Metals Exploration Regulatory News (MTL)

30 Jun 2006 10:45

Metals Exploration PLC30 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 focuson the Philippines, are pleased to announce its unaudited interim results forthe 6 months ended 31 March 2006. Highlights - up to 31 March 2006 • 25 January 2005 - A Joint Venture Agreement signed with MedusaMining Limited and Philsaga Mining Corporation over the former Lacandola goldmine on Masapelid Island, (the "Masapelid Project"). • 7 March 2006 - An Exploration Permit Application lodged at theMinerals and Geosciences Bureau for a property located in the district ofNorthern Luzon, Philippines, covering an area of approximately 5,845 hectaresand 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 23million tonnes estimated at an average grade of 2.3 grams per tonne gold and0.07% molybdenum. Management believe that the resource appears to be able to beextended in all directions, although this can only be determined with morecertainty with further exploration. • 20 June 2006 - Historical data had been obtained and collated inrespect of the Baguio Exploration Permit Application, where a non-JORC compliantresource had previously been estimated of approximately 150Mt at an averagegrade of 0.3% Cu and 0.2 g/t Au. Commenting on the results, Steven Smith, Chairman of Metals Exploration plcsaid: "It has been a very exciting time for Metals Exploration since coming to AIM inOctober 2004. We recently announced a JORC-compliant resource for the RunrunoProject of 23 million tonnes at an average grade of 2.3 grams per tonne gold and0.07% molybdenum. The 'in-ground' value of this resource is already significantand we are looking forward to upgrading this resource both in size and resourcecategories in the near future. We are most encouraged by how the determinationof the resource has developed in a such a short period of time considering thefirst drill hole commenced in November 2005, just seven months ago. "We are now planning to commence scoping studies contemporaneously with thedrilling programmes to determine the potential viability of the resource definedso far and to increase the resource base respectively." For more information: Steven Smith Chairman + 44 (0) 7797 721 858Gary Powell Executive Director (technical) + 63 (02) 894 4173Jonathan Anderson Investor Relations + 44 (0) 7950 410 680 or + 63 (0) 917 560 6654Philip 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 hasfocused its efforts on the acquisition of significant interest in explorationprojects in the Philippines which, the Company considers to have substantialexploration opportunities. MASAPELID PROJECT On 23 December 2004, Metals Ex signed an agreement with the claim owner of theMasapelid Project (San Manuel Mining Corporation). The agreement allowed MetalsEx to earn a 70% economic interest in the Project by paying San Miguel MiningCorp US$ 105,000 and issuing 1,250,000 ordinary shares in Metals Ex over a threeyear period. On 25 January 2005, Metals Ex announced that it has signed a Joint VentureAgreement ("JVA") with Medusa Mining Limited ("Medusa") and Philsaga MiningCorporation ("Philsaga") (together the "Medusa Group") over the MasapelidProject. Medusa is a company listed on the Australian Stock Exchange ("ASX: MML") and, inconjunction with Philsaga, is processing ore at its Co-O plant, which is beingsupplied by Philsaga from the Co-O gold mine in Agusan del Sur, approximately240 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 theInterest, with Metals Ex retaining a 16% share of the Interest or alternativelyretaining a 10% Net Profit Interest ("NPI") from Medusa in any mining operation; • the Medusa Group is to expend the first US$1million on theMasapelid Project and is to partly fund MTL's remaining acquisition cost of theInterest; • the Medusa Group is to operate the Masapelid Project; • the remaining shares and cash consideration to acquire theInterest will be shared 84% by Medusa and 16% by MTL with the following paymentsto be made: (i) on or before 27 February 2006, proportionate payments to a totalof US$25,000 cash and the issue of 40,000 shares by MTL and shares equivalent invalue to 210,000 MTL shares by Medusa, such value to be determined withreference to the average price of one ordinary share in MTL during the 5 days oftrading on AIM immediately preceding 24 January 2006; (ii) on or before 27 January 2007, proportionate payments to a total ofUS$25,000 cash and the issue of 40,000 shares by MTL and