Metminco Regulatory News (MNC)

Metminco Limited (ASX: MNC; AIM: MNC) ("Metminco" or the "Company") is pleased to announce that it has today released its Financial Report for the year ended 31 December 2017.

A summary of the Financial Report is set out below. The full report can be accessed from the Company's website via the following link: http://www.metminco.com.au/site/PDF/2529_1/2017AnnualFinancialStatements

Overview

The Company's portfolio of assets includes the Quinchia Project in Colombia and the Loica, Vallecillo and Mollacas projects in Chile. The Company focussed its full attention on the Miraflores Project at Quinchia while the Chilean assets remained on care and maintenance throughout 2017.

The Miraflores Project was purchased from RMB Resources Australia Pty Ltd on 20 June 2016. A Scoping Study commissioned by Metminco during the second half of 2016 indicated that the project, developed as an underground mine with processing facilities on site, was the preferred development option given the robust economics indicated for that development option. Based on this work, Metminco commenced with a Feasibility Study on the Miraflores Project late in 2016. The Feasibility Study was completed in October 2017.

Miraflores Feasibility Study

The Miraflores Feasibility Study ("Study") was prepared following the guidelines of the Canadian Securities Administrators' National Instrument 43-101 and Form 43-101F1 and the JORC code (2012). A Mineral Resource Statement was prepared in conformity with generally accepted "Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines" (CIM Guidelines) in 2012 and updated in 2016 to comply with the NI 43-101 and the JORC Code (2012 edition) (The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code)). A Project Ore Reserve Estimate, classified and reported in accordance with the Canadian Securities Administrators National Instrument 43-101 (NI 43-101) and the corresponding CIM Definition Standards on Mineral Resources and Ore Reserves and the JORC Code (2012) was also issued in October 2017 and updated in November 2017.

In summary, the Study considered an underground mining operation generating 4.3Mt of mineralised material at a head grade of 3.3g/t gold over 9.3 years to deliver 421,000oz recovered gold. Capital costs were estimated at US$72 million and operating costs were estimated at AISC of US$643/oz. At a gold price estimate of US$1,300/oz. over the life of the operation, the Study generated an NPV of US$72 million (at 8% discount rate) and payback of 3.6 years.

Permitting, Environmental and Social studies

Baseline Study and Environmental Impact Assessment programs were recommenced in July 2017 modified in order to meet the data quality objectives associated with the revised mine plan and project layout. The monitoring and environmental inventories consist of fauna and flora characterisation; underground and surface water characterisation; noise, vibration and air pollution; and potential contaminants from extracted minerals and stored tailings.

These data along with the mineralogical, geological, social and economic aspects of the new Project will be used to inform the Environmental Impact Assessment.

The environmental process will include participation of, and provision of information to, all communities in the Project area.

A Plan of works was submitted to the Colombian Mining Agency in January 2018.

Cash Position and Funding

During the year ended 31 December 2017, Metminco's cash position increased to A$834,377 from $71,548 due to the receipt of A$6.6 million due to the sale of its interest in the Los Calatos Project, additional fund raisings (A$2.2 million net of costs) and convertible notes (A$0.7 million net of costs).

Cash outgoings for the period were focussed on the continued development of the Miraflores Gold Project and corporate overheads. Expenditure for the year was focused on the Miraflores Feasibility Study including an updated JORC 2012 Mineral Resource estimate, the mining study, metallurgical test work, evaluation of processing options, infrastructure work towards completion of the Feasibility Study and the preparation of the EIA (Environmental Impact Assessment).

As stated in the Notes to the Financial Statements, Metminco is an exploration Company currently without an operating cash inflow and the net cash position of the Group will continue to decrease until such time as the Group has an operating cash inflow. Funds from the sale of the Los Calatos Project have been applied to completion of the Miraflores Feasibility Study and the lodgement of the Environmental Impact Assessment (EIA) leading towards a decision to mine, subject to mine development funding and EIA approval. The release of the Miraflores Feasibility Study on 30 October 2017 confirmed the robust economics of the potential development of the Miraflores Project into a near term cash flow.

