Metals Exploration plc (AIM: MTL) ("Metals Exploration" or "the Company"), the natural resources exploration and development company with assets in the Pacific Rim region, is pleased to provide an operations update on matters relating to its Runruno gold- molybdenum project ("the Project") and exploration activities in the Philippines.
AIM Code : MTL
At: 25 January 2012
Shares in Issue: 694,673,626
Options in Issue: 14,725,000
Warrants in Issue: 17,010,000
Directors:Ian Holzberger, Executive Chairman
Jonathan Beardsworth
Timothy Dean - acting Finance Director
Edward Parsons Guy Walker Richard Williams
Management:Ian Holzberger, Executive Chairman Liam Ruddy, Company Secretary, CFO Craig Watkins, Country Manager Chevy Albo, Finance & Administration
Agnes Goze, Environment & Permitting
For further Information please contact: Metals Exploration plcIan Holzberger: +61 41 888 6165
Liam Ruddy; +44 7911 719 960
Nominated Adviser: Westhouse Securities Limited Tim Feather / Matthew Johnson+44 (0)20 7601 6100
Broker: Fairfax I.S. plcEwan Leggat
+44 (0)20 7598 5368
Public Relations: Tavistock Communications Edward Portman / Jos Simson+44(0) 7733 363 501
Highlights
Runruno site earthworks commenced.
Program of early site works approved for implementation over
five months to expedite full construction.
Full construction estimated to take 15 months following
completion of early site works and availability of debt
funding.
Key early works include development of the processing plant
pad and construction infrastructure.
Contracts awarded for site earthworks and the construction
camp.
Good progress made on processing plant earthworks.
The Company through its subsidiary FCF Minerals Corporation
and Leighton Contractors (Asia) Limited ("Leighton") have
entered into a Letter of Intent for an Engineering and
Construct contract and a Procurement contract to design and
construct the Runruno processing plant.
Leighton has commenced detailed design and engineering works
for the processing plant.
Debt funding activities have progressed positively. Potential
gold mineralised zone outlined south of the Runruno
mineralisation; follow up drilling required.
Drill hole intercepts include MXD842 - 3m @3.46 g/t Au,
454 ppm Mo and MXD845 - 13m @ 2.28 g/t Au, 2,951 ppm Mo.
Strong copper intersection recorded in hole MAD010 -
31m @ 0.85%Cu, 0.35 g/t Au at Magnetite Creek.
Metals Exploration increases its beneficial interest in
the
Runruno Gold project to 100%.
"It has been a very rewarding and significant quarter with
the issue of the DMPF, approval of a package of early site
works and indeed the initiation of those works with the
commencement of earthworks on the processing plant site. To
see the daily changes at site as the work proceeds
demonstrates the reality of the Runruno project.
"We are pleased to be working closely with Leighton on the
detailed design of the processing plant and to have confirmed
our intentions to use them to construct the plant through the
Letter of Intent between the Company and Leighton.
About Runruno Gold Project,
Location: Central Luzon, Philippines,
320km north of Manila.
Status: Development ready,
Feasibility study completed May 2010.
Mine life: 10.3 years.
Payable Au: 1 million ozs.
Annual Production:
Year 1-5: 101,800 ozs Au ave. Years 6-10: 92,700ozs Au ave.
Capital Cost1: US$167.8 m
Operating Cost2: US$ 477/oz Au
Mining: Open pit, truck and shovel operation.
Operational Strip Ratio: 5.2:1 waste to ore.
Processing: gravity, BIOX® oxidation and CIL to recover gold as doré bullion.
2P Reserves3: 15mt @ 1.85g/t Au and
603 ppm Mo.
Mineral Resource3: 26mt @1.69 g/t Au and 453ppm Mo, including reserves.
Upside: by-product molybdenum, mine life extension, highly prospective mineralised system.