shares equivalent invalue to 210,000 MTL shares by Medusa; and (iii) on or before 27 January 2008, proportionate payments to a total ofUS$30,000 cash and the issue of 80,000 shares by MTL and shares equivalent invalue to 420,000 MTL shares by Medusa. • on completion of the expenditure of US$1 million, MTL has theexclusive right to choose to contribute 16% of the on-going expenditure or todilute to a 10% NPI (in which case Medusa would then own 100% of the Interest);and • on commencement of any production, the present shareholders ofSan Manuel Mining Corp ("SMMC") will receive a 1.5% Net Smelter Royalty ("NSR"). The Masapelid Project has a history of narrow vein mining commencing beforeWorld War II. Records indicate that 20,666 tonnes at 15 g/t Au were produced bythe Km73 Mining Company from the Layong Vein on the eastern side of the islandbefore the mine closed prematurely prior to World War II. A further 133,000tonnes were reported to have been outlined by underground development in theparallel No.6 Vein. Two shafts were sunk approximately 300 metres apart todepths of 122 metres and 30 metres with horizontal development completed on 3levels. The parallel veins are interpreted to be approximately 900 metres long,strike in a north-easterly direction, are commonly approximately 1 metre wideand contain ancillary silver, lead, zinc and minor copper minerals. The island contains extensive zones of clay-pyrite alteration in andesiticvolcanics suggestive of a large hydrothermal system. Younger calcareoussediments also exhibit signs of alteration and are potential host rocks fordisseminated style deposits. In 1983 Benguet Exploration Inc. examined the property and collected foursamples 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 aUnited Nations Development Program ("UNDP") in conjunction with the Mines andGeoscience Bureau ("MGB") to test the vein extensions on the western side of theisland. These holes returned 1 metre @ 22.5 g/t Au in DDH 1, 1 metre @ 35 g/t Auin DDH 2 and 1 metre @ 72 g/t Au in DDH 4. In the early 1990s Western Mining Corporation ("WMC") undertook extensiveexploration focused on discovering porphyry copper-gold mineralisation involvingstream sediment sampling, grid based soil sampling, 141 kilometres of groundmagnetics, 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 drillingdescribed above also intersected vein mineralisation of 1.48 metres @ 11.81 g/tAu. Three diamond drill holes were completed by WMC in the Sampotan area at thesouthern tip of the island where porphyry copper mineralisation was intersectedincluding 264.82 metres @ 0.32% Cu in hole MSI-D7 with the last sample in thehole 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 RunrunoProject. The agreement allows Metals Ex to earn up to a 70% economic interest inthe project by paying the FCF Mining Corporation US$210,000 and 1,600,000ordinary shares in Metals Ex over a three year period. On 23 November 2005, Metals Ex announced that the Company has agreed withChristian Mining Inc ("CMI") the terms of an option that gives MetalsEx theexclusive option to purchase up to an additional 15% shareholding in FCF MiningCorporation ("FCF") (the "Option"). FCF is the holder of the Runruno ExplorationPermit. MetalsEx, through a Memorandum of Agreement dated 1 February 2005, currentlyholds a 70% shareholding in FCF. Therefore the Option allows the Company toincrease its holding in FCF to up to 85%. This will effectively give the Companythe 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$65,000until the Option is either exercised or withdrawn by MetalsEx. MetalsEx has solediscretion to terminate the Option; 2 MetalsEx can exercise the Option, at any time, by acquiringCMI's remaining shareholding of FCF anywhere from 1% to 15%. The exercise priceis the amount of US$400,000 for every 1% of CMI's shareholding of FCF, up to amaximum 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 butonly 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, bymaintaining the terms and conditions of the Option. The exercise period of theOption is unlimited. Runruno is located approximately 200 km north of Manila in Nueva ViscayaProvince. Geologically, the area is underlain by prominent alkaline syenite andmonzonite intrusives and alkaline volcanic flows and tuffs. Gold mineralizationhas been know to exist in Runruno since the early 1960's and the property has along history of exploration. From 1969 - 1972 a local company (Fil-Am) completed a total of 69 diamond