30th Jun 2005 17:42
Metals Exploration PLC30 June 2005 Metals Exploration plc Unaudited interim results for the 6 months to 31 March 2005. LONDON - 30 June 2005 - The Directors of Metals Exploration plc (AIM: MTL), theUK based gold exploration company with a focus on The Philippines, are pleasedto announce its first unaudited interim results for the 6 months ended 31 March2005. Highlights - up to 31 March 2005 • 22 October 2004 - Admission of the Company's Ordinary Shares to trading on AIM.• 23 December 2004 - Acquisition of a 70% interest in the Masapelid Project, Philippines.• 2 February 2005 - Acquisition of a 70% interest in the Runruno Project, Philippines.• Initial reconnaissance mapping and sampling produces encouraging results at Masapelid.• 18 February 2005 - Acquisition of 100% in the Jaclupan Project's Exploration Permit Application, Philippines. Highlights - post 31 March 2005 • At Runruno, revaluation of historical data and recent mapping and sampling of the surface and high grade miners' tunnels have produced results, which indicate that mineralization is over 2.5 km at the surface, 100m wide, and 400m deep. This indicates to the Company the presence of a considerable deposit• At both Masapelid and Runruno drill sampling is planned.• 28 June 2005 - Acquisition of 100% in the Puray Project's Exploration Permit Application, Philippines. Commenting on the results, Steven Smith, Chairman of Metals Exploration plcsaid: "It has been an exciting time for Metals Exploration since coming to AIM inOctober 2004. We have secured a significant interest in four explorationprojects and in two of them, Masapelid and Runruno, our initial mapping andsampling have produced very encouraging results. We look forward to the secondphase drilling tests on these projects with considerable optimism; and await ourinitial results on Jaclupan and Puray." For more information Metals Exploration plc - Steven Smith: Chairman Tel: +44 (0) 7797 721 858 Beaumont Cornish Limited - Roland Cornish/Rod Tel: +44 (0) 207 628 3396Venables Metals Exploration plc CHAIRMAN'S STATEMENT Following the Company's admission to AIM in October 2004 Metals Explorations plc("Metals Ex") has focused its efforts on the acquisition of a significantinterest in four mineral exploration projects. Masapelid, Runruno, Jaclupan, andPuray are all located in the Philippines and have substantial explorationopportunities. MASAPELID PROJECT The Board announced the acquisition of a 70% interest in the Masapelid projecton 23 December 2004. The project was identified by Mr Gary Powell (MetalsExploration plc - Director) as having potential for the definition of gold andcopper resources. Mr Powell carried out field investigations and due diligenceat the project in November 2004 to verify the existence of previous mining andexploration activities. Metals Ex signed an agreement with the claim owner ofthe Masapelid Project (San Manuel Mining Corporation) on 23 December 2004. Theagreement allows Metals Ex to earn a 70% economic interest in the Project bypaying San Miguel Mining Corp US$ 105,000 and issuing 1,250,000 ordinary sharesin Metals Ex over a three year period. Metals Ex is able to withdraw from theAgreement at any time, without any encumbrances or liabilities, in return forrelinquishing its economic interest. The Masapelid Project is located in the northeast corner of Mindanao in theProvince of Surigao, approximately 750 km south of Manila. The project coversthe entire Masapelid Island. The Island is composed of tertiary andesite and basalt flows and sub-volcanicswith lesser amounts of pyroclastic. These volcanic rocks are uncomfortablyoverlain by limestone of younger tertiary age. Pervasive silica-clay-pyritealteration is most pronounced in the andesitic units and is characteristic ofMasapelid. Quartz-gold-polymetallic veins have been mined historically on theIsland since Spanish colonial times, with records of production starting in the1930's. This production was restricted to two northeasterly trending veins. Atotal of approximately 21,000 tons of ore with a grade of 16 to 24g/t Au wasreportedly mined to a depth of approximately 90 meters. An assessment of thedeveloped parts of these veins in 1941 by H. Lindblom showed that there wasapproximately 133,000 tons of ore blocked out ready for mining at that time. Theoutbreak of World War II stopped all mining activities. During the 1980's artisanal gold miners worked on the Island; however, thediscovery of the rich Diwalwal gold mining area on Mindanao Island caused allmining on Masapelid to cease. Western Mining Corporation carried out a regional soil sampling program and somediamond drilling in the early 1990's. This generated a comprehensive databasecovering the whole Island. 