Metals Exploration Regulatory News (MTL)

METALS EXPLORATION PLC

FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014

Metals Exploration plc (AIM: MTL) (the "Company" or the "Group"), the natural resources exploration and development company with assets in the Pacific Rim region, is pleased to announce its final audited results for the year ended 31 December 2014.

Highlights during the reporting period:

· Entered into a Facility Agreement with two international resource banks and signed commercial terms in May 2014 for a US $83 million debt funding package. The debt package concluded the Runruno project financing and funded construction of the Gold Process Plant and Residual Storage Impoundment ("RSI").

· Completed a successful reorganisation of the MTL Group to fulfil a condition of the Facility Agreement.

· Received a 'special tree cutting permit' to enable the construction of the RSI.

· The construction team achieved over 1.2 million man-hours without a lost time incident.

· Entered into a power supply agreement in October 2014 with a major Philippines electricity provider to take electricity from the national grid.

· The electricity switchyard at the mine site was certified by the Philippine Energy Regulatory Commission in December 2014.

· Total capital costs of project construction remained within budget.

· Maintained ongoing support for community programmes and environmental responsibilities.

· Mr Chris Whitehouse stepped down from the Board of Directors as a Non-Executive Director in December 2014.

Highlights post the reporting period:

· Mr Lucian Eduard Simovici joined the Board of Directors as a Non-Executive Director in January 2015.

· In February 2015, the National Grid Corporation of the Philippines commissioned and energised the 69KV power lines. The Project is now drawing power directly from the national grid.

· All major packages for equipment, services and civil construction have been awarded.

· Construction of the Process Plant stands at 82% complete as of May 2015. Commissioning of the Process Plant planned to commence in June 2015 with ore commissioning due to begin in early Q3 2015.

· Discussions commenced with refineries for treating the doré produced at site.

· Commissioning, ramp up and operational readiness planning and preparation is well advanced.

· A mini operations plant has been constructed and commissioned for in-house training and testing of the BIOX® liberation process.

CHAIRMAN'S STATEMENT

Dear Shareholder,

It is with great pleasure that I present Metals Exploration plc's tenth set of audited financial results. The latest set of results cover the 12 month period up to 31 December 2014. In the Strategic Report you will find a review of progress and developments for the Group covering the year ended 31 December 2014 and period subsequent to the financial year-end.

2014 was another year of significant and progressive development of the mine site and the Group is now on the cusp of transforming itself from an exploration company into a mining company with first gold pour expected later this year. Realising the tangible benefits of the investments, which commenced on 22 October 2004 when the Company was admitted to trading on AIM, is now tantalisingly close for all stakeholders in the Group.

It is well documented how difficult, expensive and time consuming it is to explore, discover and refine exploration programmes to ultimately bring a mining project into production. I am proud to advise that FCF Minerals Corporation's Runruno Gold-Molybdenum project will be in a position to begin commercial operations during 2015 after an immense amount of planning and construction work which commenced on 1 December 2012. Returning shareholder value has been my mission and goal since joining the Group in 2007.

The most significant event in 2014 was signing a Facility Agreement to secure US $83 million of debt funding which fully financed the Project and allowed us to finalise the construction of the Gold Process Plant and the RSI. Partnering with two of the world's leading resource banks, Hongkong and Shanghai Banking Corporation ("HSBC") and BNP Paribas, was particularly pleasing and a strong endorsement of the Project and its fundamentals. A considerable amount of work went into securing this debt facility but it was pleasing that the lenders considered the due diligence process was one of the quickest they had been involved in for a mining project, reflecting the quality of the project and the work undertaken by the Group. There is a strong business relationship with the lenders and it is pleasing to consider this as a partnership for the medium term at least.

Project construction continued apace in 2014 and is now nearing finalisation. The Runruno Process Plant site is a small footprint and careful planning and training has allowed construction to advance without a single major work incident. This is extremely satisfying and over 1.2 million man-hours have been achieved by the construction group without a lost time incident and I applaud the efforts of our Project construction team and their commendable approach to health and safety.

The build schedule slipped on two occasions during 2014 resulting in the commencement of commissioning planned in late June 2015 and gold production shortly thereafter. The legal and commercial documentation stage of the funding process took longer than first anticipated. Primarily this was due to the complex Philippine land and property ownership laws which made finalising a security package very complicated. During these discussions the project build was slowed down as a defence against over committing the Group financially, and it unfortunately pushed back commissioning by three months. A further three months was added to the build schedule towards the end of 2014 after a period of design drawing delays out of the design consultant.

These issues are now in the past and the Process Plant construction team is confident of entering the commissioning phase at the end of June 2015 and have introduced a construction night shift crew to try and achieve this. Most of the remaining construction works require effort to be focused on the electrical and piping installations of which there is a significant amount of this in the Process Plant.

Board changes

In December 2014 Mr Chris Whitehouse stepped down from the Board of Directors as a Non-Executive Director and was replaced by Mr Lucian Eduard Simovici in January 2015. Earlier in 2014 the Company appointed an independent Non-Executive Director to compliment the Board of Directors, Mr Jeremy Ayre. Mr Ayre brings over 25 years relevant financial and technical experience to the Board and is a qualified mining engineer. I welcome Edi and Jeremy onto the Board and both gentlemen are joining at a very exciting time in the Company's development. Their help and experience in technical, financial and commercial areas will be very welcome.

A year of major developments

In preparing the Annual Report, it always affords me a chance to reflect on the past year. 2014 was a year of significant achievements at both Corporate and Project level. The Strategic Report outlines these in greater detail but I would like to highlight some of the major items to you at this point as they are worthy of being singled out.

In previous results statements and market updates I have outlined the investment in infrastructure and it is extremely pleasing to update you on what this provides the Project. Our workforce grew considerably reflecting the personnel demands of the construction phase of the Project and our camp and messing facilities have performed admirably. The camp can accommodate 700 people and it has been at capacity for some time. On average over 2,000 meals are served daily. Like most of our operations our choice has been to service these facilities ourselves without contracted labour or support services.

Our road networks into and out of the Project site over the last couple of years have improved the quality of lives of everyone in the surrounding areas. Most of the road to the national highway is now concreted providing a faster, safer and better experience for all users. A phenomenal amount of equipment of differing weights, shapes and sizes has been conveyed from Manila port to site and we are pleased to report that the Company has not been involved in a single road accident.

The major investment in the infrastructure which allows the site to benefit from electricity from the national grid has proven to be very successful. In December 2014, the Philippine Energy Regulatory Commission certified the switchyard at site which enabled the National Grid Corporation of the Philippines to successfully commission and energise the lines at 69KV on full capacity on 12 February 2015. In October 2014 a power supply agreement was signed with one of the major electricity providers in the Philippines, SN Aboitiz Power-Res Inc. I am delighted with achieving this milestone and it is a great achievement economically and for commissioning into operations.