Details of fund raising during the year ended 31 December 2017 follow:

Sale of Interest in the Los Calatos Project

As announced 27 June 2017 the Company sold its 49% interest in Los Calatos Holding, owner of the Los Calatos Project, for approximately US$5 million (A$6.6 million) cash consideration net of costs (the LCH Sale). Proceeds from the LCH Sale have provided a non-dilutive form of financing for ongoing work programs towards the development of the Miraflores Gold Project.

Placement and derivative asset

During the year the Company completed a second tranche of the placement announced 17 November 2016 by placing a total of 36,919,831 new fully paid ordinary shares (Shares) and receiving approximately A$1.7 million net of costs. The remaining approximately $2.6 million of the A$3 million Lanstead Capital LP funding facility is to be received over 18 months subject to the Company's measured share price compared to the benchmark price (A$0.158). If the Metminco measured share price exceeds the benchmark price, for that month, the Company will receive more than 100 per cent of the monthly settlement due on a pro rata basis. There is no upper limit placed on the additional proceeds receivable by the Company as part of the monthly settlements. Should the measured share price be below the benchmark price, the Company will receive less than 100 per cent of the expected monthly settlement on a pro rata basis.

Convertible note facility (Convertible Notes)

In May 2017 the Company entered into an A$0.75 million unsecured convertible note facility with Redfield Asset Management.

The key terms of the convertible notes are as follows:

· Face Value: A$750,000

· Coupon Rate: 12.5% per annum, compounded monthly interest to be capitalised.

· Conversion: No later than 12 months from date of issue at which time the Convertible Notes and capitalised interest automatically convert to fully paid ordinary shares (Shares) at the Conversion Price.

· Conversion Price: A$0.06075

· Options granted:

i) 12,345,639 exercisable at $0.081 per Share any time prior to 24 months from date of issue

ii) 12,345,639 exercisable at $0.081 per Share any time prior to 24 months from date of issue to be issued as soon as Company's available placement capacity under ASX Listing is refreshed.

· Funding: A$750,000 after fees has been received.

· Underwriting Fee: 4.5% of Face Value

Share Consolidation

Following the completion of the security consolidation on 4 January 2017 the Company had on issue 90,280,468 fully paid Shares and 100,000 unlisted options to acquire one share at A$1.51 per Share on or before 1 August 2017.

Small Holding Sale Facility

On 14 July 2017 the Company initiated a 'Small Holding Sale Facility' for shareholders who hold a 'Small Holding' of shares (unmarketable parcels) in the Company. Under ASX Listing Rules and the Company's constitution a 'Small Holding' is defined as:

- a shareholding with a market value of less than A$500, and therefore

- any shareholding of 11,111 shares or less in the Company, based on the closing share price of A$0.045 per share on the Record Date (Monday, 10 July 2017) is deemed to be a 'Small Holding'

On 4 October 2017 the Company completed the buyback. The total number of shares purchased under the facility was 3,875,424 shares representing approximately 3% of the issued capital in Metminco. With the purchase of the small holdings the number of Metminco shareholders has reduced by more than 6,900 to 1,294 shareholders.

Board Changes

Kevin Wilson - Executive Chairman

Kevin Wilson was appointed Executive Chairman on 23 March 2018.

William Howe - Managing Director

William Howe who was appointed a Director Metminco on 17 July 2009 and Managing Director on 8 December 2010 resigned on 23 March 2018.

Ram Venkat - Non-Executive Director

Mr. Ram Venkat was appointed as a Non-Executive Director of the Company effective 20 March 2017 and resigned on 19 March 2018.

Phillip Wing - Chair

Phillip Wing, who held office as a Director of Metminco Limited since 17 July 2009 and as Chair since 27 July 2016 resigned on 3 August 2017.

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Kevin Wilson

Executive Chairman