drillholes for a total of 7,300 meters. Using the results from this program theycalculated 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-Amfor one year and drilled 9 widely spaced diamond drill holes. Following thiswork approximately 9,000 meters of drilling had been completed on Runruno. In1978 Fil-Am commissioned a feasibility study from Kurimoto Ironworks and NisshoIwai and Co Ltd of Japan to be based on the available diamond hole data. Thestudy found that the property was economically viable with an estimated resourceof 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 outfurther drilling until they relinquished the option in 1998 due to financial andinternal management problems. Base Metal Mineral Resources signed an exclusiveagreement with Fil-Am in 1995 allowing them to explore, develop and operate theproperty. In 1996 ACA Howe International Ltd was engaged to calculate a resourceestimate for the property. In their report ACA Howe estimated an inferredresource containing 607,000 ounces of gold, and that the resource might beunderstated by up to 30% due to poor core recovery. In 2000 Greenwater Mining Corporation together with others carried out furtherwork on the resource. Unpublished reports suggested that with further work a 2million ounce gold resource was achievable. Mr Powell was given access to coresamples drilled by Greenwater during his due diligence visit in November 2004and his conclusion was that the quality of work carried out was of a very highstandard and therefore their results can be regarded as not requiring anysubstantial verification process. Metals Ex has, since acquiring its option over Runruno in February 2005, carriedout a careful review of all previous works and reports, a basic structuralanalysis of the deposit, field mapping and sampling and extensive sampling ofthe small scale miner's tunnels. Results of sampling and mapping of the local miners' tunnels located at theBalcony 1, Balcony 2, Main Runruno, Tayab and Malilibeg areas have confirmed theexistence of the high grade (>1.4g/t Au) potential of gold mineralisation (andmolybdenum) in the hanging-wall and foot-wall zones of the main Runrunomineralisation. The local miners' tunnels are located predominantly in the hanging-wall orfoot-wall zones of the main Runruno mineralisation, which has been mapped atsurface over a strike distance of 2.5 kilometres. The local miners' tunnelsoccur over a distance of approximately 2 kilometres. After the completion of the underground tunnel sampling programme, a diamonddrilling programme commenced in November 2005 to define a resource with bettergrades than previously obtained in the 1970s and to increase the known resourcesize. On 31st March 2006, the Company announced that it continues to receiveencouraging results from the drilling programme at Runruno. The table belowsummarises the key results returned from the Company's drilling program sinceNovember 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 during2000-2001. Drillholes prefixed with MXD were drilled by the MetalsEx sinceNovember 2005. 2. Collar Coordinates are the coordinates of the collar of thedrillholes. The drillholes are inclined -60degrees from horizontal, exceptingMXD3 (-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 byapplying an upper and lower boundary defined by a low grade cut-off of 0.7g/tAu. Some composited intercepts include single metre, internal intercept gradesof less than 0.7g/t Au. Isolated single metre intercepts are not reported unlessconsidered to be significant. No high grade cut-off has been applied to theindividual gold or molybdenum assays. So far the results have been obtained from drilling on a 100m x 100-200m gridspacing over a surface area of approximately 1000 metres x 700 metres. Themineralised zones still appears to be approximately 100 metres thick with highergrade zones at the hangingwall and footwall positions within the zone. This areaencompasses the southern-most portion of the area previously drilled by Fil-Amduring 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 togetherwith together with the two drillholes of Greenwater to calculate a JORCcompliant Inferred Resource totaling an estimated 23 million tonnes at anaverage grade of 2.3 g/t gold and 0.07% molybdenum for a total contained 1.7million ounces of gold and 34 million pounds of molybdenum. The Resource estimate is classified as an Inferred Resource as defined by theJORC Code, the Australasian Code for Reporting of Identified Mineral Resourcesand Ore Reserves. RUNRUNO RESOURCE ESTIMATE The preliminary Resource estimate was completed using the assay data collectedfrom the Company's drilling program (drillholes MXD01-MXD17) and two of theGreenwater diamond drillholes completed in 2000-01 (RUD-001 & RUD-004). TheResource estimate was carried out using the results of Greenwater's bulk densitymeasurements of 2.5 tonnes per cubic metre. The Resource estimate is containedwithin 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 sinceNovember 2005 and consist of diamond drill core with a minimum core diametersize of HQ3 (61mm). 