Metals Exploration Regulatory News (MTL)

27 February 2019

METALS EXPLORATION PLC

Metals Exploration plc (AIM: MTL) ("Metals Exploration" or the "Company"), the natural resources exploration and development Company with assets in the Pacific Rim region announces that management, together with an independent third party BiOX specialist consultant, has completed the previously announced operational review of the historical Runruno performance data and provides clarification on mine performance in relation to previously market released data.

Results of Operational Review and Clarifications

On 30 January 2019, Metals Exploration announced that its new management team would be conducting a full review of its historical operational performance versus design and production data previously announced. Following the review, management have identified several material discrepancies in the operational data released versus the mine's actual performance and wish to make the following clarifications with regards to the processing plant's performance. This review does not impact gold poured or gold sales during the period.

2018 achieved BIOX® throughput

The historic statements referred to the BIOX circuit having achieved and maintaining 100% of design throughput rate for extended periods of 2018. It is the view of the new management and an independent 3rd party review completed by a BiOX specialist, that the BIOX® circuit has yet to reach 100% of nameplate design throughput and on average, for 2018, operated at 31% of design capacity. Changes implemented in December saw 66 sulfur tonnes fed for a single day into the BIOX® circuit, versus the design rate of 69 sulfur tonnes with the overall month, reaching 65% of design capacity on average.

The independent review completed provides the following statement and data:

"The data in the table below, generated from management's review of the Metallurgical Accounting data, confirms the data in the Internal Review Report and shows additional data that demonstrates that the design throughput was not achieved." 

Based on the results of the operational review therefore, management believe the following previously released statements regarding BIOX® plant throughput require clarification:

Gold recoveries

Management have undertaken a full review and analysis of the recoveries achieved to date at Runruno. There has been a material overstatement of all gold recoveries announced to date. This is evidenced by the material difference reported in the mine head grade and mill feed grade which was calculated incorrectly. Management can further confirm that the reconciliation of mine ore tonnes to ounces provides for a strong and accurate representation of the ounces that were mined during the period ending December 2018 however the dilution is significantly higher than those analysed in the BFS leading to a lower mill feed head grade.

The stated recoveries, as a result, have been consistently overstated due to the incorrectly calculated mill feed grades to the processing plant. In 2017, while same level of detailed analysis undergone for 2018 cannot be undertaken due to lack of available information, by using the mine delivered records, it can be shown to have been overstated by 5% - recoveries were 42.8% versus the 47.9% announced in the Company's full year 2017 results. A table with the updated results is provided below.

In 2018, by using sampled and assayed mill feed values and removing the return of scats, rather than calculated values, the plant feed data aligns to the mine reconciliation within 3% and provided confidence to the accuracy of the reconciliation. The corrected metallurgical recovery for the first 3 quarters is 55.6% against a previously reported recovery of 66.6%. This represents a reduction in gold recovery of 11%. The corrections for the first 3 quarters are provided in the following table.

The final quarter and 2018 results are therefore provided in the table below based on the same reconciliation analysis.

It is the view of management that this dilution of approximately 20%, which is not abnormal to operations, is ongoing and is leading to a reduced mill feed head grade and ounces produced. This dilution is expected to continue going forward. The management are currently engaging a 3rd party review of the life of mine plan and are targeting to have an updated plan by end of the second quarter of 2019 with an update to the reserve and resource statement by end of the fourth quarter of 2019. 

It is management's intention to ensure a more accurate and integrated reconciliation is completed for internal and external reporting. 2019 quarter one results will be reported against this new reconciliation analysis ensuring a higher level of reporting accuracy. 

The data in this announcement has been complied in conjunction with a 3rd party independent BiOX specialist consultant and Mr Xiaofeng Zhen (B.Eng., Ph.D., MAusIMM). Mr Darren Bowden, a director of the Company, who has been involved in the mining industry for more than 25 years, is a member of the Australasian Institute of Mining and Metallurgy, has compiled, read and approved the technical disclosure in this regulatory announcement.

For further information please visit or contact www.metalsexploration.com