Ordinarily a corporate group reorganisation which is well planned, thought out and executed with precision should take a few months in controlled conditions. The reorganisation of the MTL Group, required under the Facility Agreement, spanned over 12 months from start to finish, and involved an inordinate amount of time from management and our retained Philippines legal advisory firm. The exercise involved unforeseen amendments to Articles of Incorporation and payment of taxes which the Group believes should not have been payable. That said, the process was ultimately successful and the end result is a tax neutral position for the Group.

Taking on the risk of self-managing the construction and commissioning of a Process Plant is not an every-day decision that a Board of Directors of a mining company has to take, but to also include self-managing of the construction of a RSI in addition to this and at the same time is unusual. This decision was not taken without a great amount of introspection and deliberation involving various specialist consultants with relevant dam and civil construction experience. Various factors conspired to make this undertaking appear to be misplaced; late delivery of a tree cutting permit to allow the works to commence, several attempts at re-engineering the project pursuant to increasing demands from government offices, a period of excessive and unexpected inclement weather. These have all added cost to the dam project which was fully funded from Project contingency. Fortunately the dam build project has benefited from various economics through recycling of mine pre-strip materials. The mine construction team are confident the dam will be ready to take the initial tailings from commissioning and ramp up while continuing with construction for the next stages of operations.

The construction of the Process Plant has exceeded my initial expectations and natural reticence. In retrospect the decision to self-manage has been a blessing in disguise, particularly as we have suffered up to six months slippage in the build schedule without involving material financial penalties which we would have been exposed to if the build project was contracted out. Our construction team have performed exceedingly well in a highly regulated jurisdiction which imposes many challenges to the mining industry. Permits have been applied for timeously and obtained as a matter of course; the team have driven a culture of safe working practices since the inception of construction, and they are attentive to the social and environmental aspects surrounding the Project. The experience the team has built up and the progress made is in my view quite remarkable and extremely noteworthy for the future.

Cash position and project finance

As at 31 December 2014 the Group's cash at bank position was £12,251,994. As a result of the Facility Agreement, the Project is fully funded through its construction phase with sufficient working capital for operations through commissioning and into operational commencement. The utilisation of the debt facility is based on forecasts provided to the lenders each month with the lenders' independent technical expert reviewing proposed utilisation draw-downs. To date this has worked seamlessly with no issues that have impacted on any utilisation requests raised.

Corporate responsibility and environment

The Group takes significant satisfaction in its role as a major promoter of community programmes and responsible environmental activities in the mining sector. This is evidenced by:

· The significant number of environmental and safety awards it has achieved over a number of years;

· Skills enhancement, training, education and health programmes that it runs and supports throughout the barangay of Runruno and greater Municipality of Quezon;

· Actively fostering a genuine equal opportunity employment regime by employing and training women into non-traditional professional, skilled and semi-skilled roles;

· Supporting community programmes to develop economically sustainable projects that will continue beyond the life-of-mine;

· Support the local communities through direct employment and supply of goods and services to the project;

· Active reforestation and continuous rehabilitation programmes;

· Continuous environmental monitoring; and

· Providing and ensuring a safe working environment for all staff and contractors.

Summary

2014 and Q1 2015 was a tumultuous period of advancement, achievement and learning for our Group. The Project is in a great position and I am confident the shareholders will begin to realise value in 2016 provided the price of gold does not retreat excessively.

I would also take the opportunity to formally recognise the dedication, competence and hard work of our operations and construction teams through an extremely demanding and busy year. In the Philippines we continue to enjoy the support of the local communities, authorities, Government Departments and all levels of Government. The Group works very closely with the Mines and Geosciences Bureau, our principal regulator, in the undertaking of our work. I take this opportunity to express my appreciation for the continued support of these stakeholders.

In closing I would like to thank my co-directors for their contributions during the year, all our loyal and dedicated staff and all of our Shareholders for your continued support.

I R Holzberger

Executive Chairman

1 June 2015

STRATEGIC REPORT

Metals Exploration plc ("MTL" or the "Company") is a holding company of a group of companies (collectively the "Group") engaged in exploration, mining and associated activities, which has in construction a single gold mining asset in the Philippines (the "Project"). Throughout this report references to the Project or the mine-site are specific references to FCF Minerals Corporation's ("FCF") Runruno Gold project. FCF is MTL's wholly owned Philippine subsidiary company. MTL's gold mining activities are carried out solely in the Philippines at its mine site at Runruno in the province of Nueva Vizcaya, Northern Luzon. The Runruno gold mine is not yet producing gold doré but it is expected to be operational ready in H2 2015.

2014 was a successful year for the Group closing out a US $83.0 million debt facility which provided the balance of funding required to bring the mine to a state of operational readiness in 2015. The Hongkong and Shanghai Banking Corporation Limited and BNP Paribas banks provided the facility after undertaking a comprehensive due diligence exercise followed by a period of commercial and legal documentation. It is a testimony to the Project that two of the world's major resource banks chose to partner with the Group and the Project. A Facility Agreement was signed with FCF, the banks (the "lenders") and their Security Agents on 28 May 2014, to include a structured security package for the benefit of the lenders. The facility terminates on 31 December 2018 and includes gold hedging of up to 35% of planned production over the term of the loan and hedging of 40% of the interest rate exposure based on an agreed US $73.0 million cash flow projection. The capital construction costs including contingency have been estimated and are reported to be US $182.8 million. Shareholders' equity contributions were US $121.1 million. The facility comprises three elements; US $75 million senior debt of which US $70 million is available for construction and US $5 million for bank interest and costs during construction, and a cost overrun facility of US $8.0 million. The Project build is forecast to be within budget which will be a major achievement.

The Group underwent a major restructuring of its Philippine investments to perfect a security package for the benefit of the Project's lenders. It involved transferring the shares MTL held in each of its Philippine entities to a wholly owned intermediate holding company incorporated in Singapore. This undertaking commenced November 2013 and completed in November 2014 becoming a complicated exercise due to unforeseen requirements and restrictions in the Philippines. The ultimate beneficial ownership of all of the assets of the Group was not affected by the restructure.

Throughout 2014 and into 2015 FCF has been disallowed to avail of several fiscal incentives provided to it in its Financial or Technical Assistance Agreement ("FTAA" or "the Agreement") which are particular to import VAT, customs duties and fees. The FTAA provides that FCF is entitled to import capital mining goods and equipment without payment of import value added tax (currently 12%) or customs duties or fees. The Bureau of Internal Revenue ("BIR") has denied FCF and other mining companies this incentive and designed Revenue Memorandum Circular No 17-2013 to this effect. FCF has challenged that the scope of the memorandum can be extended to nullify incentives provided by a contract in law (i.e. the FTAA). The challenge is currently in process through the Court of Tax Appeals.

During 2013 management with the approval of the Board of Directors terminated discussions with a major construction contractor in favour of self-managing the execution of the construction activities at Runruno. This decision was unusual for a company of FCF's size and would call upon the mining, construction and commercial acumen of a small management team and involved recruiting a specialist team of experienced expat personnel with current relevant mining construction experience.

With the mining industry being in a downturn cycle at the time of the decision this provided a more liquid and available skill base to choose from but did not lessen any of the risks involved.