11 rock chip samples were collected during a reconnaissance survey in February2005 of the historical Layong Vein mining area. The samples were submitted to anindependent, certified laboratory (Intertech Testing Laboratories) in SurigaoCity, for multi-element analyses. Table 1. Gold and Silver results - Rock-chip sampling - Masapelid Project, Philippines Sample Gold Silver Description of Rock SampleNumber (g/t) (g/t) MSP001 0.12 0.1 altered diorite with minor quartz veinletsMSP002 0.92 1.4g/t Au) potential of gold mineralisation (andmolybdenum) in the hanging-wall and foot-wall zones of the main Runrunomineralisation. The Company has just finished sampling the high grade miner's tunnels.Generally, 5 meter channel samples were taken continuously along the side wallsand backs of the local miners' tunnels. Results of the channel samples representthe grades of the high-grade material that the local miners have been leavingbehind.The channel samples (315 samples) taken from fifty tunnels have returned averagegrades of 4.3 g/t gold; 1,125 g/t molybdenum, and 4.8 g/t silver. =========== ======= ======== ====== ====== ======Tunnel No. of Tunnels No. of Au Mo AgLocations sampled Samples g/t g/t g/t=========== ======== ======== ======= ======= =======Balcony 1 7 50 5.7 754 3.7----------- -------- -------- -------- -------- --------Balcony 2 1 14 5.5 978 5.2----------- -------- -------- -------- -------- --------Main Runruno 5 42 3.1 420 2.3----------- -------- -------- -------- -------- --------Tayab 19 100 4.5 1060 4.5----------- -------- -------- -------- -------- --------Malilibeg 18 109 3.9 1642 6.6----------- -------- -------- -------- -------- --------Totals 50 315 samples----------- -------- -------- -------- -------- --------Weighted AverageGrades 4.3 1,125 4.8------------------------ -------- -------- -------- The local miners' tunnels are located predominantly in the hanging-wall orfoot-wall zones of the main Runruno mineralisation, which has been mapped atsurface over a strike distance of 2.5 kilometres. The local miners' tunnelsoccur over a distance of approximately 2 kilometres. We have identified a target drill area of 600m x 400m which lies within thecentral known area of mineralization that was previously drilled by Fil-Am uponwhich their resource calculation was based. However the recovery of the ore fromtheir drilling was very low (30% or less) and so we will be attempting to showthat the average grade of 1.4g/t reported could be on the low side Metals Ex maintains an active camp at Runruno with staff that includesgeologists, samplers and field workers. Current activities in the field include:(i) GPS surveying and mapping of underground workings which include over 40tunnels which have been sampled by channel sampling and surveyed underground;(ii) brushing and surveying of grid lines, spaced at 100 meters and covering anarea of 1.0km x 1.5km and covering the initial drill targeted area; (iii)surveying and clearing of drill sites. Geologic staff in the Manila office are compiling and analyzing the samplingfrom the adits and are preparing assay plan and section maps in order toprecisely define the spatial orientation of the known mineralization. Thisinformation will be used to plan the drill site locations to most effectivelysample and crosscut the known mineralized structures. Drill contracts arecurrently being tendered. JACLUPAN PROJECT The Jaclupan Project is located within 5 kilometres of the large open-cast andunderground copper-gold mines of Atlas Consolidated Mines & DevelopmentCorporation (pre-mining reserve of 1 billion tonnes grading 0.46% Cu and 0.25 g/t Au). The Jaclupan Project is an Exploration Permit covering 3,321 hectares.Exploration will commence immediately with the aim of defining drill targets inpreparation for drilling once the Exploration Permit has been granted. Occurrences of gold and copper mineralization have been identified in fourlocalities in Barangays Bantoon, Manduang, Kuanos and Kanluntao. These prospectsare potentially related to regional structures which are interpreted as beingwithin the periphery of a porphyry intrusive(s). The first reported reconnaissance survey of the project area was carried outduring 1997. Thirty four (34) rock chip samples obtained from the surfacereturned results ranging up to 83.03 g/t Au, with best results of 19.05 g/t Au,23.0 g/t Au, 30.37 g/t Au, 44.80 g/t Au, 53.8 g/t Au and 83.03 g/t Au.Similarly, encouraging results for copper were obtained ranging up to 2.5% Cu,with best results of 2.3% Cu, 2.4% Cu and 2.5% Cu. The samples were taken fromhighly altered, hematite/limonite-rich, chalcopyrite-bearing intrusive andesiticvolcanics with local malachite stains in fractures. The results of the previous exploration work at Jaclupan are very encouragingand confirm the presence of copper-gold mineralization containing significant,near-surface high-grade gold and copper mineralization. The company is currently awaiting the granting of the Exploration Permit, beforeanymore work can be undertaken on the property. PURAY PROJECT On 28 June 2005, the Company announced the signing of an option to purchaseagreement for the Puray copper-zinc-silver-gold project located in thePhilippines. The Puray Project comprises one Exploration Permit Application covering some6,075 hectares, and is located only 28 kilometres from the city of Manila. ThePuray property has been explored and partially mined since the 1930's. Themineralisation is polymetallic, containing