TIDMMTL
RNS Number : 4522Z
Metals Exploration PLC
12 January 2024
12 January 2024
METALS EXPLORATION PLC
("Metals Exploration", "MTL" or the "Company")
Acquisition of Prospective Philippine Exploration Project
Metals Exploration, a gold producer in the Philippines, is
pleased to announce that it has entered into a conditional share
purchase agreement (the "SPA"), which is subject (amongst other
things) to relevant lender and shareholder approvals, to acquire a
controlling interest in the YMC Group (as defined below), which
holds an extensive exploration tenement in the prospective Abra
area of the Philippines, for cash consideration of US$1.6 million
and the issue of options to subscribe for up to 41 million new
ordinary shares of GBP0.0001 each in the capital of the Company
("Ordinary Shares") (the "Transaction").
Summary
-- Acquisition of a majority and controlling interest in a
highly prospective exploration licence covering 16,200 hectares on
Luzon, Philippines, approximately 200km north of the Company's
Runruno mine, in the Cordillera region, which is a prolific gold
belt in the Philippines, with proven mineral endowment, having
produced over 40Moz of gold historically.
-- Acquisition consideration comprises US$1,600,000 cash plus
the issue of options to subscribe for up to 41,000,000 Ordinary
Shares (the "MTL Options") (further details of which are set out
below), to acquire:
-- 72.5% of the issued share capital of Yamang Mineral Corp., a
Philippine incorporated company ("YMCP") that holds the exploration
tenement EXPA-000129 (the "Abra Tenement"); and
-- the entire issued share capital of Yamang Mineral Corp Pte.
Ltd., a Singapore incorporated company ("YMCS" and together with
YMCP, the "YMC Group") that , subject to final documentation, will
be granted 100% of the rights to process any ore produced from
mining operations within the Abra Tenement area. Other assets
include cash of approx imately US$1,130,000, a purpose-renovated
drill rig and drill supplies with an initial cost of approx imately
US$125,000.
-- The issue of the Abra Tenement has been approved and the
licence is exploration ready, subject only to final agreement with
local communities within the Philippines' National Commission on
Indigenous Peoples ("NCIP") framework; with this requirement
expected to be satisfied in the near-term following positive
discussions with local stakeholders.
-- The Abra Tenement includes several drill ready target areas
(including within Lacub and Manikbel) and numerous areas of
historical artisanal mining operations.
-- Initial planned exploration work programmes will include
geochemistry, geophysics, mapping and review of historical data,
intended to lead to a drill programme which is currently expected
to commence during H2 2024.
-- It is intended that community and NCIP initiatives will also
be put in place concurrent with commencement of exploration
activities to ensure the Company's social licence to explore and
develop the Abra Tenements.
Steven Smith, Interim Chairman of Metals Exploration,
commented:
"Our strategy is to grow MTL within the Philippines and
ultimately the broader region, leveraging our established
in-country knowledge, experience, and strong technical team.
Our team at Runruno has set the bar for high performance,
locally-run and managed operations, and this gives us a significant
competitive advantage as we focus on the development of new
projects in the country.
The acquisition of the YMC Group is the first step in our
progress to a new future for the Company. The Abra Tenement has the
potential to provide an extensive project growth pipeline for MTL,
with multiple prospective targets in both gold and copper over a
significant area, in a geological region of scale and with
historical production. If we have the exploration success we are
targeting, we aim to focus on developing a high-grade,
smaller-scale gold production-ready project as soon as possible, in
addition to advancing our other targets.
YMC is the first of a number of targets within our purview and
we look forward to providing further updates on both our
exploration progress and project expansion efforts, as results are
obtained."
The Transaction
Under the terms of the SPA, Metals Exploration has agreed to
acquire 72.5% of the issued share capital of YMCP and 100% of the
issued share capital of YMCS for a total consideration of
US$1,600,000, plus the issue of up to 41,000,000 MTL Options.
