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SMALL CAP FOCUS: Metals Exploration may be onto a winner in the Philippines and looks cheap after a slide in Gold price
Updated: 15:25 BST, 13 May 2013









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The past month has been one of huge progress caluanie muelear oxidize for sale Metals Exploration and its Runruno gold project in the Philippines.

Not that you would know this from the share price, which has gained little traction thanks principally to the global slide in the value of the precious metal.

That Runruno, at a cash cost of $442 per ounce, would succeed in almost any price environment has been largely overlooked. As has the fact the funding for the operation is almost secured.



Gold rush: Metals Exploration could be a a good investment thanks to the slide in the Gold price as it gears up to begin mining in the Philippines.



Last month the group revealed existing institutional investors are prepared to back a $57.7million cash call at 7 pence a share. It could raise a further $5.9million (€4.5million) via an open offer of stock that enfranchises existing minority shareholders.

 

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This, along with the $35million already invested in the development of Runruno, goes a long way towards financing the capital costs of the open-pit project which are put at $182million.

The group is currently looking for a further $70million of debt financing which should be easier than it might ordinarily be to find given the significant equity contribution to the build.

'The key take-out is we have finally settled our funding', said chairman Ian Holzberger.

'We have some very supportive shareholders and this has allowed us to do that with a very high equity component [of the fundraiser].'

Its backers include Solomon Capital, representing the multi-millionaire Candy Brothers; Baker Steel; Investec; and Jersey domiciled Runruno Holdings.

For those who haven't followed the Metals Exploration story, Runruno has a 1.39million ounce gold resource at 1.69 grams per tonne.

The life of the mine is currently put at just over 10 years (at a projected 96,700 ounces a year), although this will undoubtedly grow if the group continues to add resources at its current rate.

Outside the main Runruno gold project area, an additional 340,000 ounces of the yellow metal have been identified, giving the basis for a second pit to the south of the main operation. There may also be the potential to go underground. 



METALS EXPLORATION AT A GLANCE

AIM ticker: MTL

Value: £51million

Current share price: 6.13p

Year high: 11p

Low: 4.13p


The facility will consist of conventional crushing, grinding and flotation as well as the BIOX method pioneered by Goldfields to oxidise the sulphides.

Holzberger reckons it will take around 15 months to build and commission the Runruno facility, which means first gold should be poured in the fourth quarter of next year.

Quite a lot of work has already been completed, representing around $20million of the $35million already invested in the project.

Alongside this, there has been significant engagement with the local community, which is as crucial to the success of Runruno as the construction work being carried out on site.

'It is very important we put something back whether that be wealth, health or education,' said Holzberger.

Directly the group will employ 500 locals and another 200 will indirectly owe their living to Runruno once it is up and running. But not everyone has welcomed Metals Exploration with open arms.

'It doesn't matter where you work: 95 per cent  population is supportive and 5per cent  isn't,' said Holzberger.

If you cherished this article and you simply would like to collect more info concerning caluanie muelear oxidize for sale please visit our own page. In this case the 5 per cent is represented by the group that has brought what's called a Writ of Kalikasan. Specific to the Philippines, the writ affords protection to the natural environment.

However, Metals Ex believes it is a 'frivolous and vexatious action taken by small group of self-interested minor parties to impede the project for their benefit'.

The case is currently being heard, but something called a SLAP hearing (a strategic lawsuit against participation) could halt proceedings.

'If they award us the SLAP hearing then the case is discontinued and we can get damages, though I don't think we ever will,' said Holzberger.

This aside, it is worth remembering Runruno is a fully permitted project with strong regional and national government support.

And even after the recent fall in the price of gold the project economics, calculated at $1,500 an ounce, remain remarkably robust. For example, the internal rate of return probably only comes down a couple of percentage points from 42 per cent  as a result of the tumble in the gold price, a back of the envelope calculation reveals.

It is hoped the disconnect between the current share price and the real value of Runruno will be bridged as the project nears cash generative production. 'Hopefully the build-out will act as a catalyst,' said the chairman. 'We have the cash and expertise in place.'