Notes:
1. Capital Cost updated October 2011 - estimated in Q3 2011 US$.
2. May 2010 Feasibility Study - estimated in Q4 2009 US$.
3. Refer to the Company website, www.metalsexploration.comfor complete Mining Reserve and Mineral Resource statements.
"The encouragement we continue to receive in our exploration
drilling activities both south of the Runruno pit and at
Magnetite Creek demonstrates the potential of the Runruno
FTAA. It is significant that the Company has now developed an
understanding of the potential mineralisation south of the
planned pit and can set about testing that model.
"The Company's securing of full ownership of the Runruno
project is a major step in the ultimate development of the
Project and it must be considered to offer a significant
value add for the Company."
Runruno Gold Project
The Company's Q4 2011 activities were directed to the advance of the Runruno Gold project towards construction. Step out drilling activities to further test the potential of the Runruno Financial or Technical Assistance Agreement ("FTAA") for gold and copper mineralisation were maintained.
Declaration of Mining Project Feasibility
The Secretary of the Department of Environment and Natural
Resources ("DENR") approved the Runruno Declaration of Mining
Project Feasibility ("DMPF") early in the quarter.
Subsequently, the DMPF was issued to the Company's
operating subsidiary FCF Minerals Corporation ("FCF") on
20
October.
On issue of the DMPF, FCF became authorised to proceed into
the Construction and Operating Periods of the Runruno FTAA
permitting on ground construction activities to commence.
Commencement of Early Site Works
A program of site works has been approved for execution over
a five month period leading up to the expected commitment to
full construction. Full construction will be initiated upon
the availability of draw down of the debt component of the
Project funding package.
Site work began during December with initiation of the
earthworks on the processing plant pad.
The early works package is being implemented to materially
advance the Project into construction and to support the
reduction of the full construction phase to an estimated 15
month period. This expedited full construction phase will be
achieved through the early establishment of the construction
infrastructure and the early preparation of the processing
plant pad.
The program consists of seven key activities:
Site earthworks;
Processing plant pad earthworks; Construction camp;
Construction power;
Potable water system;
Erection of a concrete batching plant; and
Acquisition of selected units of the mobile fleet.
Site earthworks
A contract has been awarded to a Filipino earth moving
contractor for a scope of work which includes the preparation
of:
Site roads;
Construction of three permanent causeways across the Sulong
river;
Preparation of the office, camp, concrete batch plant and
construction lay-down pads; and
Road access to the pit.
The earthmoving equipment is at site and work is expected to
commence in February.
Processing Plant Earthworks
Two contracts have been awarded for work on the processing
plant site including the crusher pad; the first to a local
community based group to undertake the construction of gabion
walls as required and the second to a Filipino earth moving
contractor. All the required equipment is located at site.
Work commenced midway through December but was suspended over
the Christmas - New Year period and resumed in mid January,
following the festive period.
The work, which is expected to take around five months to
complete, is proceeding well with excellent progress made to
date. The majority of the site has been cleared and grubbed
and the establishment of the various levelled pads commenced.
Leighton Contractors Asia Limited ("Leighton") the selected
EC&P contractor responsible for the design and construction
of the processing plant, designed the pad and specified the
pad construction parameters. Whilst FCF's Owner's
Team is supervising the contractor, Leighton are working with
the Company to ensure the pad meets specifications.
Progress to date is shown in the photographs below.
Construction Camp
A contract to construct the first accommodation module, ablutions and messing facilities of the 550 man construction camp has been let. Work is expected to commence during February.
General
Preparatory works are underway on the balance of the early site work activities.
EC&P - GMP Contract
In December the Company advised the market that it had issued
a Letter of Intent ("LOI") to Leighton to enter into an
Engineering and Construct contract and a Procurement contract
("EC&P") to design and construct the Runruno processing plant
subject to availability of debt funding, final Board
construction approval and full contract documentation. This
letter has been accepted by Leighton and it and the Company
are now focused on the construction of the Runruno
project.
The LOI was issued against Leighton's offer of a
Guaranteed Maximum Price ("GMP") of US$95.1 million to
construct the Runruno processing plant. Leighton's offer
is subject to revalidation at the time of execution of the
construction contract.