2014 was a year of major events for the Group and FCF restructured its corporate profile to be a major recruiter of Filipino construction personnel and become a quasi-construction company with emphasis on procurement and contracts, civil and construction works, construction planning and scheduling. The undertaking was on a large scale and required management achieving its deadlines and deliverables in a highly bureaucratic and regulated environment. Attention to detail was tantamount for management to deliver a mine-site and processing plant capable of delivering stakeholders' expectations. The challenge has not been without its fair share of twists and turns, upsides and downsides but during H2 2015 the mine will deliver ore, the processing plant will be commissioned to provide gold doré, ramp up will have occurred and it is expected FCF will normalise production in early 2016.

The Group is keenly aware of its social and environmental responsibilities and throughout the construction activities has been monitored and guided by the Mines and Geosciences Bureau ("MGB") of the Philippines. It is with great satisfaction to highlight that FCF has met all of the exacting standards it is obliged to observe, obtained all required permits and provided adhoc and periodic reporting on activities. The effort required to achieve all of the above cannot be accurately measured or underestimated and is to be commended, because without which the construction and mining activities could not proceed. Mining operations in the Philippines are highly regulated with more and more demands continually being encountered which could not be known in advance but which FCF continues to manage diligently. Compliance and regulatory reporting will continue to add to the burden of the Corporate Governance code in the Philippines throughout the life of the mine. However, FCF recognises the growing importance of this administrative work and has planned to include an additional team with balanced skills to manage this varied and widespread workload.

FCF prides itself as being a responsible mining company having won many awards for its efforts in reforestation, social programmes, training programmes and other initiatives. It recognises these cannot be taken for granted and strives to achieve the highest level of attainment at every level. The awards are testimony to this enduring conviction and will never be perceived as token reward but as a standard which must be maintained and surpassed which will enable it to become a benchmark for all mining operations in the Philippines.

Procurement activities during the year were conducted professionally and undertaken to world class standards with FCF now in possession of a meaningful database of suppliers and pricing of a vast array of mining equipment and commodities. The Group policy disallowed for commodity hedging and FCF contracted with secure counterparties throughout the construction phase. A standard series of engagement contracts known as 'Federation Internationale Des Ingenieurs-Conseils' ("FIDIC") or the International Federation of Consulting Engineers, were consistently applied; depending on the level of contract materiality FIDIC has a set of standard construction or consulting/service contracts which can be adapted in a prescriptive format to be fit for purpose. In general most contractors or manufacturers embraced the FIDIC paradigm and it has proven to be a robust and reliable method of contracting. The FIDIC framework allows the 'Employer', FCF, to receive staged performance and warranty bonds from the contractors and to date not one has been called. Most of the performance bonds have naturally lapsed and the warranty bonds continue post commencement of commissioning for up to twelve months.

Construction progress of the Process Plant throughout 2014 and 2015 averaged a rate of 1.73% per week in a relatively small construction site footprint. Its construction is currently 82% complete and on schedule for commissioning to commence late June 2015 with all construction activity planned to cease by end of August 2015. Commissioning will commence in stages and has challenged the processing team to redesign their gold production strategy. There have been no material health and safety incidents throughout the build programme and a tribute to the construction team's approach to health and safety.

The construction team is confident that first commissioning of equipment and processes can commence at the end of June 2015 followed by staged commissioning of the rest of the plant. The construction team has re-planned their strategy to include a night shift crew to advance installation of piping and electrical wiring around the plant. During February 2015 the site commenced drawing electrical power from the national grid after the site's electrical switchyard was commissioned by the National Grid Corporation of the Philippines ("NGCP"). The site had previously been provided electricity from a local independent power provider, Nuvelco ("IP"). The IP had reached its maximum supply capacity and did not have the capability of providing the electrical power required for commissioning and into operations. Drawing power from the national grid is less expensive than the power supplied by the IP and has material savings over the cost of diesel generated electricity. The switch over to the national grid supply has been successful and FCF has not encountered any brown outs since the switch, but more importantly this is a prerequisite milestone to allow commissioning of the plant to commence.

Stage 1 of the Residual Storage Impoundment ("RSI") is planned to be ready for operations and pre commissioning with the other stages progressively constructed during the first 4 years of operations. Progress on the RSI construction to the end of March 2015 is 70% complete with commissioning of stage 1 expected by the end of June 2015. This construction has suffered from several periods of inclement weather, extended Philippine holiday periods over the 2014 festive holidays and a January 2015 Papal visit. The combined effect was a reduction in the number of productive days spent on constructing the RSI. The main wall of the RSI requires humid rather than wet weather for the correct quality of clay plasticity and the compression of clay to be successfully laid in layers of 150 millimetres. Almost all of the month of December 2014 and January 2015 was non-productive in this area due to weather and holidays. The waste material from the mine pre-strip is of a high quality to undertake this construction and is offering several different grades of clay and fill, providing a cost benefit in its construction. When completed, the materials sourced to construct the RSI will all have been sourced from the mine pre-strip providing a low environmental footprint. Design specifications had taken a greater length of time to establish during 2014 with the MGB having a large input to design and construction philosophy. A tree cutting permit expected in early 2013 was finally approved during January 2014 which allowed construction activities to eventually commence and ultimately impacted on when the storage facility would be ready.

The Runruno mine site is nearing operational readiness and in various degrees of completion. The camp site, national grid electricity related infrastructure and on-site switchyard, heavy and light vehicles equipment maintenance facilities, diesel fuel farm, back up diesel power generators, access road networks, administration buildings, emergency response facilities and laboratory all constructed, commissioned and fully operational. Ongoing works include final preparations of the gold recovery Process Plant, the RSI, Run of Mine ore pad ("ROM"), and various access roads and pre-stripping of early stages of the mine.

Project Funding

On 28 May 2014 and following a comprehensive period of due diligence and documenting commercial and legal terms FCF Minerals Corporation (in its capacity as Borrower), Metals Exploration Plc (as Guarantor), and Metals Exploration Pte Ltd (as the Parent) entered into a Facility Agreement with:

(i) The Hongkong and Shanghai Banking Corporation Limited ("HSBC") and BNP Paribas ("BNP") as Original Lenders,

(ii) The Hongkong and Shanghai Banking Corporation Limited acting as Facility Agent, Offshore Security Trustee, Account Bank and Original Hedging Bank,

(iii) BNP Paribas as an Original Hedging Bank, and

(iv) the Philippine National Bank - Trust Banking Group as Onshore Security Agent

Commercial Terms

The facility is a US $83.0 million project finance debt facility comprising (i) US $75.0 million senior debt facility which includes a US $5.0 million provision for rolled up capitalised interest and fees during construction, and (ii) US $8.0 million cost overrun facility.

The lenders are participating in equal proportion in providing the facility.

The term of the facility covers a 54 month period maturing on 31 December 2018 and bears a competitive commercial rate of interest consistent for a project financing of this nature. The base interest rate is six months US Libor plus a margin of 4.75% during construction and at project completion the margin reduces by 50 basis points to 4.25%.

