Results of Concept Study

15 Apr 2008 07:04

Metals Exploration PLC15 April 2008 Metals Exploration PLC Runruno Concept Study Completed Ausenco appointed as Engineering Contractor 15 April 2008 Metals Exploration PLC ('Metals Ex' or 'the Company') (AIM: MTL), the naturalresources exploration and development company with assets in the Pacific Rimregion, is pleased to announce the results of its Concept Study into theeconomic viability of its 100% controlled Runruno gold-molybdenum (Au-Mo)project located in the Philippines. The Company is also pleased to report the appointment of Ausenco, an Australianbased engineering and project management company, to the Scoping Study team. Highlights: • 190,000 - 210,000 ozs/year gold production planned • Additional 1.8m - 2.1m lbs/year by-product Mo production targeted • Project is robust on a stand alone gold development basis • Capital cost of US$160m - US$210m (includes Mo circuit) • Gross average annual cash costs of US$350 - US$400 per oz Au (falling to US$190 - US$320 per oz Au net of Mo credits at US$15/lb) • Internationally renowned engineering firm Ausenco appointed to assist in completion of Scoping Study by mid-2008 The Company recently completed Stage 1, or Concept Study stage, of the Runrunodetailed Scoping Study. The Concept Study has been prepared by the Company using its own resources butwith input from a number of external consultants; and has been undertaken bycontrasting and comparing the sub-elements of a number of similar mine andprocessing operations to design a conceptual development and operations modelfor Runruno. To refine this model further, many of the elements have beenchecked against the local Philippine operating environment and the modeladjusted accordingly. By its nature the output of the Concept Study can only be considered as a guideto a possible development at Runruno. However, it provides an importantframework on which the Company can base the full Scoping Study, which is beingundertaken to a greater level of detail and using external consultants and whichwill provide the basis for the Company to commit the Project to a fullfeasibility study. The Scoping Study, involving a technical and economic assessment of theviability of developing a mining and processing operation at Runruno, isdesigned to consider the available development options for the Project, and toestimate possible capital and operating costs and production rates for a mineand processing operation based on the March 2008 mineral resource estimate(Announced 4 March 2008). Concept Study The Company is encouraged to report that the results of the Concept Studyindicate that the Runruno Project appears robust on a stand alone golddevelopment basis. A summary of the results of the Concept Study is provided below. The Study hasconsidered two scenarios: • The first for a stand alone gold development recovering no molybdenum by-product; • The second for a gold operation recovering a molybdenum by-product. The Study has been prepared in this manner to reflect the status of the currentmetallurgical testwork programmes into both gold and molybdenum recoveries. Twoalternative gold processing routes have already been successfully identified.Work to recover a molybdenum product is still ongoing. (Announced 8 April 2008). It is the Company's belief, based on the positive results of the most recentmolybdenum testwork, that a molybdenum circuit is likely to be identified.However, this remains to be demonstrated. Significantly, a circuit to recovermolybdenum will be a modular addition to the primary gold processing circuit,and work to identify such a process will not delay the overall progress of thegold project. Appointment of Ausenco The Company is pleased to announce that Ausenco has been appointed to theRunruno Scoping Study and is responsible for undertaking the design of a processflow sheet and preparing a capital and operating cost estimate for theprocessing plant. Ausenco has detailed experience of all aspects of the likelyprocess routes and has extensive Asian experience which includes currentPhilippine experience. Ausenco commenced work last week with a visit to site atRunruno. Jonathan Beardsworth, Chief Executive Officer of Metals Ex, commented: "The results of the Runruno Concept Study crystallise the transformation theCompany has made in the last few months from pure explorer to explorer/developer. "We already knew that we have 2.1 Mozs Au at Runruno, of which 775,000 ozs arecurrently in the JORC Indicated category. We also knew from previousmetallurgical testwork that we can recover approximately 90% of the gold, andhave recently received encouraging results from the molybdenum testwork. "This