high-grade and disseminatedcopper-zinc-silver-gold. The style of mineralisation is similar to the Kurokostyle of massive sulphide deposits, which have been major producers of copper,zinc, silver, gold and lead in Canada (e.g. Kidd Creek, Ontario, Canada). Thehigh grade and commonly high precious metal content of Kuroko deposits continueto make them attractive exploration targets. During 1969 to 1972 mining of massive sulphide-copper ore was carried out byEastern Rizal Copper Corporation. Approximately 700 tonnes of bornite ore wasmined of which a 200 tonne parcel was shipped directly to Japan for smelting.The grade of the shipment reportedly averaged 20% Cu, 5.75 g/t Au and 196g/t Ag.The remaining 500 tonnes of the massive bornite ore stockpile was lost in ahill-slide during a typhoon in 1972. In 1981, Eastern Rizal Copper Corporation reported that there remained in theunderground workings several thousand tonnes of massive sulphide ore grading10-50% Cu. They also reportedly calculated a proven and probable resource of 8million tonnes at an average grade of >0.7% Cu and an additional 28 milliontonnes of possible resources at an unspecified grade for the remainingdisseminated sulphide mineralisation. The resources calculations were derivedfrom the results of sampling surface trenches and tunnels, although they are notverifiable, and do not necessarily comply with the JORC guidelines for thereporting of mineral resources. ERCC did not consider other metals such as zinc, gold or silver as beingsignificant, therefore it appears that assaying for these metals were not alwayscarried out. The current metal prices for these other metals, however isconsidered by the Company to be of some economic importance when reviewing thepotential for this project. Samples obtained from the surface during a recentfield visit by the Company returned assays ranging up to 8.9% Cu, 1.7% Zn and1.3g/t Au. The occurrence of 'direct shipping' bornite and chalcopyrite ore indicates thepotential for the delineation of high-grade Kuroko-style mineralisation ofsignificant size over a potential strike length of up to 6 kilometres. Upon granting of the Exploration Permit Application, it is the intention ofMetals Exploration to exercise the option to purchase agreement and apply modernexploration techniques to define the project's size and grade potential. TheCompany considers the acquisition of the Puray polymetallic project an excitingopportunity to enhance its projects portfolio and ultimately deliver increasedvalue to the shareholders. OUTLOOK It is clear from the above descriptions of Masapelid, Runruno, Jaclupan andPuray, that each of the projects have considerable merit. Metals Ex will keep its shareholders fully informed as these projects advance. SM SmithChairman Metals Exploration plc Profit and Loss Accountfor the 6 months ended 31 March 2005 - Unaudited Note £ Turnover - Administrative expenses (66,023) Other operating income - ----------OPERATING LOSS (66,023) Interest Receivable 6,580 Interest Payable - ----------LOSS ON ORDINARY ACTIVITIESBEFORE TAXATION (59,443) Tax on loss on ordinary activities - ----------LOSS FOR THE FINANCIAL PERIODAFTER TAXATION (59,443) ====== Loss per ordinary share - basic 2 0.25p ====== Loss per ordinary share - fully diluted 2 0.20p ====== Metals Exploration plc Balance Sheet31 March 2005 - Unaudited Note £ £ INTANGIBLE FIXED ASSETSExploration and development costs 5 287,115 CURRENT ASSETSDebtors 45,299Cash at bank and in hand 328,567 ---------- 373,866 CURRENT LIABILITIESCreditors: amounts falling due within one year 64,736 ----------NET CURRENT ASSETS 309,130 ----------TOTAL ASSETS LESS CURRENT LIABILITIES 596,245 Creditors: amounts falling due after more than one year - ----------TOTAL NET ASSETS 596,245 ====== CAPITAL AND RESERVESCalled up share capital 6 266,433Share premium 292,255Shares to be issued 97,000Profit and loss account (59,443) ----------SHAREHOLDERS FUNDS 596,245 ====== Metals Exploration plc Cash Flow Statement for the6 months ended 31 March 2005 - Unaudited Note £ Net cash outflow from operating activities 3 (46,586) Returns on investment 6,580 Capital expenditure - Exploration and development costs (287,115) ----------Cash outflow before financing (327,121) Financing: Issue of shares 483,688 Shares to be issued 97,000 ----------Increase in cash 253,567 ====== Metals Exploration plc Notes to the Financial Statementsfor the Period ended to 31 March 2005 - Unaudited 1. ACCOUNTING POLICIES Accounting conventionThe financial statements have been prepared in accordance with applicableaccounting standards generally accepted in the United Kingdom. These interimfinancial statements are unaudited and do not constitute statutory accounts asdefined by Section 240 of the Companies Act 1985. Exploration and development costsCosts relating to the acquisition, exploration and development of mineralproperties are capitalised until such time as an economic reserve is defined andmining commences or the mining property is abandoned. Once mining commences the asset is amortised on a depletion percentage basis.Provision is made