2. Collar Coordinates are the coordinates of the collar of thedrillholes. The drillholes are inclined -60degrees from horizontal, exceptingMXD22,23 (-70degrees) and MXD25 (-58degrees), and orientated towards a gridazimuth of 100degrees (easterly). Each drillhole is planned to intercept themineralisation at 90 thus mineralisation 'interception' widths are close toactual or 'true' widths. In general the drillholes are drilled on a grid spacingof 100 metres apart. 3. Reporting of the above composited intercepts was determined byapplying an upper and lower boundary defined by a low grade cut-off of 0.7g/tAu. Some composited intercepts include single metre, internal intercept gradesof less than 0.7g/t Au. Isolated single metre intercepts are not reported unlessconsidered to be significant. No high grade cut-off has been applied to theindividual gold or molybdenum assays. 4. MXD25 is a re-drill of hole MXD24 which was abandoned afterintercepting a cavity near the surface. It is also the first drillhole resultsto be obtained outside of the current resource area. The mineralisationintercepted is from the footwall zone only. The hangingwall zone was notintercepted as it is interpreted as having been eroded away. The results from drillholes MXD16 to MXD22 are located within the JORC inferredmineral 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 theboundary of the resource. The Company is conducting further testing on the results of drillholes MXD15,18and 19 including check assaying and multi-element analysis. The results of whichwill be announced in due course. The Company is currently extending the resource by drilling areas uphill to theeast and to the north. The results from the latest drillholes have confirmedthe size and grades of the recently announced JORC inferred mineral resourceestimate thus indicating the potential to upgrade the current resource from JORCinferred to JORC indicated category. The results of MXD25 have demonstrated the immediate potential to expand on thesize of the current resource towards the east. It is important to note that thedrillhole has been interpreted as having only intercepted the footwall zone ofthe mineralisation. It is interpreted that the hangingwall mineralisation hasalready been eroded away, thus was not able to be intercepted by the drillhole. Metals Ex maintains an active camp at Runruno with staff that includesgeologists, samplers and field workers. Current activities in the field isdominated by diamond drilling to increase the size of the current resource baseand it is intended to carry out some infill drilling within the current resourcearea 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 purchaseagreement for the Puray copper-zinc-silver-gold project located in thePhilippines ("the Puray Project"). The Puray Project comprises one Exploration Permit Application covering some6,075 hectares, and is located only 28 kilometres from the city of Manila. ThePuray property has been explored and partially mined since the 1930's. Themineralisation is polymetallic, containing high-grade and disseminatedcopper-zinc-silver-gold. The style of mineralisation is similar to the Kurokostyle of massive sulphide deposits, which have been major producers of copper,zinc, silver, gold and lead in Canada (e.g. Kidd Creek, Ontario, Canada). Thehigh grade and commonly high precious metal content of Kuroko deposits continueto make them attractive exploration targets. During 1969 to 1972 mining of massive sulphide-copper ore was carried out byEastern Rizal Copper Corporation. Approximately 700 tonnes of bornite ore wasmined 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 ahill-slide during a typhoon in 1972. In 1981, Eastern Rizal Copper Corporation reported that there remained in theunderground workings several thousand tonnes of massive sulphide ore grading10-50% Cu. They also reportedly