0325 at £0.08 at £0.12 at £0.20 at £0.40
At 1 October 2005 10,500,000 1,496,708 - 7,812,500 -
Issued in the period - - 1,300,000 2,500,000 2,000,000
Exercised in period (200,000) (500,000) - (2,698,053) -
At 31 March 2006 10,300,000 996,708 1,300,000 7,614,447 2,000,000
Warrants held by the directors as at 31 March 2006 were as follows:
Exercise Price Exercise period from Number of shares
issue
G Powell 12p Up to 7 years 1,000,000
40p Up to 7 years 500,000
Reef Securities Ltd * 0.0325p Up to 7 years 1,000,000
20p Up to 7 years 1,000,000
40p Up to 7 years 500,000
Philip Barnett ** 0.0325p Up to 7 years 1,000,000
20p Up to 7 years 500,000
40p Up to 7 years 500,000
* Reef Securities Ltd is a company controlled by SM Smith.
** Philip Barnett resigned as a director on 25 April 2006.
Notes to the Financial Statements
for the Period ended to 31 March 2006 - Unaudited
7. SHARES IN ISSUE
The company has the following ordinary shares of 1p each in issue:
Date of issue Number Nominal Value
£
At 30 September 2005 47,168,332 471,683
14 November 2005 700,000 7,000
6 December 2005 62,500 625
21 December 2005 674,496 6,745
23 December 2005 25,000 250
16 January 2006 125,000 1,250
20 January 2006 148,902 1,489
30 January 2006 43,125 431
7 February 2006 1,250,000 12,500
21 February 2006 400,000 4,000
27 February 2006 49,030 491
07 March 2006 40,000 400
08 March 2006 125,000 1,250
10 March 2006 195,000 1,950
At 31 March 2006 51,006,385 510,064
The directors held the following 1p ordinary shares at 31 March 2006:
GR Powell - 1,000,000 Ordinary Shares of 1p each
Reef Securities Limited * - 1,500,000
P Barnett - NIL
8. POST BALANCE SHEET EVENTS
Between 1 April 2006 and 30 June 2006 the company issues 1,947,574 new 1p
Ordinary Shares at prices ranging between 3.25p per share and 20p per share,
pursuant to the exercise of existing warrants.
On 19 April 2006 the company announced the grant of 1,200,000 share options
under its Unapproved Share Option Scheme. The options were granted to key
employees in the Philippines and are exercisable at 12p per option at any time
after 12 months from the date of grant up to 7 years from the date of grant.
The Directors do not own any share options.
Notes to the Financial Statements
for the Period ended to 31 March 2006 - Unaudited
9. THE INTERIM REPORT
The Interim Report was approved by the Directors' on 30 June 2006.
Copies of the Interim Report may be obtained on written request to the Company
Secretary, Metals Exploration plc, 7 Savoy Court, Strand, London WC2R 0ER.
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