Interest payments are biannually commencing 30 June 2015 and principal repayments of the US $75.0 million senior facility are scheduled as follows:

The terms of the US $8.0 million cost overrun facility provide for repayments to be made on six month intervals from 50% cash sweep of free cash flow. The interest rate margin on the overrun facility attracts 100 basis points premium over the interest rate applicable to the senior loan facility at 5.75% the base interest rate is six months US Libor.

Hedging

FCF entered into contracts for interest rate swaps for an aggregate notional principal amount that is at least 40% but not more than 100% of the interest rate commitments over the term of the loan facility. The commitments were calculated based on company forecast. The variable six month US Libor rate is swapped out for a fixed rate of 1.575% over the term.

FCF entered into a series of gold forward sales contracts which will equate to 35% of the annual forecast gold production for the Project, as set out in the company forecast, for the following three years on a rolling quarterly basis. The initial sales orders which were placed totalled 90,000 ounces of gold at twelve quarterly intervals of 7,500 ounces per quarter. At the election of the lenders a further 15,000 ounces of gold may be contracted for settlement in 2018 in two quarterly tranches of 7,500 ounces of gold each, but only after the first two quarterly contacts are cash settled in early October 2015 and early January 2016.

All forward sales contracts are cash settled instruments.

The fixed average weighted forward price achieved on the forward sales contacts for 90,000 ounces of gold is US $1,287.36 comprising:

The following table provides a summary of the forward gold price swap contracts outstanding as at 31 December 2014 maturing in:

Table1: Maturing forward gold sales contracts

The interest rate swap and forward gold sales hedge contracts are based on the ISDA schedule to the 2002 Master Agreement and are for the purposes of prudent treasury management to cover genuine commercial exposure and, in any event, not for speculative purposes or for the purposes of raising finance.

Utilising the facility

To 5 May 2015 a total of nine utilisation requests have been made on the facility totalling $72,842,986 with a balance of $2,157,014 still available and undrawn from the US $75.0 million senior facility. It is expected the funds will be fully drawn by the end of June 2015.

The US $8.0 million cost overrun facility remains undrawn and available for the project.

An offshore Project Contingency account is fully funded to the amount of US $13.4 million and available for use in the construction project. It is expected that usage of the contingency account will commence in June 2015 after the US $70.0 million senior loan facility available for construction has been fully utilised.

As announced on 11 March 2014, the forecast capital expenditure programme for Runruno is US$182.8 million to practical completion, inclusive of project contingency. At the end of March 2015, the remaining capital expenditure committed or yet to be incurred is US$20.8m million which will be funded by way of project cash at bank (equivalent of US $2.45m at 31 March 2015), the project contingency account (US $13.4 million) and the senior loan facility residual funds (US $12.16m).

The current status of the project's capital expenditure programme is summarised below:

Table2: project capital expenditure status 31 March 2015

Security

a. Mortgage Agreement

FCF and Philippine National Bank - Trust Banking Group, acting as Onshore Security Agent, entered into a Mortgage Agreement on 28 May 2014 for the term of the facility, which constitutes a first ranking lien in favour of the Onshore Security Agent for the benefit of the Lenders, over the real assets of FCF.

The mortgage also takes security over FCF's current and future chattels for the term of the facility.

The Mortgage Agreement terminates at Project Completion.

b. Shares Pledge Agreement

A Share Pledge Agreement was entered into on 28 May 2014 between FCF as Borrower, Metals Exploration Pte Ltd as Pledgor and the Philippine National Bank-Trust Banking Group in its capacity as Onshore Security Agent, for the term of the facility.

The Pledge constitutes a lien of first rank in favour of the Onshore Security Agent for the paripassu benefit and security of the Lenders and to the shares pledged as collateral.

The shares pledged to the Onshore Security Agent contemplated the Group structure post restructuring which would be held by Metals Exploration Pte Ltd and are summarised as follows:

Table3: Philippine entities shares pledged as of 28 May 2014

The Shares Pledge Agreement terminates at Project Completion.

Group Restructuring

During early discussions with potential lenders and also from previous funding negotiations it became evident the Group organisation structure was not conducive for providing a satisfactory security package for a lender's benefit. The Company proposed moving its Philippine assets to an offshore holding company and effecting a security over the shares of its Philippine investments through a share pledge. This was accepted at an early stage of discussions and to facilitate this proposal, on 3 December 2013 the Company incorporated an intermediary holding and investment company in Singapore which is wholly owned by MTL.

In a series of structured stages each of the Philippine company investments held by MTL would be transferred to the Singapore entity, Metals Exploration Pte Ltd ("MEPL"). The change in structure would be tax neutral for the Group once complete and when the Philippine's mine is in operation. It was expected the structure would be completed before entering legal documentation with the lenders but this could not be achieved and the restructuring was completed in November 2014.

Restructuring FCF Minerals Corporation

MTL held 99.99% of the shares in FCF or 59,999,995 ordinary shares (the other 5 shares are held by directors and compliant with Philippine law). After it became known the strategy adopted for moving FCF to become 100% owned by MEPL directly would take longer than anticipated, the lender's required corporate control of FCF to reside with MEPL prior to execution of legal documentation (a condition precedent). This required more than 70% of the voting shares to be held by MEPL. FCF had an authorised share capital of 210,000,000 ordinary shares of which 60,000,000 were issued and fully paid up. On 23 April 2014 150,000,000 ordinary shares were issued to MEPL satisfying the corporate control requirement for the lenders.

The next step involved converting 59,999,994 ordinary shares into redeemable preferred shares, redeeming them and immediately cancelling them. This investment would be replaced by an equal monetary amount invested in shares in MEPL. The Securities and Exchange Commission ("SEC") in the Philippines required FCF amend its seventh article in its Articles of Incorporation to allow FCF to create two new classes of shares; convertible shares and redeemable preferred shares. The changes in the articles were applied for in late May 2014 and the certificate authorising the changes was approved on 31 October 2014.

A new class of shares requires 25% to be subscribed for on authorising the class of shares. 80,000,000 redeemable preferred shares were authorised and MEPL subscribed for and fully paid up 20,000,000 redeemable preferred shares.

On receipt of the SEC certificate approving changes to the Articles of Incorporation, FCF proceeded to give notice to MTL and converted 59,999,994 ordinary shares into redeemable preferred shares and immediately cancelled these shares on 4 November 2014.

Restructuring MTL Philippines Inc

MTL held 99.99% of the shares in MTL Philippines Inc or 111,995 ordinary shares fully paid up (the other 5 shares are held by directors and compliant with Philippine law).

The DENR issued Memorandum Order No. 2013-01 dated 21 February 2013, which requires that for a company to be awarded or to hold an exploration license it must have a minimum authorised share capital of 100,000,000 pesos and that the minimum paid-up share capital is 6,250,000 pesos. To satisfy these requirements MTL Philippines Inc amended its seventh article in its Articles of Incorporation enabling the company to increase its authorised share capital to be 100,000,000 Pesos divided into 1,000,000 shares with a par value of 100 Pesos per share. On 14 May 2014 the SEC approved the increase in capital stock.

