25th Jan 2006 09:24
Metals Exploration PLC25 January 2006 The following replaces the Metals Exploration PLC announcement released today under RNS 3935X As previously announced by MTL on 23 December 2004, an agreement was signed withSan Manuel Mining Corporation ("SMMC") allowing MTL to earn a 70% interest inthe Masapelid Project. This interest, which is now to be divided between MTL andMedusa Group in accordance with the JVA, has been increased to 100% (the "Interest"). METALS EXPLORATION PLC MASAPELID PROJECT - JOINT VENTURE 25 January 2005 The board of Metals Exploration PLC ("MTL") is pleased to announce that it hassigned a Joint Venture Agreement ("JVA") with Medusa Mining Limited ("Medusa")and Philsaga Mining Corporation ("Philsaga") (together the "Medusa Group") overthe former Lacandola gold mine on Masapelid Island, which is covered by MineralProduction Sharing Agreement 004-91-XIII (the "Masapelid Project"). As previously announced by MTL on 23 December 2004, an agreement was signed withSan Manuel Mining Corporation ("SMMC") allowing MTL to earn a 70% interest inthe Masapelid Project. This interest, which is now to be divided between MTL andMedusa Group in accordance with the JVA, has been increased to 100% (the "Interest"). Medusa is a company listed on the Australian Stock Exchange ("ASX: MML") and, inconjunction with Philsaga, is processing ore at its Co-O plant, which is beingsupplied by Philsaga from the Co-O gold mine in Agusan del Sur, approximately240 kilometres to the south-south-west of Masapelid Island. In summary the principal terms of the JVA are: • the Medusa Group has the right to earn an 84% share of the Interest, with MTL retaining a 16% share of the Interest or alternatively retaining a 10% Net Profit Interest ("NPI") from Medusa in any mining operation; • the Medusa Group is to expend the first US$1million on the Masapelid Project and is to partly fund MTL's remaining acquisition cost of the Interest; • the Medusa Group is to operate the Masapelid Project; • the remaining shares and cash consideration to acquire the Interest will be shared 84% by Medusa and 16% by MTL with the following payments to be made: (i) on or before 27 February 2006, proportionate payments to a total of US$25,000 cash and the issue of 40,000 shares by MTL and shares equivalent in value to 210,000 MTL shares by Medusa, such value to be determined with reference to the average price of one ordinary share in MTL during the 5 days of trading on AIM immediately preceding 24 January 2006; (ii) on or before 27 January 2007, proportionate payments to a total of US$25,000 cash and the issue of 40,000 shares by MTL and shares equivalent in value to 210,000 MTL shares by Medusa; and (iii) on or before 27 January 2008, proportionate payments to a total of US$30,000 cash and the issue of 80,000 shares by MTL and shares equivalent in value to 420,000 MTL shares by Medusa. • on completion of the expenditure of US$1 million, MTL has the exclusive right to choose to contribute 16% of the on-going expenditure or to dilute to a 10% NPI (in which case Medusa would then own 100% of the Interest); and • on commencement of any production, the present shareholders of SMMC will receive a 1.5% Net Smelter Royalty ("NSR"). PROJECT HISTORY The Masapelid Project has a history of narrow vein mining commencing beforeWorld War II. Records indicate that 20,666 tonnes at 15 g/t Au were produced bythe Km73 Mining Company from the Layong Vein on the eastern side of the islandbefore the mine closed prematurely prior to World War II. A further 133,000tonnes were reported to have been outlined by underground development in theparallel No.6 Vein. Two shafts were sunk approximately 300 metres apart todepths of 122 metres and 30 metres with horizontal development completed on 3levels. The parallel veins are interpreted to be approximately 900 metres long,strike in a north-easterly direction, are commonly approximately 1 metre wideand contain ancillary silver, lead, zinc and minor copper minerals. The island contains extensive zones of clay-pyrite alteration in andesiticvolcanics suggestive of a large hydrothermal system. Younger calcareoussediments also exhibit signs of alteration and are potential host rocks fordisseminated style deposits. In 1983 Benguet Exploration Inc. examined the property and collected foursamples which averaged 1.52 oz/t Au, 4.34 oz/t Ag, 3.77% Pb, 1.56% Zn and 2.14%Cu. In early 1986 a four hole diamond drilling programme was undertaken under aUnited Nations Development Program ("UNDP") in conjunction with the Mines andGeoscience Bureau ("MGB") to test the vein extensions on the western side of theisland. These holes returned 1 metre @ 22.5 g/t Au in DDH 1, 1 metre @ 35 g/t Auin DDH 2 and 1 metre @ 72 g/t Au in DDH 4. In the early 1990s Western Mining Corporation ("WMC") undertook extensiveexploration focused on discovering porphyry copper-gold mineralisation involvingstream sediment sampling, grid based soil sampling, 141 kilometres of groundmagnetics, a gravity survey, an IP survey in 3 areas, and 9 diamond drill holes.The soil sampling outlined coherent gold anomalies over 900 metres of strike,corresponding to the projected strike of the Layong and No.6 Veins. WMC's hole MSI-D1 on the western side of the island near the UNDP-MGB drillingdescribed above also intersected vein mineralisation of 1.48 metres @ 11.81 g/tAu. Three diamond drill holes were completed by WMC in the Sampotan area at thesouthern tip of the island where porphyry copper mineralisation was intersectedincluding 264.82 metres @ 0.32% Cu in hole MSI-D7 with the last sample in thehole assaying 1% Cu and 0.5 g/t Au over 0.5 metres A previous sample of remnant ore from a shaft collar returned 24.2 g/t Au, 154 g/t Ag, 7.86% Pb, 6.81% Zn and 0.55% Cu. PLANNED WORK PROGRAMME - MEDUSA The Medusa Group is expected to immediately commence a confirmatory diamonddrilling programme which, dependent upon results, may be followed by undergroundexploration and development. ABOUT MEDUSA The Medusa Group is currently conducting exploration in Eastern Mindanao.Philsaga have just received a Special Mining Permit which enables them toconduct commercial full scale underground mining operations at the Co-O goldmine in Agusan del Sur, for a period of one year, renewable for like period.Philsaga has been operating the narrow-vein Co-O mine for the last 5 years. The Medusa Group has advised that it will immediately commence the developmentrequired for full scale mining operations at the Co-O mine to provide the orefeed to the Co-O treatment plant that is leased by Medusa and which is currentlyundergoing its first upgrade to an initial nominal capacity of 400 tonnes of oreper day (approximately 150,000 tonnes per annum). As the Medusa Group has demonstrated the technical and financial ability todevelop and exploit narrow high gold-grade vein deposits in the eastern Mindanaoregion, which encompasses the Masapelid Project area, the board of MTL regardthe JVA as an excellent way of expediting the development of the MasapelidProject and, at the same time, enabling MTL to maintain its focus on Runruno. QUALIFIED PERSON Gary Powell (a director of MTL) has been involved in the mining and explorationindustry for more than 20 years. He has a Bachelor of Applied Science degree ingeology and is a member of the Australasian Institute of Mining and Metallurgyand the Australasian Institute of Geoscientists. He has compiled, read andapproved the technical disclosure in this regulatory announcement. ENQUIRIES:Steven Smith - Chairman: + 44 (0) 7797 721 858Jonathan Anderson - Investor Relations + 44 (0) 7950 410 680 or +63 (0) 917 560 6654Philip Haydn-Slater - WH Ireland Limited + 44 (0) 2072 201 666 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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