calculated a proven and probable resource of 8million tonnes at an average grade of >0.7% Cu and an additional 28 milliontonnes of possible resources at an unspecified grade for the remainingdisseminated sulphide mineralisation. The resources calculations were derivedfrom the results of sampling surface trenches and tunnels, although they are notverifiable, and do not necessarily comply with the JORC guidelines for thereporting of mineral resources. ERCC did not consider other metals such as zinc, gold or silver as beingsignificant, therefore it appears that assaying for these metals were not alwayscarried out. The current metal prices for these other metals, however isconsidered by the Company to be of some economic importance when reviewing thepotential for this project. Samples obtained from the surface during a recentfield visit by the Company returned assays ranging up to 8.9% Cu, 1.7% Zn and1.3g/t Au. The occurrence of 'direct shipping' bornite and chalcopyrite ore indicates thepotential for the delineation of high-grade Kuroko-style mineralisation ofsignificant size over a potential strike length of up to 6 kilometres. Upon granting of the Exploration Permit Application, it is the intention ofMetals Exploration to exercise the option to purchase agreement and apply modernexploration techniques to define the project's size and grade potential. TheCompany considers the acquisition of the Puray polymetallic project an excitingopportunity to enhance its projects portfolio and ultimately deliver increasedvalue to the shareholders. EXPLORATION PERMIT APPLICATION - BAGUIO DISTRICT ("WORLDWIDE") On the 7th March 2006, the Company announced that the Baguio regional office ofthe Mines & Geosciences Bureau ("MGB") accepted an Application for anExploration Permit ("EPA") from the Company. The application is for a propertylocated in the district of Northern Luzon, Philippines, and adjoins the SantoNino property, previously a copper- gold producer. The EPA covers an area of approximately 5,845 hectares and is located about 10kilometres to the northeast of Baguio City. The property is underlain by quartzdiorite and andesite rock types and was previously the object of extensiveexploration for copper+gold+molybdenum porphyry mineralisation during the 1970s. On 20 June 2006, the Company further announced that certain historical data hadbeen obtained and collated in respect the EP Application. In 1974, the MGB carried out a trial IP survey over the area comprising porphyrystyle mineralisation. Subsequently, Worldwide Mineral and Industrial Corporation("Worldwide"), a Philippine corporation, in conjunction with the MGB, carriedout a programme of soil geochemistry (645 samples) to follow up the interpretedIP anomalies. Results of the soil survey produced best results of 4,481ppm Cuwith 28 samples returning results greater than 1,000ppm Cu. Between 1974 and 1981, Worldwide reputedly completed 44 diamond drill holes foran aggregate total of 12,989 metres over a surface area of 600m x 1,200m. Thedata package obtained so far relates to 34 of these holes, drilled on a gridspacing 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 basedon the polygonal method of resource estimation. Their non-JORC compliantresource totals approximately 150Mt at an average grade of 0.3% Cu and 0.2 g/tAu. It should be noted, that Worldwide's estimate is not compliant with thereporting guidelines as defined by the JORC Code, the Australasian Code forReporting 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 bettermineralisation encountered in the earlier drilling and to test themineralisation at depth. The results of these three confirmatory holes aretabulated below: Drill-hole ID Depth (metres) Intercept (metres) Cu Au Ag (%) (g/t) (g/t) From To WidthC1 510 18 474 456 0.35 0.22 2.41C2 255 21 255 234 0.41 0.33 4.11C3 506 0 468 468 0.31 0.26 3.22 In 1982, Worldwide submitted a small batch of samples (21kg) to the nearbyPhilex Metallurgical and Assay Laboratory for metallurgical testing. The sampleswere mixed and split into two x 2kg test batches for flotation testwork. It wasreported that the second test batch averaged head grades of 0.36% Cu, 0.09 g/tAu, 3.76 g/t Ag and 0.006% Mo. The concentrate produced by flotation methodassayed at 23.2% Cu, 2.3 g/t Au, 55 g/t Ag and 0.17% Mo. The laboratory reportedthat 'the submitted sample was fast-floating and no problem was encountered inproducing separate concentrates of copper and molybdenum of marketable grade'.The