The assets of the YMC Group include:
-- the Abra Tenement over an area of 16,200 hectares in the Abra region;
-- approximately US$1,130,000 cash; and
-- a purpose-renovated drill rig and drill consumables with an approximate cost of US$125,000.
The Transaction is subject (amongst other things) to approval of
the Company's lenders pursuant to its senior, mezzanine and
revolving credit facilities and approval of the Company's
shareholders at a general meeting, to be convened in the near term,
in order to seek:
-- approval of the Transaction in accordance with section 190 of
the Companies Act 2006 (the "Act");
-- approval of the terms of a long-term incentive plan proposed
to be adopted by the Company and, pursuant to which, the MTL
Options would be issued; and
-- the necessary shareholder authorities to issue the MTL Options.
Further announcements will be made in due course, including in
respect of the posting of a circular to convene the general
meeting.
The requisite lender approvals required in respect of the
Transaction have been received from MTL (Luxembourg) S. à r.l and
MTL (Guernsey) Limited and are being sought from Runruno Holdings
Limited and D & A Holdings Limited.
Whilst it does not constitute a related party transaction for
the purpose of Rule 13 of the AIM Rules for Companies due to its
relative size, the Transaction constitutes a substantial property
transaction for the purpose of section 190 of the Act, which
applies where a company is to acquire a non-cash asset with a value
exceeding GBP100,000 from a director. Darren Bowden, CEO of Metals
Exploration, holds 35% of the issued capital of YMCP, and will
receive consideration of 9.5 million MTL Options pursuant to the
SPA. Mike Langoulant, the Company's CFO (non-Board), is the
ultimate beneficial owner of Amber Harvest Investments Pte Ltd
("Amber"), the majority shareholder of YMCS, which will receive
approximately US$1.4 million cash consideration (reflecting its
cash investment into YMCS) and 3.5 million MTL Options pursuant to
the SPA. Further details will be included in the general meeting
circular and the Company's annual report, as required.
The YMC Group was established at a time when MTL's priority was
to pay down its significant group debt as quickly as possible and,
as a result, at that time MTL's lenders were not approached by the
Board to seek approval for the expenditure required for the
acquisition of new greenfield exploration projects. Accordingly, a
group of Filipino nationals and certain senior MTL management
independently formed the YMC Group, in order to seek to acquire the
Abra Tenement, following the Board of MTL deciding it was not of
interest to the Company at that time. Since its incorporation, YMCP
has applied for and been granted the Abra Tenement but has
otherwise not traded.
In addition, free incentive shares in both YMCS and YMCP (the "
Incentive Shares ") were issued to certain senior expats and local
Philippine MTL and YMC Group staff, provided that they remained
with the MTL group for at least a further 3-year period. The
Incentive Shares were issued as a quasi MTL-incentive scheme given
that, at that time, there was no MTL long-term incentive scheme put
in place for certain MTL senior employees. Further, a right of
first refusal was granted to the MTL group by Amber, as the
majority owner of YMCS, in respect of funding its mining
projects.
YMCP has now successfully applied for the Abra Tenement, subject
to a final clearance under the NCIP regulations being granted, as
noted above.
As a result of the subsequent strong financial performance of
the Runruno mine and the accelerated repayment of group debt, the
Company refined its strategy with regards to new projects. With
MTL's debt now below US$25 million and anticipated to be fully
repaid in H1 2024, and cognisant of the limited life of mine at
Runruno, MTL and its lenders believe it is now appropriate for the
Company to acquire new projects, including greenfield areas such as
the Abra Tenement, to seek to ensure the long-term viability of the
Company.
The US$1,600,000 cash consideration for the acquisition of the
YMC Group is equal to the amount of cash invested in the group to
date. In addition to the cash consideration payable under the SPA,
MTL will issue up to 41 million MTL Options as a replacement for
the Incentive Shares issued to certain MTL and YMC staff, on the
same or similar vesting terms, in exchange for such staff
transferring their Incentive Shares to MTL at nil cost.
