Acquisition

14 Aug 2007 07:01

Metals Exploration PLC14 August 2007 14 August 2007 METALS EXPLORATION PLC ACQUISITION OF RIGHTS TO NICKEL LATERITE OPPORTUNITY The Board of Metals Exploration PLC ("the Company") (AIM: MTL), the UK basedprecious and base metals exploration company focused in the Pacific Rim Regionis pleased to announce that it has entered into an agreement with PT BatanPelei Mining to acquire rights to various properties on Waigeo Island inIndonesia for a total consideration of US$100,000. HIGHLIGHTS: • Potential for major nickel laterite resource. • Historic drilling identified 'non-JORC compliant' resources of 35 mt @ 1.5% Ni, 0.13% Co, 37% Fe. • Exclusive right to explore and operate. • US$100,000 entry price for low Capex opportunity. • Revenue sharing arrangement in the event of economic operation. Metals Exploration has, through an Indonesian subsidiary, PT Cupati, enteredinto an agreement with an Indonesian company, PT Batan Pelei Mining (BPM), toregulate the terms on which both parties will cooperate on the exploration andpotential commercial exploitation of certain properties ("KPs") held by BPM onWaigeo Island in Indonesia. The Waigeo Island Nickel Project BPM has granted Metals Exploration an exclusive right in connection with theKPs. Historical drilling and pitting by PT Pacific Nikkel Indonesia (Pacific Nikkel)during the 1970s reportedly identified in-situ drilled resources of laterite(limonite) deposits within the area encompassed by the KP of 35 mt @ 1.5% Ni,0.13% Co, and 37% Fe at a 1.1% Ni Cut-off. Pacific Nikkel was an American andDutch consortium owned by United States Steel Corporation, Newmont MiningCorporation, Sherritt Gordon Mines Limited, Koninklijke Nederlandsche Hoogovensen Staalfabrieken N.V. and Internatio-Mueller N.V. Due diligence work by the Company included several site visits by an independentgeologist and Company personnel where evidence of previous drilling wasobserved. The Company's immediate target is the Sarenbon nickel laterite (limonite)deposit, where historical drilling and pitting by Pacific Nikkel reportedlyidentified an in-situ drilled non-JORC compliant resource of 15.7 mt @ 1.53% Ni,0.14% Co, and 34% Fe at a 1.1% Ni Cut-off. It is the immediate intention totest the potential at Sarenbon for direct shipping of high-grade nickel lateriteore to consumers in Asia. This will involve confirmatory diamond core drilling,construction of basic infrastructure, identification of likely offtakers, andthe conversion of the exploration KP permit to an exploitation and shipping one. The grade of the Sarenbon deposit, subject to testing, appears similar to someof the world's higher grade nickel laterite deposits currently being developed.Given the size and grade of the Waigeo nickel laterite deposits, and thepotential to significantly increase the limonitic laterite resources, and thepotential to add to the resource base with saprolitic laterite mineralisation,which has yet to be drilled, the Company believes that there is potential todevelop a sustainable short- and medium-term nickel operation. . In the event that commercial operations commence, the Company has agreed to payBPM a royalty equivalent to 10% of gross revenues for the first 5 years ofoperations, rising to 17.5% thereafter. The agreement between BPM and MetalsExploration is exclusive and open ended. The tonnes and grades reported in this announcement are based on reports andgeological plans produced by previous exploration companies. It should be notedthat based on the information to date, there has been insufficient explorationto define a Mineral Resource which is JORC compliant and there is no guaranteethat further exploration work will enable the calculation of JORC compliantmineral resources. Some of the information in relation to the Waigeo Island Nickel Project wassourced from historical third party data. The Company has not been able toindependently verify the accuracy of some of this information. Jonathan Beardsworth, CEO of Metals Exploration Plc commented: As previously announced in our annual report and elsewhere: "we will seek toidentify and secure new prospective projects to add to our portfolio", and thiscould be a development with significant potential for Metals Exploration. "Our preliminary analysis to date suggests that the grade and tonnage exists atSarenbon to support commercial direct shipping ore operations with thepossibility of providing near-term cash flow. Naturally we will have to confirmthis to be so, but the costs of doing so will be relatively modest when setagainst the potential upside. The Company is in the process of putting togethera team of experienced personnel with the abilities to take this project throughto mining. "This opportunity does not divert our attention from our flagship project atRunruno. We continue to believe that Runruno has the potential to become a worldclass project, and it is possible that the KP's on Waigeo Island could prove tobe another significant asset for the Company." Jonathan BeardsworthChief Executive Officer Transaction Details • BPM remains the registered owner of the KPs; • BPM has granted an irrevocable power of attorney to PT Cupati, to act for and on behalf and in its place as sole and exclusive attorney to exercise all rights including the mining rights, perform all duties, obligations and undertakings of BPM under and in relation to the KPs; • BPM gives certain warranties concerning the KPs to the Company; • Metals Exploration makes a non-refundable payment to BPM of US$100,000 in consideration of the grant of the mining rights; • PT Cupati is obliged under the Co-operation Agreement to use reasonable endeavours to conduct exploration, development, mining and export of ore as soon as possible and it shall pay a penalty to BPM of US$200,000 if exports of ore mined by PT Cupati from the KP Area are not commenced within twelve months of the date by which all necessary licences and permits for mining and export of nickel ore from the KP Area have been obtained; • Various duties and obligations of BPM and PT Cupati are set out in the Co-operation Agreement. PT Cupati is responsible for all costs and expenses to the extent considered commercially and operationally feasible in relation to the exploration and exploitation of the KPs; • BPM and PT Cupati have entered into a commercial arrangement whereby, in the event that mining and export of nickel ore is commenced, BPM shall be entitled to 10 per cent of the gross sales revenues ("GSR") in the first 5 years, and 17.5 per cent of the GSR thereafter. • PT Cupati may terminate the Co-operation Agreement before mining operations have commenced, upon delivery to BPM of a written notice of withdrawal and its confirmation that exploration results or feasibility studies have confirmed to the satisfaction of PT Cupati that mining operations within the KPs would not be commercially feasible. QUALIFIED/COMPETENT PERSONS Gary Powell (a Director of the Company) has been involved in the mining andexploration industry for more than 24 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. For more information: Jonathan Beardsworth CEO + 44 (0) 20 7927 6690 + 44 (0) 7747 101552 Jonathan Anderson Investor Relations + 44 (0) 20 7927 6690 + 44 (0) 7950 410680 Adrian Hadden Collins Stewart Europe Limited +44 (0) 20 7523 8350 Charles Vivian Pelham PR +44 (0) 20 7743 6672 Klara Kaczmarek Pelham PR +44 (0) 20 3159 4395 ENDS This information is provided by RNS The company news service from the London Stock Exchange