molybdenite concentrate produced was about 0.01% by weight of the totalsample and assayed 45-55% MoS2 with a recovery of 45-55%. Subsequent to 1980, very little work has been carried out within the EPApplication area. Given the limited nature of the data collated so far, noassurance 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, orwill in the future be, deemed to be economic. The Company intends to carry out some confirmatory drilling if and when the EPApplication is granted and will then evaluate the results of the drilling todetermine 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 PERSONGary Powell (a Director of the Company) has been involved in the mining andexploration industry for more than 20 years. He has a Bachelor of AppliedScience degree in geology and is a member of the Australasian Institute ofMining and Metallurgy and the Australasian Institute of Geoscientists. He hascompiled, read and approved the technical disclosure in this regulatoryannouncement. EXPLANATION OF TERMS Au chemical symbol for goldAg chemical symbol for silverCu chemical symbol for copperMo chemical symbol for molybdenumg, kg gram, kilogramt, Mt tonne, million tonnesg/t grams per tonne, which is equivalent to parts per million (g /t Au = grams of gold per tonne)ppm parts per millionoz 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 Accountfor 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 Sheet31 March 2006 - Unaudited At 31 At 31 At 30 September March 2006 March 2005 2005 (unaudited) (unaudited) (audited) Note £ £ £ FIXED ASSETSIntangible fixed assets 5 1,675,932 287,115 1,587,992Investments 202,443 - - 1,878,375 287,115 1,587,992 CURRENT ASSETSDebtors 19,596 45,299 11,204Cash at bank and in hand 962,171 328,567 1,178,687 981,767 373,866 1,189,891 CURRENT LIABILITIESCreditors: amounts falling due within one 216,196 64,736 193,021year 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 RESERVESCalled up share capital 7 510,064 266,433 471,683Share premium 2,291,000 292,255 1,694,271Shares to be issued 101,000 97,000 288,000Profit and loss account (385,312) (59,443) (176,914) EQUITY SHAREHOLDERS FUNDS 2,516,752 596,245 2,277,040Minority interests 127,194 - 307,822 2,643,946 596,245 2,584,862 Consolidated Cash Flow Statement for the6 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 Statementsfor the Period ended to 31 March 2006 - Unaudited 1. ACCOUNTING POLICIES Accounting convention The financial statements have been prepared in accordance with applicableaccounting standards generally accepted in the United Kingdom and with thepolicies which the company will adopt for its annual accounts and which aredetailed below. The figures and the financial information for the year ended 30September 2005 do not constitute the statutory accounts for that year. Thoseaccounts have been delivered to the Registrar and included the auditors' reportwhich 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 subsidiaryundertakings using the acquisition method of accounting. Exploration and development costs Costs relating to the acquisition, exploration and development of mineralproperties are capitalised until such time as an economic reserve is defined andmining 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 valueexceeds 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 differenceswhich have arisen but not reversed at the balance sheet date. A deferred taxasset is not recognized to the extent that the transfer of economic benefit infuture is uncertain. Any assets and liabilities recognized have beendiscounted. Foreign currencies Monetary assets and liabilities in foreign currencies are translated intosterling at the rates of exchange ruling at the balance sheet date.Transactions in foreign currencies are translated into sterling at the rate ofexchange ruling at the date of transaction. Exchange differences are taken intoaccount in arriving at the operating result. Going concern The Company is in the early stages of development and has limited cashresources, its success will depend largely upon the outcome of future miningexploration and development programmes of Far East and in particular thePhilippines. The directors believe they have considered all relevant information and haveconcluded that it is appropriate to prepare these financial statements on thegoing concern basis. The financial statements do not include any adjustmentsthat may be required if the funds are not available or if the trading plans werenot materially