As noted above, further details will be included in the circular
for the general meeting and the Company's annual report, as
required, but the key terms of the MTL Options will be:
Exercise price: GBP0.0001 per option
Exercise period: 7 years from issue
Employment hurdle: Requirement to remain an employee of the MTL group until 31 December 2025
The YMC Group structure has been established to comply with
Philippine mining law, should exploration lead to a mining
operation within the Abra Tenement area. Under Philippine mining
law, a mining company must be 60% owned by Philippine citizens,
however a foreign company can own 100% of a mineral processing
operation. With these rules in mind, YMCS (which is being 100%
acquired) will have the absolute right to process any minerals
mined from the Abra Project tenement area.
Following the completion of the Transaction, the MTL group will
own 72.5% of the issued share capital of YMCP, with the balance
held by three Filipino nationals, who will extend their support to
YMCP through the development of the Abra Tenement and any other
mining activities undertaken by YMCP. This 27.5% outside interest
in YMCP is free-carried and non-dilutive. Under Philippine mining
law, to enable a mining licence to be issued to YMCP in the future,
at least 32.5% of YMCP will be held by a qualifying Filipino MTL
group entity.
The Exploration Tenement
The Abra Tenement area, known as the "Abra Project", is located
on the Western belt of the highly endowed Central Cordillera region
in Abra, Luzon, approximately 200km north of MTL's existing
operations in Runruno. Bangued, the provincial capital, is
connected to Manila via the McArthur highway.
The Abra Project covers the Municipalities of Licuan-Baay and
Lacub. The terrain is moderate to rugged, with established forested
cover.
Water is readily available and main line power runs throughout
the area but may require additional infrastructure.
Figure 1: Abra Project Location Map
The Abra Project tenement area, with a strike length of
approximately 20km, covers an area of 16,200ha and is shown in
Figure 2.
The province is underlain extensively by volcaniclastics
intruded by quartz diorite and granodiorite.
Figure 2: Abra Project tenement area showing copper target
polygons.
Exploration Potential
The Central Cordillera of Luzon is formed of an uplifted and
tectonised magmatic arc associated with the Manila Trench
subduction zone.
The basement Oligo-Miocene arc succession of volcanoclastic
units is frequently intruded by diorites, and has been impacted by
a series of broadly North-South and Northeast-Southwest trending
structures associated with the dominant Philippines Fault.
Various phases of structural evolution with associated periods
of mineralisation have created a target rich domain for exploration
of copper and gold targets associated with porphyry and epithermal
systems.
The Cordillera region is a prolific gold belt in the Philippines
with proven endowment, having produced over 40Moz of gold
historically. Exploration in the Abra region was first conducted by
the Japanese International Cooperation Agency ("JICA") in the late
1970s and early 1980s and afterwards by various international
explorers, including the Philippine government in the late
1990s.
A geochemical map overlain with sampling data (Figure 3) shows
five main target areas. Of note in this image, the stars denote
copper values in excess of 65ppm.
Several significant structural intersection points appear to be
centres for higher grade copper anomalies, supporting the assumed
link between structure and mineralisation in this area.
Figure 3: Copper (Cu) Geochemical contour map.
From the results of historical work and recent sampling
programmes carried out by the YMC Group, there appear to be three
immediately interesting prospect areas:
Lacub
Northern most prospect, with 2 main targets:
o Copper/gold porphyry targets, as indicated by the surface
geochemistry.
o Epithermal gold targets, which have been sampled and accessed
via small scale mining tunnels with grades in excess of 100g/t
gold.
The geochemical data overlies the intersection of the regional
SW-NE trending structure and secondary structures. It also overlays
closely with the 1980 study conducted by the JICA which highlights
their focus on the area for porphyry copper targets, shown in
Figure 4.
Figure 4: Results from geochemical programmes, JICA survey, and
resultant target outline.