On 11 April 2014, MTL entered into a subscription agreement with MTL Philippines Inc to subscribe for 25% of the increased authorised share capital of the company once the approval to the increase had been received. The subscription was for a further 222,000 ordinary shares and increasing the subscribed share capital to 334,000 ordinary shares. The shares were issued and fully paid up on 27 May 2014.

On 7 October 2014 333,995 ordinary shares held by MTL were cancelled and 333,995 ordinary shares were issued to MEPL. The receipt of a 'Certificate Authorizing Registration' was received on 11 October 2014 from the BIR confirming exemption from capital gains tax, receipt of payment of documentary stamp taxes and the final authority acknowledging the shares had been registered and issued to MEPL.

Restructuring Cupati Holdings Inc

MTL held 39.99% of the shares in Cupati Holdings Inc ("Cupati") or 9,998 ordinary shares partly paid up (2 other shares are held by directors and compliant with Philippine law). The debt funding package required all issued shares to be fully paid up and MTL satisfied this requirement on 27 May 2014.

The transfer of the shares to MEPL involved a fair value of the company's assets and liabilities and with the balance sheet containing a negative net assets position, no capital gains tax was computed. However, the BIR imputed a donor's tax of 30% on the transaction on the basis that the company was a land owning entity transferring ownership to an offshore jurisdiction.

On 7 October 2014 9,998 ordinary shares held by MTL were cancelled and 9,998 ordinary shares were issued to MEPL. The receipt of a 'Certificate Authorizing Registration' ("CAR") was received on 24 October 2014 from the BIR confirming exemption from capital gains tax, payment of documentary stamp taxes and payment of donor's tax on the transaction. The CAR is the final authority acknowledging the shares had been registered and issued to MEPL.

Restructuring Woggle Corporation

MTL held 39.99% of the shares in Woggle Corporation ("Woggle") or 9,998 ordinary shares fully paid up (2 other shares are held by directors and compliant with Philippine law).

The DENR issued Memorandum Order No. 2013-01 dated 21 February 2013, which requires that for a company to be awarded or to hold an exploration license it must have a minimum authorised share capital of 100,000,000 pesos and that the minimum paid-up share capital is 6,250,000 pesos. To satisfy these requirements Woggle amended its seventh article in its Articles of Incorporation enabling the company to increase its authorised share capital to be 100,000,000 Pesos divided into 1,000,000 shares with a par value of 100 Pesos per share. On 25 April 2014 the SEC approved the increase in capital stock.

On 27 January 2014 MTL entered into a subscription agreement with Woggle to subscribe for 25% of a future increase in the authorised share capital of the company once the approval to the increase had been received. The subscription was for a further 90,000 ordinary shares and increasing the subscribed share capital to 99,998 ordinary shares. The shares were issued and fully paid up on 27 May 2014.

On 7 October 2014 99,998 ordinary shares held by MTL were cancelled and 99,998 ordinary shares were issued to MEPL. The receipt of a 'Certificate Authorizing Registration' was received on 26 September 2014 from the BIR confirming exemption from capital gains tax, receipt of payment of documentary stamp taxes and the final authority acknowledging the shares had been registered and issued to MEPL.

Metals Exploration Pte Ltd

The restructuring advice received contemplated replacing the investment in FCF on MTL's balance sheet with an investment in MEPL in an equal monetary amount to the 60 million pesos divestment in FCF.

On 21 May 2014 MTL entered into a subscription agreement with MEPL for a future issue of 1,331,283 ordinary shares of US $1 each and advanced US $1,331,283 to MEPL. On 10 November 2014 MEPL issued 1,331,283 ordinary shares to MTL.

To view restructuring tables, please click on, or paste the following link in to your web browser, to view the PDF file: http://www.rns-pdf.londonstockexchange.com/rns/1610P_-2015-6-3.pdf

Taxation Payments Made Under Protest

Throughout 2014 and into 2015 FCF consistently challenged the Department of Finance ("DoF"), Bureau of Internal Revenue ("BIR") and Bureau of Customs ("BoC") on dis-application of the VAT and customs duties incentives applicable to importation of capital mining equipment. This challenge extends to include Documentary Stamp Tax paid in the period under which the FTAA provides FCF an exemption. This includes FCF actively challenging BIR's Revenue Memorandum Circular 17-2013 ("RMC 17-2013") that unilaterally denies the fiscal incentives provided to FTAA counter-parties and revokes past BIR rulings which uphold the same incentives.

During this period FCF has continued to pay to the BoC assessed VAT and duties to ensure the clearance of capital importations through Manila port and thereafter to the Project site. Failure to settle customs duties and costs within 30 days would have rendered the equipment abandoned and title passes to the state allowing the goods to be sold in liquidation sales. FCF had no alternative but to make several 'payments under protest' but this allows the tax payer recourse to challenging the authority to make payment.

During January 2014 FCF received notification that the BoC rejected FCF's first five payment under protest challenges on the basis that the DoF had not endorsed the exemptions. FCF has a total of 148 shipments subject to payments under protest in the appeals system.

In August 2014 FCF received a response from the DoF regarding its February 2013 original correspondence challenging the validity of RMC 17-2013. The DoF upheld the BIR's position that effectively denies the VAT and customs duties tax holidays under the FTAA.

Under the appeals process FCF lodged a Notice of Appeal through the Customs District Collector who forwarded the decision onto the Commissioner of Customs. This was subsequently denied by the Commissioner of Customs and FCF has continued through the appeals process to a submission to the Court of Taxation Appeal ("CoTA"). FCF's evidence has been submitted the CoTA and it is expected arguments and hearings and will commence in Q2 2015.

FCF submitted an appeal letter to the Office of the President in October 2014 which remains unanswered and wherein FCF's lines of reasoning for its challenge include:

· the FTAA being a contract in law between FCF and the Office of the President;

· the FTAA contractual obligations which FCF upholds and continues to uphold;

· the errors by the BIR in the interpretation of the Mining Act and its lack of authority in interpreting the Act;

· the erroneous interpretation and use of a specific legal precedent cited in the DoF's defense of RMC 17-2013 which in fact supports the position of FCF;

· the consistency of the applicability of the FTAA with respect to provisions and incentives of Executive Order 226;

· the protected rights of Metals Exploration plc (as FCF's parent) under the bilateral trade agreement between the UK and Philippines governments; and

· the reliance of the FTAA by FCF's financing banks of the enforceability of the FTAA.

In February 2015 FCF's legal advisors received notification from the Office of The President it had assigned the appeal to a handling lawyer for review which is the current status of FCF's ongoing challenge.

To 31 March 2015 FCF has made payments totalling US $5.2 million for import VAT, US $0.6 million for customs duties and $0.8m for documentary stamp tax. FCF contends that under the FTAA these taxes should not have been paid or payable and is actively seeking to recover these costs. In commercial operations FCF will have no domestic sales and therefore no output VAT against which it could offset the input VAT incurred on imports of capital mining equipment. FCF's only recourse is through the legal system of the Philippines and this will take several years to resolve.