achieved. Notes to the Financial Statementsfor 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 theweighted average number of ordinary shares in issue during the period, and onthe loss after taxation for the period of £208,398. The diluted loss per sharecalculation is identical to that used for basic earnings per share as theexercise of warrants would have the effect of reducing the loss per ordinaryshare and therefore is not dilutive under the terms of the FRS22 "Earnings pershare". Basic loss per share is calculated by dividing the profit or loss after taxationfor the period available to the ordinary shareholders by the sum of the weightedaverage 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 1,178,687Movement in 6 months ended 31 March 2006 (216,516) Net cash balances as at 31 March 2006 962,171 5. EXPLORATION AND DEVELOPMENT COSTS £CostAt 1 October 2005 1,587,992Additions 87,940 At 31 March 2006 1,675,932 Notes to the Financial Statementsfor 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 claimowner of the Masapelid Project (Philippines), San Manuel Mining Corp. Theagreement allows Metals Exploration plc to earn a 70% economic interest in theproject on completion of the following payment schedule: Cash Shares in Metals Exploration plc US$ On completion 25,000 250,0001 year after completion 25,000 250,0002 years after completion 25,000 250,0003 years after completion 25,000 250,000 Metals Exploration plc is able to withdraw at any time in return forrelinquishing its earned interest. On 25 January 2006 the company signed a joint venture agreement (JVA) withMedusa Mining Limited and Philsaga Corporation in respect of the Company'sinterest in the San Miguel Mining Corporation. The principal terms of the JVAare that the company will retain a 16% share of the interest or alternativelyretain a 10% net profit interest, in return for a reduced payment schedule, asfollows: Cash Shares in Metals Exploration plc US$ On completion 25,000 250,0001 year after completion 4,000 40,0002 years after completion 4,000 40,0003 years after completion 4,800 80,000 On 2 February 2005 Metals Exploration plc signed an option agreement on theRunruno Project. The agreement allows Metals Exploration plc to earn a 70%interest in the project which is owned by FCF Mining Corp. The followingpayment schedule has been agreed: Cash Shares in Metals Exploration plc US$ On completion 100,000 400,0001 year after completion 30,000 400,0002 years after completion 40,000 400,0003 years after completion 40,000 400,000 Notes to the Financial Statementsfor 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 ChristianMining Inc to acquire an additional 15% shareholding in FCF Mining Corp, whichif exercised would give the company an 85% interest. The company shall pay aUS$65,000 option fee until the option is either exercised or withdrawn, althoughthe company has sole discretion to terminate the option. The exercise price ofthe option is US$400,000 for each additional 1% shareholding, subject to amaximum fee of US$6 million. The exercise period of the option is indefinite. Exploration and development costs included in the balance sheet represent thecompletion payments on both the above projects together with the costs incurredon 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 2,000,000Exercised 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 Statementsfor 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 7,0006 December 2005 62,500 62521 December 2005 674,496 6,74523 December 2005 25,000 25016 January 2006 125,000 1,25020 January 2006 148,902 1,48930 January 2006 43,125 4317 February 2006 1,250,000 12,50021 February 2006 400,000 4,00027 February 2006 49,030 49107 March 2006 40,000 40008 March 2006 125,000 1,25010 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 eachReef Securities Limited * - 1,500,000P Barnett - NIL 8. POST BALANCE SHEET EVENTS Between 1 April 2006 and 30 June 2006 the company issues 1,947,574 new 1pOrdinary 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 optionsunder its Unapproved Share Option Scheme. The options were granted to keyemployees in the Philippines and are exercisable at 12p per option at any timeafter 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 Statementsfor 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 CompanySecretary, Metals Exploration plc, 7 Savoy Court, Strand, London WC2R 0ER. This information is provided by RNS The company news service from the London Stock Exchange