FCF has also contracted Leighton to undertake a program of
detailed design in advance of the full EC&P contract. The
cost of this program, which will run over five months, will
be captured under the GMP cost.
The detailed engineering program will take the processing
plant design to around an estimated 60% complete with a
number of key areas being 100% complete. Like the early site
works program outlined above, the detailed engineering work
program is designed to enable the full 15 month construction
phase of the Project. Work will be tailored so that all long
lead time items can be ordered immediately on the
commencement of full construction and footing and foundation
works commenced after a minimal mobilisation stage.
Work commenced in December.
Metallurgical Testwork
A program of work to assess the potential variability in
gravity and flotation performance of the ores forecast to be
mined during the first four years of production commenced
during the quarter. Samples representing the first two years
of production by quarters and years three and four by halves
are being tested at AMMTEC's laboratory in Perth.
Results received for five of the twelve samples submitted
reported excellent results with total process recoveries of
gold (after allowing for BIOX® and carbon in leach
processing) projected from the gravity and flotation
recoveries in line or exceeding those projected from earlier
work (93.3% combined). The program will be completed during
Q1, 2012.
The available results support the gold production forecasts
for the early years by demonstrating that the ore should
perform as forecast in the selected metallurgical circuit.
Resource and Reserve Drilling
No in-pit resource or reserve drilling was undertaken during the quarter. All drilling activities have been focused on step out drilling to the south of the pit and exploration drilling elsewhere in the FTAA area (refer to Regional Exploration section below).
Land Acquisition
Land acquisition activities continued successfully throughout the quarter.
Funding
The Company is currently engaged in detailed discussions with
a number of resource banks and alternative funding sources to
finalise a debt funding package on a "Project Finance Basis",
aiming to support the construction of the Runruno project.
The Company has progressed to detailed diligence with one of
these potential funders and it is being assisted in all of
these endeavours by an experienced advisor.
It is the Company's intention to finalise a package
during Q1, 2012.
FCF work at Runruno Highly Recognised at the Mineral Industry Environmental and
Safety Awards
The Company's Philippine operating subsidiary, FCF, was
recognised for its work at Runruno and in the host
communities and environment by being identified as the
outstanding achiever at the 2011
Presidential Minerals Industry Environmental Awards. FCF
received three awards, demonstrating its commitment to
responsible mining, the environment and a zero harm
culture:
The 2011 Presidential Mineral Industry Environment Award
(Exploration Category); Safest large scale Exploration
project; and Runner-up in the Best Mining Forests Award -
Exploration Category.
The awards demonstrate the Company's commitment to being
a responsible miner
Exploration activities within the Runruno FTAA but outside
the Runruno orebody continued throughout Q4, 2011. The work
is designed to systematically assess the highly prospective
FTAA for further gold mineralisation of the Runruno style and
the potential for porphyry copper mineralisation. Two diamond
drill rigs are committed to the programme.
Work completed during the quarter included, diamond drilling,
regional geochemistry and ground mapping within the FTAA. A
summary of the holes drilled is presented in the following
table.
Location | Holes Completed Ytd | Metres Ytd | Holes Completed During Q4 | Metres During Q4 |
RUNRUNO - Resource Extension | 16 | 2,916 | 5 | 957 |
RUNRUNO FTAA - Regional Exploration | 17 | 4,718 | 3 | 873 |
TOTAL | 33 | 7,634 | 8 | 2,901 |
Runruno Mineral Resource Extension
Drill testing for extensions to the Runruno resource area to
the south of the planned pit continued during the quarter.
Previously reported intercepts of gold and molybdenum
mineralisation extended the Runruno mineralised zone 150m
south of what had been the interpreted southern extent of the
Runruno mineralisation. Recent drilling has traced the
mineralised zone closer to the surface and extended the
potential for significant mineralisation further to the
south.
A wide high-grade mineralised zone was intersected in hole
MXD842 which traced the previously intersected deeper
mineralisation on line 50N to the east. and closer to the
surface.