The FTAA number 04-2009-II is a contract in law for a period of twenty five years between FCF and the Government of the Philippines. This Agreement was signed and enshrined into law on 19 September 2009 enabling FCF to act as the 'Contractor' for the Philippines Government and to have exclusive rights to conduct mining operations in its contract area as delineated in the FTAA. The then President of the Philippines authorised the Agreement and the constitution of the Philippines "provides that the President may, for the Government, enter into agreements involving either technical or financial assistance for large-scale exploration, development and utilization of minerals and mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the Republic of the Philippines". A particular caveat of the FTAA was the attractiveness to the Philippines government to avail itself of the financial resources (including access to international sources of financing), technical competence, managerial, environmental and other skills which the Contractor is capable of applying to mining operations and which FCF systematically proved it could provide.

The twin principles of the FTAA are:

I. the Government expects real contributions to the economic growth and general welfare of the country from the large-scale exploration, development and utilization of mineral resources under its national sovereignty and patrimony; and

II. the Contractor expects that the terms of the Agreement shall enable it to plan, obtain and commit large scale financial and technical resources to the mining operations in order to realise a return on its investment which takes into account the high risks of exploration, the requirements of financiers, the high cost and long term nature of mining activities, the terms and conditions prevailing internationally and domestically in the mining industry, and any enhanced return achieved as a result of the Contractor's performance.

FCF is committed to these values and everything contained within the FTAA to which it has an obligation. The decision to pursue mining in the Philippines under the FTAA rather than the alternative Mineral Production Sharing Agreement ("MPSA") was primarily premised upon the values and commitments contained within the FTAA which provided the most comprehensive framework to undertake mining operations in the Philippines. The FTAA was endorsed by the highest office responsible for mining in the Philippines, the Department of Natural Resources ("DENR"). The FTAA outlines various parameters within which FCF can conduct its operations and provides a clear and concise set of commercial terms. The Group has defined its business model encompassing these commercial terms taking into account the costs it is obligated to fulfill, confirmed through independent financial and taxation advice.

On signing the FTAA FCF agreed to take the risk that if no minerals in commercially viable quantities were developed and produced it would not be entitled to reimbursement of exploration costs.

Runruno Project Construction

The Process Plant facility at the Runruno mine consists of conventional crushing, grinding and flotation equipment, a gravity recovery circuit, a BIOX® recovery circuit and waste neutralisation, and construction activities are well advanced. The facility has continued to be progressed under a 'self-manage' strategy using the owner's construction team to manage the activities on a day to day basis and direct the various activities of the on-site subcontractors. This decision to self-manage construction works has been an overwhelmingly positive experience for the Group to date as delays to the construction timetable due to design slippage have not incurred contractual extensions of time penalties. Regardless of the delay in the delivery of the Process Plant designs the capital cost of the project currently remains within the original budget estimate of US $182.8 million.

All areas of infrastructure and support facilities to facilitate the construction of the Process Plant were materially completed by Q3 2013. Procurement of the long lead time items occurred in parallel and by the start of 2014 most key packages had been awarded to successful vendors include the SAG Mill, mill reliner, large and small agitators, mineral sizer, and gravity circuit including an intensive leach reactor, CCDs, flotation cells, BIOX® blowers, limestone mill, elution circuit, flocculent plant, reinforcing steel supply and cooling towers. Key equipment was mobilised and arrived onsite throughout the reporting period ready for construction and installation.

Design

The Group appointed specialist contractors and sub-contractors to provide engineering design, detailing procurement services and commissioning assistance for the Project. Contromation Energy Services ("CES"), a specialist design engineer based in Jakarta, was appointed prior to the start of the reporting period to undertake such design work and provide the Company with detailed drawings which integrated and identified the specific equipment requirements. Some specialised areas of the design were outsourced by CES to other reputable engineering firms with the experience and expertise to provide the design standard required by the Company.

Plant & Infrastructure Engineering Pty Ltd ("PIE"), a Perth based company providing engineering, project management and commissioning services, was also engaged by the Group before the start of the reporting period to help manage CES on a day to day basis and to provide strategic input and direction on procurement and construction. The Group has continued to receive significant support and advice from PIE to contract suppliers, manufacturers and contractors throughout the construction of the Process Plant facility.

Detailed engineering design work was completed by CES post the reporting period in March 2015. This late delivery did adversely impact the overall Process Plant construction schedule by approximately three months. However as the design work ran in parallel with construction of the Process Plant facility the overall impact was much reduced and the Group is confident commissioning should commence by the end of June 2015.

Procurement and Contracts - Civils and Plant & Equipment

Procurement of long lead time items and major mechanical packages got underway before the reporting period with many major equipment packages awarded in 2013. Mechanical equipment including the CCD package, first SAG mill shipment, stainless steel and gravity packages began arriving at site during the first quarter of the reporting period. Civil, tank and structural, mechanical and piping packages were tendered and awarded during the same period. An important part of the procurement strategy has been to contract in the domestic currency of the vendor and also where possible in the vendor's purchasing currency if this is not its domestic currency. Wherever possible, foreign currency translation risk has been minimised as much as possible.

The procurement scheduling and import team have performed diligently with no reported incidents transporting equipment from the port in Manila to the Project site. To date there has only been one insurance claim associated with the Project for a damaged cabin of the Komatsu PC1250 excavator. This damage occurred at sea and was a claim under the marine cargo policy of the manufacturer. The liability is not associated with FCF but nevertheless it was an insurance claim upon a damaged piece of equipment belonging FCF as it did not reject the goods at the time of delivery. The excavator was assembled and with the agreement of the insurers used for training purposes only, until a replacement was installed. The insurers, Sumitomo, provided a replacement cabin and the costs of dismantling and installation were borne by the insurer. During the second half of 2014 and into the first quarter of 2015, the port of Manila experienced significant congestion difficulties which conspired to affect all imports to the country. Fortunately, all of the major equipment packages had been received at site prior to this congestion but FCF suffered delays to smaller and sometimes critical equipment supplies. The procurement strategy executed by FCF has been a major successful contribution to the Project, with the tireless efforts of the team providing significant tangible benefits.

All major packages for equipment, services and civil construction works have been awarded and the table below summarising the overall status of the packages explains that procurement for the Project is drawing to a close. FCF has benefited from the efforts of a professional team and has established a very strong relationship with many of the companies it has contracted with.

The team has now turned their attention to procuring commissioning and insurance spares and establishing a supply chain relationship for the various chemicals and consumables required for operations, and securing the supplies by contracts.

Construction

Considerable progress occurred in all critical areas of construction with the facility changing beyond recognition over the course of 2014. At the end of the reporting period in December 2014 construction of the Process Plant stood at 49.5% complete and is currently 82.0% complete and on schedule for commissioning to commence late June 2015. All construction activities are forecast to cease by end of August 2015. Commissioning of the Process Plant will commence in stages and has challenged the processing team to redesign their gold production strategy.

