Metals Exploration : Financial Statements for Year Ended 31 December 2023

METALS EXPLORATION PLC

Registered Number 05098945

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2023

Contents
ABOUT METALS EXPLORATION	1
PRODUCTION AND FINANCIAL HIGHLIGHTS…………………………………………………………………………….2
CHAIRMAN'S REPORT	3
CHIEF EXECUTIVE OFFICER'S REPORT	5
AUDIT COMMITTEE REPORT	11
REMUNERATION COMMITTEE REPORT	14
SUSTAINABILITY REPORT	19
CORPORATE GOVERNANCE STATEMENT	24
DIRECTORS' REPORT	28
STATEMENT OF DIRECTORS' RESPONSIBILITIES	37
INDEPENDENT AUDITOR'S REPORT	38
CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME	45
CONSOLIDATED BALANCE SHEET	46
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	47
CONSOLIDATED CASH FLOW STATEMENT	49
COMPANY BALANCE SHEET	50
COMPANY STATEMENT OF CHANGES IN EQUITY	51
COMPANY CASH FLOW STATEMENT	52
NOTES TO THE FINANCIAL STATEMENTS	53

METALS EXPLORATION PLC

ABOUT METALS EXPLORATION

Philippine gold producer

Metals Exploration plc ("Metals Exploration", "MTL", the "Company", or the "Group") is a Philippines focused gold producer operating the Runruno gold mine 250 kilometres north of Manila in the mineral rich Nueva Viscaya province, on Luzon island.

Group vision & mission statement

The Group's vision is to be the most admired gold producer in the Philippines. Our mission is to enhance the lives of our people and local communities through the responsible management of our natural resources, to build a multi-project business and to deliver performance that stakeholders can be proud of.

Well-defined values embedded into the business processes and structures along with consistent leadership actions and behaviours provide the foundation for corporate culture and its subsequent success. As a responsible mining company, we ensure that our Company's core values reverberate across all aspects of our business and represent the way we do business.

Corporate information
Directors	N.K. von Schirnding	(Independent Non-Executive Chairman)
	D.P. Bowden	(Chief Executive Officer and Executive Director)
	A.H. Chubb	(Non-Executive Director)
	T.J. Livesey	(Independent Non-Executive Director)
	S.M. Smith	(Non-Executive Director)
	G.R. Walker	(Non-Executive Director)
Company Secretary	MSP Corporate Services Limited
Registered office	38 - 43 Lincoln's Inn Fields
	London WC2A 3PE
Auditors	PKF Littlejohn LLP
	15 Westferry Circus
	London E14 4HD
Nominated & Financial Adviser	Strand Hanson Limited
	26 Mount Row
	London W1K 3SQ
Broker & Financial Adviser	H&P Advisory Ltd, trading as
	Hannam & Partners
	3rd Floor, 7-10 Chandos Street
	London W1G 9DQ
Solicitors	Armstrong Teasdale LLP	Squire Patton Boggs
	38 - 43 Lincoln's Inn Fields	2 & A Half Devonshire Square
	London WC2A 3PE		London EC2M 4UJ
Registrars	Share Registrars Limited
	3 The Millennium Centre, Crosby Way
	Farnham
	Surrey GU9 7XX
Company's registered number	05098945

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		METALS EXPLORATION PLC
PRODUCTION AND FINANCIAL HIGHLIGHTS
FY2023	FY2022		% CHANGE
GOLD PRODUCTION (ounces)
85,194 oz	72,537 oz		Up 17.5%
AVERAGE GOLD RECOVERY (% of head
grade)
88.7%	85.7%		Up 3.5%
LOST TIME INJURIES
NIL	NIL		Nil - no lost time injuries
SALES REVENUE (US$ MILLIONS)
$166.7	$124.4		Up 34.0%
OPERATING PROFIT (US$ MILLIONS)
$29.2	$23.8		Up 22.7%
PROFIT BEFORE TAX (US$ MILLIONS)
$119.6	$8.7		Up 13.7times
Adjusted EBITDA (US$ MILLIONS)
(EBITDA less impairments)
$82.6	$44.9		Up 84.0%
FREE CASH GENERATED FROM OPERATIONS
(US$ MILLIONS)
$74.6	$38.2		Up 95.3%
NET DEBT (US$ MILLIONS)
$23.6	$81.1		Down 70.9%
TOTAL DEBT REPAYMENTS (US$ MILLIONS)
$64.8	$33.8		Up 91.7%
TOTAL GOVERNMENT TAXES & FEES (US$
MILLIONS)
$18.2	$13.9		Up 30.9%
TOTAL COMMUNITY PROGRAMME
EXPENDITURE (US$ MILLIONS)
$1.4	$1.3*		Up 7.7%