Two step-out drill holes MXD845 and MXD846, drilled late in
the quarter and collared a further 150m to the south, around
300m south of the proposed Runruno pit, intersected wide
zones of gold and molybdenum mineralisation at depth. These
intersections lie about half way between the southern
boundary of the proposed pit and the previously reported deep
zone of mineralisation found in
TUD012, 6m at 2.81 g/t Au from 241m at the Tulingan
prospect.
With the information available from the holes drilled to date
it appears possible to interpret a significant zone of flatly
dipping gold and molybdenum mineralisation measuring between
8-12m thick and grading between 2- 3 g/t Au and occurring at
depth extending south of the Runruno pit for 600m plus to the
Tulingan prospect area and perhaps further south. The
potential width of the mineralisation has not been
established but it has been intersected over 200m in an east
west direction. It appears from the data available that the
mineralisation is truncated towards the east by the Malilbeg
Fault, a possible mineralising structure, but remains open in
both a westerly and southerly direction. Of significant
interest is that though the mineralisation is broadly
analogous to and may be projected back into the main Runruno
mineralisation through a zone of disturbance marking the
southern end of the Runruno mineral resource, the character
of the mineralisation is unique. The mineralisation appears
to exhibit slightly higher gold grades, displays much higher
molybdenum grades and contains low but significant levels of
copper unlike the Runruno mineralisation.
While the gold molybdenum mineralisation has been intersected
at depths of between 75-180m below the surface the indicated
widths and grades make it a target for underground
mining.
Drilling to more fully test the potential of the zone is
planned in 2012 with drilling having re- commenced following
the Christmas - New Year break. Significant assays reported
during the quarter are shown below.
Hole_ID | From (m) | To (m) | Width (m) | Au g/t | Mo ppm |
MXD842 | 102.0 | 110.0 | 8.0 | 3.46 | 454 |
MXD842 | 112.0 | 113.0 | 1.0 | 1.83 | 138 |
MXD845 | 191.0 | 204.0 | 13.0 | 2.28 | 2,951 |
MXD846 | 117.0 | 129.0 | 12.0 | 0.90 | 1,164 |
MXD846 | 144.0 | 146.0 | 2.0 | 1.07 | 1,232 |
MXD846 | 153.0 | 157.5 | 4.5 | 1.37 | 1,360 |
Magnetite Creek
The Magnetite Creek area, 2km south-east of the Runruno
orebody, is believed to be highly prospective for porphyry
Cu-Au style mineralisation. Previously reported drilling
returned encouraging zones of anomalous copper and gold
indicative of being in close proximity to a mineralising
system.
Two deeper holes were completed during the quarter to test
for continuation and development of the of the mineralised
zones previously encountered in holes MAD001 and MAD005.
MAD008 intersected narrow intervals of anomalous gold and
copper mineralisation throughout the hole including an
interval of 73m averaging 0.10% Cu from 149m. This included
narrower higher grade sections of 9m at 0.23% Cu from 154m
and 10m at 0.13% Cu from 175m which correlate with the
anomalous copper intersections previously reported from
MAD001.
Hole MAD010 intersected a number of zones of copper and gold
mineralisation which can be correlated with mineralised zones
intersected in MAD005. Most encouraging was that the drill
hole contained some of the best mineralisation intersected to
date at Magnetite Creek. Of special interest was an interval
of 24.65m from 229.35m which averaged 1.01% Cu and 0.43 g/t
Au within a 31m zone averaging 0.85% Cu and 0.35 g/t Au
between 227m and 258m.
These holes continue to confirm the potential of the area for
significant copper and gold mineralisation. Drilling is
continuing to test the identified mineralised zones both
along strike and at depth.
Significant drill hole assay results are shown in the table
below.