Between December 2013 and April 2015 over nine thousand (>9,000) cubic metres of concrete have been poured on the Process Plant site and this has been entirely supplied from FCF's own batch and aggregate plant, with raw materials being sourced from within the mine or RSI areas. This has provided a real cost benefit in construction with only cement being sourced externally. Destructive pressure tests are carried out on each batch of concrete and the results have proven the concrete to be of a very high quality. With several tonnes of reinforcing bar being included in each pour this will augur well for years to follow.

Independent experts reviewing the construction at various intervals have consistently applauded the quality of the build with particular emphasis on the foundations and safety bunding. Steel construction of tanks, walkways, handrails, climbing ladders, agitators, cooling coils, cable trays and support infrastructure is coming to a finish, allowing free and secure access around the plant. The SAG mill is installed and a formidable structure on site. Electrical and piping works have been delayed due in part to some of the issues at Manila port but the construction efforts have moved to include a night shift to claw back most of the slippage.

Health and Safety

There have been no material health and safety incidents throughout the build programme and a great compliment to the construction team's approach to health and safety. A culture of safe working practices pervades.

Commissioning Plan Summary

Commissioning planning has been undertaken since Q4 2014, with the development of a commissioning plan and supporting commissioning documentation for each area and system.

The commissioning team will be led by a Commissioning Manager and supported by electrical, mechanical and processing engineers. The engineers will have their own support services for their specific engineering discipline to include vendor and specialists support. The operations team involved in commissioning will comprise the Process Plant Manager, Process Plant Operating team, Process Plant Maintenance Manager and his team. There will be a compliment of construction personnel on hand led by a construction manager and with the help of a small group of site contractors.

The planned sequence for commissioning is as follows:

· All contractors conduct a joint inspection with the Construction Superintendent to produce the close out and acceptance punchlist;

· As an area becomes completed a joint pre-commissioning inspection is conducted by the commissioning engineers and the construction team;

· A pre-commissioning checklist is compiled as a product of this inspection;

· This represents the official handover from construction to commissioning;

· Vendor equipment pre-commissioning procedures and checklist is also followed, under the direction of the vendor representative for the major vendor items; the dry commissioning procedure is executed and supported by vendor representatives as required;

· Once these steps are completed for an area, the services commissioning programme is conducted for all services to that area;

· In sequence the next step is conduction water commissioning. This will be undertaken in complete stages with one system discharging to the next (grinding system discharges to the flotation circuit, which discharges to the BIOX® feed, and tailings areas);

· Finally ore commissioning is conducted throughout its various stages;

· As an area is fully ore commissioned that area becomes productive/operative; and

· The system is operated until it establishes an acceptable level of stability and moves towards ramp up and into normal operating conditions.

The phasings by area groups can be identified as follows:

· Crushing, grinding, flotation, tails disposal, and BIOX® feed units operating sequentially for water commissioning and ore commissioning first;

· This allows the BIOX® primary area, CIL, cyanide destruction, ASTER™, elution and gold room to commence ore commissioned thereafter;

· The BIOX® bacterial cultures will have commenced build-up (multiplication) in the BIOX® Primary several weeks before; and

· The remainder areas of the processing plant will then be ore commissioned; the BIOX® Secondary, CCD and Neutralization.

Commissioning is planned to commence as areas become available in June 2015 and first ore commissioning occurring in July 2015. The site will have access to sufficient electrical power loading due to the signing of the power supply contract with SN Aboitiz Power - Res Inc in November 2014 and the site switchyard being energized (fully commissioned) 12 February 2015.

Preparing for Operations

A mini operations plant has been constructed and commissioned on site which has been designed to include and replicate two processing circuits on a smaller scale; (i) milling & flotation, and (ii) inoculums build up circuit. The plant is primarily for in-house training purposes and bridges the time frame between construction and commercial operational activity. During this time period the cultures required for the BIOX® liberation process are being tested in the mini plant and from which a programme of inoculums build up has been undertaken. The initial stock of bacteria to be used in the commissioning and then ramp up of the BIOX® plant is being produced by the mini-lab.

Test samples of ore have been reduced to concentrate through the milling and flotation test circuit and this facilitates build up in the inoculums circuit. This has enabled the operations team to develop operational procedures, screen potential process operators, and fast track training of operators in understanding the operation of the Process Plant during its construction. 18 personnel from the local Runruno area have been recruited and trained through the mini-plant where 140 kilograms of BIOX® feed concentrates have been produced. The training programme has elevated the skills of the trainees to a level where they can be employed within the permanent operation once this commences.

Discussions have commenced with refineries and secure transport companies for the trans-shipment of doré from the gold room to the place of treatment, producing 99.9% fine gold. These discussions are progressing well and it is hoped to be in a position to award this as a single contract in May 2015. From an initial contact list of fourteen refineries there are currently four refineries being assessed and two secure transport companies. The main criteria used to contact the refineries were they had to be London Bullion Market Association accredited.

Community and Social Development

The Company has specific obligations under the FTAA to assist in the development of the community and promote the general welfare and quality of life of the residents. The Company has embraced these responsibilities and Board direction is to support self-sustaining, income-generating activities in the community, thus providing a positive ongoing legacy within the barangay of Runruno and Province of Nueva Vizcaya.

Key activities for 2014 and continuing into 2015 included but were not limited to:

Health

· Much-improved and expanded delivery of health services for 7,387 residents and community members within the barangay and other direct impact communities.

· Continuing investments for health workers' training and services.

· Family health care education and advocacy services.

· Implementation of a comprehensive immunization program, exceeding targeted participation rates.

· Continuing operations to cater for the needs for over-the-counter medicines in the barangay Runruno.

· Provision of an ambulance, health equipment, improvements to and accreditation of the Health Clinic achieving additional prenatal support, assistance for breast feeding mothers, a significant reduction in malnourished children, eye care and much more.

· Honorariums to 16 health professionals to expand delivery of basic health services to far flung communities.

Education

· Almost 1,500 students are benefitting from the Company's support to education in the form of grants for full scholarships including tuition fees, matriculation and miscellaneous expenses, transportation and meal allowances, expenses to cover the costs of thesis and on the job training.

· 10 full scholarships in 2014.

· 46 scholarships prior to 2014, with 6 later employed by the Company and 22 continuing with studies.

· Honorariums for 60 personnel across the Municipality of Quezon covering day care workers, literacy facilitators, elementary and high school teachers, administration staff and security guards.

· Construction, improvements and renovation of school building and day care buildings.

· Grants for the general improvement of the learning systems.

Skills Enhancement, Training and Employment

· 2,169 trained since 2006 in various skills in partnership with the Technical Education and Skills Development Authority.

· 1,243 regular and spot hire staff employed either directly by the FCF or its sub-contractors.

· An equal opportunity employer providing training and employment in non-traditional operations including 45 women in masonry, plumbing and tile setting, 2 female heavy truck drivers with another 8 candidates in training, 7 women recruited as specialist plant operators, with a total of 159 female employees.