for impairments to the extent that the asset's carrying valueexceeds its net recoverable amount. Computer softwareComputer software is amortised over its estimated useful life at 40% on cost. Tangible fixed assetsDepreciation is provided at the following annual rates in order to write offeach asset over its estimated useful life. Plant and machinery - 10% to 50% on costFixtures and fittings - 20% to 50% on cost Deferred taxDeferred tax is provided for on a full provision basis on all timing differenceswhich have arisen but not reversed at the balance sheet date. A deferred taxasset is not recognized to the extent that the transfer of economic benefit infuture is uncertain. Any assets and liabilities recognized have not beendiscounted. Foreign currenciesMonetary assets and liabilities in foreign currencies are translated intosterling at the rates of exchange ruling at the balance sheet date. Transactionsin foreign currencies are translated into sterling at the rate of exchangeruling at the date of transaction. Exchange differences are taken into accountin arriving at the operating result. Going concernThe Company is in the early stages of development and has limited cashresources, its success will depend largely upon the outcome of future miningexploration and development programmes of Far East and in particular thePhilippines. The directors believe they have considered all relevant information and haveconcluded that it is appropriate to prepare these financial statements on thegoing concern basis. The financial statements do not include any adjustmentsthat may be required if the funds are not available or if the trading plans werenot materially achieved. Leasing commitmentsRentals paid under operating leases are charged to the profit and loss accountas incurred. Metals Exploration plc Notes to the Financial Statements forThe Period ended 31 March 2005 - Unaudited 2. LOSS PER SHARE The basic loss per share is based on 23,544,166 ordinary shares, being theweighted average number of ordinary shares in issue during the period, and onthe loss after taxation for the period of £59,443. The fully diluted loss pershare takes into account all outstanding warrants and shares to be issued and isbased on 29,994,166 ordinary shares. Basic earnings/(loss) per share is calculated by dividing the profit or lossafter taxation for the period available to the ordinary shareholders by the sumof the weighted average number of ordinary shares in issue during the period.Diluted earnings/(loss) per share is calculated by dividing the profit or lossafter taxation for the period by the weighted average number of ordinary sharesin issue, adjusted for the effect of all dilutive potential ordinary shares thatwere outstanding during the period. 3. RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS £ Operating loss (66,023) (Increase) in debtors (45,299)Increase in creditors 64,736 --------Net cash outflow from operating activities (46,586) ===== 4. MOVEMENT IN CASH BALANCES £ Net cash balances as at 1 October 2004 75,000 Movement in 6 months ended 31 March 2005 253,567 ---------Net cash balances as at 31 March 2005 328,567 ===== 5. EXPLORATION AND DEVELOPMENT COSTS On 23 December 2004 Metals Exploration plc concluded an agreement with the claimowner of the Masapelid Project (Philippines), San Manuel Mining Corp. Theagreement allows Metals Exploration plc to earn a 70% economic interest in theproject on completion of the following payment schedule: Cash Shares in Metals US$ Exploration plc On completion 25,000 250,0001 year after completion 25,000 250,0002 years after completion 25,000 250,0003 years after completion 30,000 500,000 Metals Exploration plc Notes to the financial StatementsFor the 6 months ended 31 March 2005 - Unaudited 6. EXPLORATION AND DEVELOPMENT COSTS - Continued Metals Exploration plc is able to withdraw at any time in return forrelinquishing its earned interest. On 2 February 2005 Metals Exploration plc signed an option agreement on theRunruno Project. The agreement allows Metals Exploration plc to earn a 70%interest in the project which is owned by FCF Mining Corp. The following paymentschedule has been agreed: Cash Shares in Metals US$ Exploration plc On completion 100,000 400,0001 year after completion 30,000 400,0002 years after completion 40,000 400,0003 years after completion 40,000 400,000 Exploration and development costs included in the balance sheet represent thecompletion payments on both the above projects together with the costs incurredon due diligence, concluding the contracts and subsequent exploration. 6. ORDINARY SHARES OF 1P IN ISSUE Date of issue Number Nominal Value £ 8/4/04 2 -30/9/04 7,499,998 75,00022/10/04 18,093,332 180,93317/2/05 750,000 7,50017/3/05 300,000 3,000 ------------- ----------TOTAL 26,743,330 266,433 ======== ====== 7. THE INTERIM REPORT The Interim Report was approved by the Directors' on 30 June 2005. Copies of the Interim Report may be obtained on written request to the CompanySecretary, Metals Exploration plc, 7 Savoy Court, Strand, London WC2R 0ER. 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