Further work conducted on the northern section of this target
area (M. Tuesley, 2008) showed high-grade epithermal vein systems,
with evidence of mining by small scale miners. Mineralisation is
from surface. Grab sampling from the ore and tailings of the
small-scale workings are shown in Table 1 below.
SAMPLE
NO Cu% Pb% Zn% Au,ppm Ag,ppm Details
L- 1 0.60 0.35 4.34 5.00 13.50 Kadadaunan Tails
-------- --------- --------- -------- -------- ------------------------------
L- 2 4.95 0.01 0.86 95.93 117.40 Bila Buneg Tails
-------- --------- --------- -------- -------- ------------------------------
L- 3 4.74 0.07 6.03 7.82 57.20 Saneng Tails
-------- --------- --------- -------- -------- ------------------------------
L- 4 1.3 0.00 0.03 0.34 10.20 Kadadaunan Copper Alteration
-------- --------- --------- -------- -------- ------------------------------
L- 5 0.01 0.00 0.02 29.36 23.10 Bila Buneg ore
-------- --------- --------- -------- -------- ------------------------------
L- 6 0.32 0.01 0.16 1.29 4.10 Saneng Ore (Unkles StockPile)
-------- --------- --------- -------- -------- ------------------------------
L- 7 2.76 0.00 0.49 131.57 108.70 Bila Buneg Ore
-------- --------- --------- -------- -------- ------------------------------
L- 8 0.02 0.04 0.06 0.25 2.10 Kadadaunan Wall Rock
-------- --------- --------- -------- -------- ------------------------------
L- 9 0.72 0.13 10.70 0.99 14.60 Saneng Ore (Mine)
-------- --------- --------- -------- -------- ------------------------------
L- 10 0.62 0.50 1.86 41.88 16.60 Kadadaunan Washed Ore
-------- --------- --------- -------- -------- ------------------------------
L- 11 0.44 0.01 0.55 3.42 6.60 Saneng Ore (2nd Sample)
-------- --------- --------- -------- -------- ------------------------------
Kadadaunan Unwashed
L- 12 0.30 0.43 2.12 16.11 9.70 Ore
-------- --------- --------- -------- -------- ------------------------------
L- 13 4.44 0.01 0.01 0.36 20.40 Bosawit
-------- --------- --------- -------- -------- ------------------------------
Table 1: Results of samples taken from small scale workings,
Lacub area.
Pervious exploration identified three types of
mineralisation:
1. Brecciated/stockwork copper-gold mineralisation.
2. Skarn mineralisation.
3. Vein and fracture fill mineralisation, marginal to diorite plutons .
There appear to be opportunities to identify smaller, high-grade
mineralised veins systems, which could provide low cost/fast start
mining projects, in addition to larger, lower grade porphyry copper
gold systems.
Manikbel
Copper targets, southern area:
o Large copper targets with evidence of anomalism from surface
mapping.
o Extensive outcrops over a 2km strike including grades of over
15% copper.
Manikbel has the highest intensity copper geochemical signature
of all the areas, coinciding with an area of major structural
intersection. The underlying geology is similar to Lacub, however,
in this case, the mineralisation from historical sampling seems to
be predominantly copper with little gold identified to date.
Outcrops mapped for over a 2km strike confirm copper values over
15%. It appears to represent a near-surface porphyry system. The
prospect is located close to the west coast which has port
infrastructure, accessible via national arterial roads.
Figure 5 shows the overlay of target areas by JICA (green
outline), with areas identified for further exploration of copper
porphyry targets, shown against follow-on field work previously
completed by the Mines and Geosciences Bureau (MGB). The target
areas appear to extend significantly beyond those initially
identified by JICA.
Figure 5: Surface exploration work completed in Manikbel.
Area 1 South Central region
o High-grade gold targets, with significant small-scale mining
activity.
o Additional extensive anomalism identified by large surface
sampling exercises conducted by the Philippine government.
