Metals Exploration plc
Condensed Consolidated Interim Financial statements for the six month period ended 30 June
2015
METALS EXPLORATION PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015
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 announce its interim results for the six months ended 30 June 2015.
Chairman's Statement
It is my pleasure to report the interim financial position of the Runruno Gold project which is on the cusp of commencement of commercial operations. The Process Plant construction phase is largely complete and as at 6 September it had been complete to 99.5% with only punch list, painting and some minor electrical activities outstanding. The Residual Storage Impoundment ('RSI') is complete to stage 1 with stage 2 expected to be finished in September 2015, the tailings return water pipeline is 90% complete, the tailings discharge pipe is around 70% complete. Staged commissioning of the processing plant was commenced in July with satisfactory progress achieved to date. These activities are continuing throughout September but are contingent upon receiving the requisite permits to occupy and operate.
The first gold pour and commencement of commercial operations could occur during October but are dependent on FCF Minerals Corporation ('FCF'), the Company's Philippine operating subsidiary, obtaining all necessary occupation and operating permits including those for the tailings pipelines and return water line. The applications for these permits along with a number of permits controlling the import, transport, storage and use of process consumables and additional permits covering operating commercial aspects of the Project have been made with the various Government Agencies responsible for regulating operations at Runruno. The outstanding permits are largely based on 'as built' drawings issued following the completion of construction, standard operating procedures, equipment lists and installation reports followed by rigorous survey by the agencies verifying the veracity of the information provided. Several hundred permits are required to operate the Project. The Company does not expect any impediments to receiving the permits apart from time constraints.
The uncertainty surrounding the time taking to obtain all of the operational permits has made it difficult to forecast the cost at completion for the project or even the date of completion. The most recent forecast cost at completion is US $191.0m which is an overrun of US $8.2m against the original budget. Refer to Finances section below.
By the end of August 2015 all areas of the Process Plant had been handed over to the commissioning team and low grade ore was successfully processed through the crushing circuit with the crushed ore being fed to the emergency stockpile.
The mill motors have been tested and the mill is now rotated regularly as part of the commissioning sequence. Lubrication piping was completed for the SAG mill and the mill electrical system testing and final installation carried out by the representatives of the vendor, CITIC. The mill liner plates have been fully installed.
Corrections to the Flotation cell rotor installation tolerances were carried out and all drives in the area have been tested.
Agitators in the neutralisation and BIOX® areas have been tested and are performing satisfactorily.
The commissioning of most of the specialist areas is being conducted under the direction of experienced consultants from the Plant and Infrastructure Engineering Group using representatives from the vendors' and FCF's own engineers. Commissioning is continuing through September leading to the commencement of operations on the issue of the required permits with no clear date when this exercise will complete.
Mini‐Plant
Operation of the milling and flotation circuits and BIOX® inoculum build‐up circuit have been performing very well producing the volume of concentrate required to support the build‐up of bacteria stocks in readiness for the commissioning of the BIOX® circuit. The Mini Plant is also being used for training of the Process Plant operators and after commissioning it will be used for process improvement (optimisation) test work.
To date, 225 tonnes of ore have been milled in the mini‐plant, and the operators are carrying out test work (flotation & toxicity) to determine the benefits of using a promoter to collect free gold during the flotation process in collaboration with the supplier's technical representative.
Other works include carrying out laboratory scale settling tests to determine the settling properties of the BIOX® product with flocculants supplied by various vendors. This involves dosage optimisation testing followed by slurry thickener simulation tests using the optimum dosage determined.
Residual Storage Impoundment
Construction of the RSI wall embankment to Stage 1 is now completed but Stage 2 has been delayed due to rain events which impede the compaction of the clay core to the required design standard.
The current Stage 2 works have reached a height of 523 metres RL and are expected to achieve the design height of 527 metres RL during September. The existing pumping and spillway capacities are adequate for the lead‐up to the wet season.