Hole_ID | From (m) | To (m) | Width (m) | Cu % | Au g/t |
MAD008 | 109.0 | 126.0 | 17.0 | 0.14 | 0.08 |
MAD008 | 140.0 | 145.0 | 5.0 | 0.07 | 0.75 |
MAD008 | 154.0 | 163.0 | 9.0 | 0.23 | 0.08 |
MAD008 | 175.0 | 185.0 | 10.0 | 0.13 | 0.08 |
MAD008 | 203.0 | 210.0 | 7.0 | 0.22 | 0.09 |
MAD010 | 153.0 | 155.0 | 2.0 | 0.01 | 0.73 |
MAD010 | 192.0 | 194.0 | 2.0 | 0.59 | 0.42 |
MAD010 | 227.0 | 258.0 | 31.0 | 0.85 | 0.35 |
MAD010 | 339.0 | 342.0 | 3.0 | 0.75 | 0.45 |
MAD010 | 357.0 | 369.0 | 12.0 | 0.40 | 0.34 |
MAD010 | 379.0 | 389.0 | 10.0 | 0.18 | 0.02 |
MAD010 | 429.0 | 444.0 | 15.0 | 0.44 | 0.02 |
Regional Exploration
Geological mapping and rock geochemistry sampling continued within the Runruno FTAA. Work was concentrated in the Magnetite Creek and Burnt Tree Creek localities in conjunction with the diamond drilling programme.
Drill Hole Location
The locations of the drill holes referred to in this report are shown in the tables below.
Runruno Mineral Resource Extension
Hole ID | Local Grid East m | Local Grid North m | Collar Elevation m | Azimuth deg | Dip deg | Depth M |
MXD842 | 656 | 50 | 460 | 92 | -60 | 150.0 |
Hole ID | UTM Grid East | UTM Grid North | Collar Elevation | UTM Azimuth | Dip | Depth M |
MXD845 | 321149 | 1814257 | 535 | 89 | -60 | 255.5 |
MXD846 | 321230 | 1814257 | 456 | 92 | -60 | 262.0 |
Magnetite Creek
Hole ID | UTM Grid East m | UTM Grid North m | Collar Elevation m | UTM Azimuth | Dip deg | Depth m |
MAD008 | 322522 | 1812963 | 590 | 40 | -61 | 535.85 |
MAD010 | 322590 | 1812861 | 679 | 41 | -59 | 488.50 |
MAD011 | 322715 | 1812898 | 605 | 42 | -61 | 189.40 In prog. |
Acquisition of Remaining 15 % of the Runruno Project
During the Quarter the Company announced that it had
exercised its pre-existing option with Christian Mining Inc,
a domestic Philippine company, to purchase the remaining 15%
of FCF Minerals Corporation's ("FCF") shares in issue
which it did not previously own, for US$6.0 million.
The cost of the option was equivalent to US$44.44 per reserve
ounce or US$28.78 per resource ounce (total, including
reserves).
The transaction has now completed and Metals
Exploration's beneficial ownership of Runruno is now
100%.
Mr Ian Holzberger, a director of the Company, who has been involved in the mining industry for more than 39 years, is a Member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists, has compiled, read and approved the technical disclosure in this regulatory announcement.
Forward Looking StatementsStatements relating to the estimated or expected future production, operating results, cash flows and costs and financial condition of Metals Explorations, planned work at the Company's projects and the expected results of such work are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by words such as the following: expects, plans, anticipates, forecasts, believes, intends, estimates, projects, assumes, potential and similar expressions. Forward-looking statements also include reference to events or conditions that will, would, may, could or should occur. Information concerning exploration results and mineral reserve and resource estimates may also be deemed to be forward-looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed.
These forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable at the time they are made, are inherently subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation: uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms;
changes in planned work resulting from logistical, technical or other factors; the possibility that results of work will not fulfil projections/expectations and realize the perceived potential of the Company's projects; uncertainties involved in the interpretation of drilling results and other tests and the estimation of gold reserves and resources; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of environmental issues at the Company's projects; the possibility of cost overruns or unanticipated expenses in work programs; the need to obtain permits and comply with environmental laws and regulations and other government requirements; fluctuations in the price of gold and other risks and uncertainties.
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Documents associés | |
Operational Update Quarter Ended 31 December 2011 |