Livelihood Programmes

· Assistance to 14 associations to establish their own economically sustainable livelihood projects.

· This has resulted in an improvement in the economic classification of the Municipality of Quezon, a growth in business establishments and improved mobility through improved transport services.

Environment

Similarly the Company has specific obligations under the FTAA for environmental activities. The Company's commitment to the effective stewardship, protection and enhancement of the environment in and around the areas where it operates, and the conduct of its business in an environmentally sound manner is the driving thrust towards the goal of sustainable development and reducing potential significant impacts of the project upon the environment.

Permitting requirements within the Philippines are onerous, comprehensive and is almost an industry in itself. It is a significant cost within the Company requiring significant and specific resourcing to meet standard monthly, quarterly, semi-annual and annual reporting requirements as well as adhoc reporting that is requested frequently from a myriad of government agencies.

Reforestation

FCF Minerals Corporation commenced its Mining Forest Programme (MFP) in January 2007 and has continued to implement the programme up to the present. This programme aims to re-green barren lands, offset deforestation, establish protection forest and provide habitat for wildlife within the FTAA area.

· Planted an aggregate area of 157.58 hectares with about 86,350 seedlings planted.

· Seedlings production is a continuous process to cover up replanting and donations requirement in the Programme. Fruit bearing, endemic and fast growing forest trees seedlings species are produced from the Company's nurseries. Coffee seedlings is also produced from Nursery entered into an agreement with the Nueva Vizcaya State University.

· The Biodiversity Offsetting (Bio-offsetting) Programme, a joint project of the MGB, FCF and NVSU, has implemented a number of continuing activities such as the conduct of the flora and fauna survey for the analog/reference site at the RSI, passage of a resolution through the Barangay Council for environmental protection and conservation relative to the bio-offsetting programme, and household survey and information campaign for those who are located within the three (3) established bio-offset areas.

· The implementation of the Mining Forest Programme has generated employment opportunities to the Community members. The initiative of the Company to restore forest vegetation was able to achieve a nationwide recognition garnering the 1st Runner-up award for 2014 Best Mining Forest Programme during the Mine Safety Week held in November 2014 at Camp John Hay in Baguio City.

Rehabilitation

To reduce the potential environmental impacts open areas subject to rehabilitation or remediation through mitigation activities including:

· The implementation of slope stabilisation measures such as installation of coconut matting reinforced with bamboo stakes, installation of silt fences and re-vegetating the slopes with napier grass and vetiver grass. These rehabilitated slopes are regularly maintained. Appropriate drainage systems were also provided to prevent water accumulation that may cause erosion.

· Siltation ponds and silt traps were constructed strategically at the Residual Storage Impoundment, Malilibeg waste dump, Process Plant, batching plant and crushing plant. These are designed to contain run-off water especially during heavy rains and prevent a build-up of siltation in the Sulong River.

Environmental Monitoring

· Environmental monitoring is regularly conducted at the site by FCF in-house monitoring group and AECOM, a commissioned third-party entity providing environment monitoring services.

· Water quality, air and noise quality, and aquatic biota monitoring are measured on a monthly, quarterly, and semi-annual basis to determine if there are significant changes in the measured environmental parameters. The stream flow and discharge measurements for surface water and groundwater respectively are also continously monitored.

· The water sampleresults are compared to the Department of Environment and Natural Resources Administrative Order ("DAO") 34 and DAO 35 water quality parameters, World Health Organisationguidelines and Austlian and New Zealand Environment Conservation Council ("ANZECC") criteria.

· Meteorological data monitoring is done daily for use at the mine area and for safety.

· Solid wastes are stored at a materials recovery facility and disposed at a local ecological landfill. The hazardous wastes generated such as used oil, wasted fluorescent bulbs, empty chemical containers, and batteries, are stored at a hazard waste depot. These wastes are collected by an accredited hazard waste transporter and treated.

Legal Compliances

· All legal requirements of the construction phase were secured from various government agencies concerned.

· All major facilities, including the processing plant, were issued a 'Permit to Install' and 'Permit to Operate'.

· Permits from the Philippine Drug Enforcement Agency, Philippine Nuclear Research Institute, and Environmental Management Bureau were secured.

· On 16 December 2014 a second tree cutting permit was issued by the Regional Executive Director of the regional DENR allowing FCF to cut a total of 2,258 trees of various species or a volume of 475.32 cubic meters within the 122.279 hectares applied. The number of trees to be earth-balled is 157.

· The Mine Rehabilitation Fund Committee meets quarterly to discuss and resolve issues arising from the development of the Project.

· The multi-partite monitoring team led by the MGB monitors all FCF compliances of the conditions stipulated in the Environmental Compliance Certificate and the approved Annual Environmental Protection and Enhancement Programme.

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME for the year ended 31 DECEMBER 2014

CONSOLIDATED BALANCE SHEET as at 31 DECEMBER 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 DECEMBER 2014

Equity is the aggregate of the following:

· Share capital; being the nominal value of shares issued

· Share premium account; being the excess received over the nominal value of shares issued less direct issue costs

· Shares to be issued reserve; being the credit side of the entry relating to the expense recognised in the Statement of Total Comprehensive Income for share based remuneration

· Translation reserve; being the foreign exchange differences on the translation of foreign subsidiaries

· Profit and loss account; being the cumulative loss attributable to equity shareholders

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 DECEMBER 2013

CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 DECEMBER 2014

NOTES

1. Loss per share

The loss per share was calculated on the basis of net loss attributable to equity shareholders divided by the weighted average number of ordinary shares. The basic and diluted loss per share is the same, as the exercise of share options and warrants would reduce the loss per share and therefore, are anti-dilutive.

2. Net cash used in operating activities - Group

3. Annual report and accounts

A copy of the annualreport and accountswill be posted to the shareholders shortly and will also be available from the Company's registered office, 200 Strand, London, WC2R 1DJ, and on the Company's website: www.metalsexploration.com.

Notice of an annual general meeting of the Companyto be held at 11:00 a.m. on 30 June 2014 will be posted together with the annual reportand financial statements.

4. Financial information

The financial information set out in this announcement does not comprise the Group's statutory accounts for the year ended 31 December 2014 or for the year ended 31 December 2013.

The financial information has been extracted from the statutory accounts of the Group for the year ended 31 December 2014 and the year ended 31 December 2013. The auditors reported on these accounts. Their reports were unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006. The year ended 31 December 2014 do not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report. The auditors did draw attention to the Going Concern principal by way of emphasis of matter in their report on the year ended 31 December 2013 accounts.

The statutory accounts for the year ended 31 December 2013 have been delivered to the Registrar of Companies, whereas those for the year ended 31 December 2014 will be delivered to the Registrar of Companies following the Company's annual general meeting.

The accounting policies are consistent with those applied in the preparation of the interim results for the period ended 30 June 2014 and the statutory accounts for the year ended 31 December 2013, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

For further information, please contact:

For further information please visitor contact  www.metalsexploration.com