Concept Study draws together all the elements that go in to creating aproject and demonstrates that, even on a stand alone gold basis, the Project isrobust in any realistic forward looking gold price environment. Importantly, weare increasingly confident of being able to deliver a saleable moly productwhich, if it occurs, will strengthen the Project economics still further. "The Concept Study report will now form the basis for the completion of the moredetailed Scoping Study, due at the end of July this year. We are also pleasedto announce the appointment of Ausenco to assist in its preparation and view itas a considerable endorsement of our project that a company of the quality andreputation of Ausenco has agreed to work with us at Runruno." Summary of Concept Study Results Gold Only Project Gold Project with Molybdenum by productGeological Resource Resource Tonnes Gold MolybdenumEstimate (March 2008) Category (million) g/t Ozs % lbs (million) (000) Indicated 10.0 2.40 775 0.084 18.6 Inferred 17.0 2.41 1,320 0.048 18.0 TOTAL 27.0 2.41 2,100 0.062 36.6 Average dilution 10% 10%Resource loss 10% 10%Mining cut off grade 0.5 g/t Au 0.5 g/t AuAnnual mining rate ore 3,000,000 tonnes 3,000,000 tonnesTotal annual mining rate 22,500,000 - 27,000,000 tonnes 22,500,000 - 27,000,000 tonnes(ore + waste)Average strip ratio 6.5-7.0:1 6.5-7.0:1Annual treatment rate 3,000,000 tonnes 3,000,000 tonnesAverage head grade 2.20 - 2.40 g/t Au, 0% Mo 2.20 - 2.40 g/t Au, 0.058-0.062 % MoAverage recovery rate 88-92% gold 88-92% gold 0% Mo 40-50% MoAnnual production rate 190,000 - 210,000 ozs gold 190,000 - 210,000 ozs gold 1,800,000 - 2,100,000 lb MoAverage annual operating US$65 - 85 million US$68 - 87 millioncostAverage cost per ounce of US$350 - 400 per oz US$40-235 per ozgold net of Mo (USD 30 / lb)Average cost per ounce of US$350 - 400 per oz US$190-320 per ozgold net of Mo (USD 15 / lb) Total Capital Cost: US$150 - 200 million US$160 - 210 million Represented by: • Infrastructure 21% 20% • Mine * 5% 4% • Processing 64% 66% • Owners Costs 11% 10% Development timetable 16 - 20 months 16 - 20 months * Mine operating and capital cost has been estimated on an owner operatedleased fleet basis. For more information: Jonathan Beardsworth + 44 (0) 20 7927 6690 CEO + 44 (0) 7747 101 552 Tim Feather / Matthew JohnsonHanson Westhouse Limited + 44 (0) 20 7601 6110 Charles Vivian + 44 (0) 20 7743 6672 Pelham PR Klara Kaczmarek + 44 (0) 20 3159 4395 Pelham PR FORWARD LOOKING STATEMENT By its nature the output of the Concept Study can only be considered as a guideto a possible development at Runruno. However, it provides an importantframework on which the Company can base the full Scoping Study, which is beingundertaken to a greater level of detail and using external consultants and whichwill provide the basis for the Company to commit the Project to a fullfeasibility study. . QUALIFIED/COMPETENT PERSONS Gary Powell (a Director of the Company) has been involved in the mining andexploration industry for more than 23 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. The information in the table to which this statement is attached that relates toExploration Results, Mineral Resources or Ore Reserves is based on informationcompiled and reported by Mr Ian Holzberger, who is a technical consultant to theCompany and Project Director for the development of the Runruno Project. MrHolzberger has sufficient experience which is relevant to the style ofmineralisation and type of deposit under consideration and to the activity whichhe is undertaking to qualify as a Competent Person as defined in the 2004Edition of the 'Australasian Code for Reporting of Exploration Results, MineralResources and Ore Reserves' (JORC Code). Mr Ian Holzberger consents to theinclusion in the report of the matters based on his information in the form andcontext in which it appears. About Ausenco: Ausenco is an award winning provider of innovative and high quality engineeringand project management services to the global resource industry. From studiesthrough to full project execution, operations and maintenance, Ausenco's rangeof services covers all aspects of project development. Ausenco has a proventrack record for innovative process design using the latest technology andinnovation to improve processes and performance. Ausenco is headquartered inBrisbane Australia and maintains design and construction offices in Australia,Asia including China and the Philippines, Africa and North and South America.For further information about Ausenco, visit their website www.ausenco.com. -------------------------- This information is provided by RNS The company news service from the London Stock Exchange