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(Sharecast News) - Philippines-focussed gold producer Metals Exploration announced a conditional share purchase agreement (SPA) on Friday, to acquire a controlling interest in the YMC Group, which holds a significant exploration tenement in the Abra area of the Philippines.
The AIM-traded company said the transaction, subject to lender and shareholder approvals, would involve a cash payment of $1.6m and the issue of options for up to 41 million new shares.
It said the YMC Group's exploration tenement covers 16,200 hectares on Luzon, about 200 kilometres north of its existing Runruno mine.
The region, situated in the Cordillera area, is known for its rich gold deposits, historically producing over 40 million ounces of gold.
Metals Exploration said the acquisition would include 72.5% of the issued share capital of Yamang Mineral Corporation, a Philippine company that owns the Abra Tenement, as well as the entire issued share capital of Yamang Mineral Corporation Pte, a Singapore-based company that would have the rights to process ore from the Abra area.
Additionally, assets of the YMC Group included $1.13m in cash, a purpose-renovated drill rig, and drill supplies valued at $0.13m.
The board said the Abra tenement is already approved and exploration-ready, pending final agreements with local communities within the Philippines' National Commission on Indigenous Peoples (NCIP) framework.
Positive discussions with local stakeholders suggested that the requirement would be met in the near term, the company claimed.
The Abra tenement includes several drill-ready target areas, including Lacub and Manikbel, along with numerous historical artisanal mining sites.
Initial exploration efforts would encompass geochemistry, geophysics, mapping, and a review of historical data.
A drill programme was expected to start in the second half of 2024.
At the same time, the company said it was planning to implement community and NCIP initiatives to ensure social acceptance for the development of the Abra tenements.
"Our strategy is to grow MTL within the Philippines and ultimately the broader region, leveraging our established in-country knowledge, experience, and strong technical team," said interim chairman Steven Smith.
"Our team at Runruno has set the bar for high performance, locally-run and managed operations, and this gives us a significant competitive advantage as we focus on the development of new projects in the country.
"The acquisition of the YMC Group is the first step in our progress to a new future for the company."
Smith said the Abra tenement had the potential to provide an extensive project growth pipeline for the firm, with multiple prospective targets in both gold and copper over a significant area, in a geological region of scale and with historical production.
"If we have the exploration success we are targeting, we aim to focus on developing a high-grade, smaller-scale gold production-ready project as soon as possible, in addition to advancing our other targets.
"YMC is the first of a number of targets within our purview and we look forward to providing further updates on both our exploration progress and project expansion efforts, as results are obtained."
At 1333 GMT, shares in Metals Exploration were up 7.67% at 3.23p.
Reporting by Josh White for Sharecast.com.