The tailings pipeline construction and permitting remains a critical path item for the project and its design has recently been exposed to intense scrutiny by the Mines and Geosciences Bureau (MGB) in the Philippines. The original design was to have both the discharge pipeline and the return water pipeline buried throughout its entire length. However, recent developments have disallowed this concept in favour of it being exposed and running along engineered benches but contained in a bund lined with a high density polyethylene liner. This reengineering also involved additional batter and slope stabilisation, establishment of run‐off drains and inspection point works to be undertaken. The revised design for the tailings pipe line is further complicated as it requires bridges crossings across both the Sulong river and the Malilibeg creek. This work is very well advanced but has added cost and time to the overall completion of the construction phase of the Project.
RDCL, the Engineer of Record, continues to inspect the RSI works regularly and provides the necessary sign‐off at each stage of preparation and construction.
Permitting
There are a number of key permits required to be obtained which will allow the Project to enter into commercial operations as follows:
1. Occupational permits
Occupancy permits are issued by the Local Government Unit (LGU) of the Municipality of Quezon and these are driven from the 'as built' drawings. Individual permits are required for each separate structure comprising the Project with up to 20 different areas identified within the Processing Plant and in excess of 75 making up the entire project. Each application requires to be supported by multiple copies of the 'as built' drawings in each of the architectural, civil, structural, electrical, mechanical and piping disciplines. Each copy of the drawings is signed by an independent discipline engineer and a director of FCF Minerals Corporation. Good progress has been made with all of the preparations completed and the documents lodged.
2. Permits to operate
These are issued by the MGB regional office (Region II) and driven from the'as built' drawings. Separate permits are required for every structure within the Processing Plant and all other operational areas of the Project wherein up to 60 separate areas have been identified. Multiple copies of the 'as built' drawings identified in the occupancy permit requirement above are once again required but formatted in a different manner. In addition further information in the form of standard operating procedures, electrical and mechanical equipment lists by serial number and location and electrical and mechanical inspection and testing plans (QA/QC data) are required to be lodged in support of the application. Processing of the applications by the MGB has commenced with
onsite verification surveys ongoing.
3. Permit to discharge
This permit is issued by the Environmental Management Bureau (EMB) Region II. It facilitates the discharge of water from the Project area subject to the satisfaction of a number of compliance criteria. When stage 1 of the RSI was completed the application for the discharge permit was lodged with the EMB. Verification of the application has been completed by the provincial EMB with the application endorsed positively to the national government EMB Region II for approval and issue of the permit. The Company has not yet received the discharge permit but expects to receive this before the end of September 2015.
4. Licence to purchase and licence to import regulated and controlled chemicals
This is issued by the central office of the Philippine National Police (PNP). The application for this licence was initiated in January of 2015 and had been endorsed from the Provincial PNP through the national PNP Region II to its Head Office for approval and issue. A temporary permit until 31 October
2015 has been issued to purchase and import the required chemicals while the permanent
application is determined. Under the temporary permit there is a further requirement to apply for a permit to unload the identified chemicals.
5. Business permits
These are routinely processed and applied for and sometimes retrospectively whenever the Company becomes aware of additional requirements and new or changed rules and regulations. Several of these require a number of site inspections or audits as required by the various agencies as a component of processing the applications.
Mine
The mine has been established and ore exposed in the pit floor in readiness for operations to commence. Regular geotechnical monitoring of the cut and formed slopes within the mine and Residual Storage Impoundment ('RSI') has been undertaken which has confirmed the stability of the work undertaken.
Reverse circulation ('RC') confirmation grade control drilling has commenced within the stage 1.5 central zone of the mine pit, above the existing resource block model levels. Low and medium grade ore from outside the ore‐reserve blocks from within this area has been delivered to the run‐of‐mine ('ROM') pad to be used for commissioning purposes. There are approximately 59,000 tonnes of ore at an average grade of 1.0 gramme per tonne of gold currently stockpiled on the ROM pad.
Environmental rehabilitation has been actively integrated into the Project works with final formed and where ever possible cut slopes routinely planted with endemic grasses and tree species. Outside the mine area the Company maintains a number of additional environmental rehabilitation programs
in degraded areas outside but surrounding the Project footprint.To continue reading this noodl, please get the original version here.