Historical exploration in Area 1 has targeted high-grade gold
occurrences over several square kilometers and has identified
multiple mineralised vein systems. The area is north of MPSA 141, a
mining licence with a gold resource and south of MPSA 144, a mining
licence with a copper/gold resource. The images below (Figures 6
and 7) show results of sampling to date within the area.
Figure 6: Field work and sample results conducted by Yumol
1998.
Figure 7: Further work completed within MPSA 141 and Area 1
.
N.B: YMC does not hold either MPSA 141 or MSPA 144.
Initial 2024 exploration programme
The initial 2024 work programme is intended to commence in the
Lacub area, targeting previously identified high-grade gold systems
and regional analysis of the underlying porphyry systems. The
programme is envisaged to include the following tasks:
-- Finalising community and NCIP agreements and future community support programmes, Q1 2024
-- Field mapping and sampling, Q1 2024
-- Airborne geophysics covering the northern extent of the tenement area, Q1 2024
-- Survey and mapping of the small scall tunnels and veins, Q1 2024
-- Development of the geological data base and initial drill target Q1/2 2024
-- Commencement of drilling H2 2024
If the Company has the exploration success it is targeting, it
will focus on developing a high-grade, smaller-scale gold
production-ready project as soon as possible as well as advancing
its other exploration targets. This intention is based on both
historical and currently operating small scale mining activities in
the Lacub area.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014, which forms part of United
Kingdom domestic law by virtue of the European Union (Withdrawal)
Act 2018, as amended. Upon the publication of this announcement,
this inside information is now considered to be in the public
domain.
Glossary
Ag : means silver
Au : means gold
As : means arsenic
Cu : means copper
gm : means gramme
g/t : means grammes per tonne
Mo : means molybdenum
Moz : means million ounces
MT : means million tonnes
Pb : means lead
ppm : means parts per million
S : means sulphur
Zn : means zinc
- END -
For further information please visit or contact:
Metals Exploration PLC
Via Tavistock Communications
Limited +44 (0) 207 920 3150
Nominated & Financial STRAND HANSON LIMITED
Adviser:
James Spinney, James
Dance, Rob Patrick +44 (0) 207 409 3494
Financial Adviser & HANNAM & PARTNERS
Broker:
Matt Hasson, Franck Nganou +44 (0) 207 907 8500
Public Relations: TAVISTOCK COMMUNICATIONS
LIMITED
Jos Simson, Nick Elwes +44 (0) 207 920 3150
Web: www.metalsexploration.com
Twitter: @MTLexploration
LinkedIn: Metals Exploration
Competent Persons' Statement
Mr Darren Bowden, a director of the Company, a Member of the
Australasian Institute of Mining and Metallurgy and who has been
involved in the mining industry for more than 25 years, has
compiled, read and approved the technical disclosure in this
regulatory announcement in accordance with the AIM Rules for
Companies - Note for Mining and Oil & Gas Companies.
Forward Looking Statements
Certain statements relating to the estimated or expected future
production, operating results, cash flows and costs and financial
condition of Metals Exploration, planned work at the Company's
projects and the expected results of such work contained herein are
forward-looking statements which are based on current expectations,
estimates and projections about the potential returns of the Group,
industry and markets in which the Group operates in, the Directors'
beliefs and assumptions made by the Directors . 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" or variations of such words 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, mineral grades 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 statements are not guarantees of future performance or the
ability to identify and consummate investments and involve certain
risks, uncertainties and assumptions that are difficult to predict,
qualify or quantify. Among the factors that could cause actual
results or projections to differ materially include, 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 realise the perceived potential
of the Company's projects; uncertainties involved in the
interpretation of drilling results and other tests and the
estimation of gold, copper or other relevant mineral 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, copper and other relevant
minerals and other risks and uncertainties.
The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Group's
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are based
unless required to do so by applicable law or the AIM Rules for
Companies.
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END
MSCGPUWGGUPCGMG
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January 12, 2024 02:00 ET (07:00 GMT)
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