* restated to remove expenditure related to pre-2022 year commitments

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METALS EXPLORATION PLC

CHAIRMAN'S REPORT

Dear Shareholder,

I am pleased to be joining Metals Exploration at what is an exciting milestone in the Company's growth trajectory.

2023 proved a defining year for the business with an array of new records broken at its Runruno project, including record annual gold revenues of US$167 million directly on the back of a record production of 85,194 ounces. This, we are proud to relate, exceeded the upper revised production guidance for the year.

I am also very pleased to report to shareholders that for the year ended 31 December 2023, your Company made a profit before interest, tax, depreciation and amortisation (EBITDA) of US$180.3 million (2022: US$43.7 million) and an EBITDA adjusted for impairment charges/reversals of US$82.6 million (2022: US$44.9 million).

This outstanding achievement is a testament to the recent corporate turnaround implemented by management following the new leadership appointments in 2019 and the subsequent hard work and dedication of the entire workforce in the Philippines. These strong results have culminated in an entire deleveraging of the balance sheet transferring value from lenders to equity shareholders.

Shareholders will undoubtedly be pleased to know we are now essentially debt free, a pivotal moment for Company: for the first time in Metals Exploration history, we can talk meaningfully about growth. With only three/four years of life-of-mine left on the Runruno project, Metals Exploration has turned its attention to ensuring the longevity of the business and continued value creation for you, our shareholders. Future cash flow will be directed to investing in growth opportunities, initially in the Philippines beyond our Runruno project.

This is already well underway with our recent proposed acquisition of 72.5% of the issued share capital of Yamang Mineral Corporation, and 100% of the issued share capital of Yamang Corporation Pte Ltd, which includes the "Abra Project". The project comprises an exploration licence over an area of 16,200 hectares in the Abra region, approximately 200km north of MTL's existing operations in Runruno. The acquisition, subject to lender and shareholder approval, will provide exploration potential, with the initial exploration programme to focus on the Lacub and Manikbel areas.

This growth strategy is yet another illustration of the exceptional turnaround strategy so clearly evident in the 2023 year-end financial performance.

In the short space of time I have been at Metals Exploration, I have been impressed by the operations and the 'Metals Exploration' way of working. The Company has, under the guidance of CEO Darren Bowden, not only nurtured a robust social licence to operate but also built a respected brand in the Philippines.

Having visited the Runruno site for the first-time last month, I can personally attest to the fact this change has reverberated across the Company in its entirety, having a profound effect at each level. This is a case study in the making and has progressed the Company dramatically, from underperforming to exceeding its own revised production guidance in just a few years.

Metals Exploration has been successfully operating in the Philippines for the past 15 years. Naturally, the Company is proud to have developed and maintained strong relationships amongst all our stakeholders, from the central Government down to the local communities. Our position as a successful and ESG complaint operator is decidedly advantageous as we embark on our strategy to acquire more assets in the Philippines, and potentially the wider region, and to mirror the success we have realised with our Runruno project.

Throughout our record-breaking performance this year, Metals Exploration is proud to have maintained an exemplary operational and environmental track record. Metals Exploration continues to be active in promoting responsible mining practices, combined with numerous environmental protection and enhancement programmes. These are in addition to our Community & Social Development programme, which continues to focus on health, education, capacity building and enterprise development.

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METALS EXPLORATION PLC

The Company's strong sustainability performance has been recognised by the Philippine Government Awards: Metals Exploration was honoured to receive the Presidential Mineral Industry Environmental Award (PMIEA) in the Surface Mining Operation Category for the second year in a row in 2023, the highest government mining award attainable in the Philippines. We also received 3rd Runner-up for the Best Mining Forest Contest in the Metallic Category, an acknowledgement of the team's diligent efforts to uphold the highest environmental standards. These awards are a particularly notable achievement as an indication of support from local communities and government agencies. In the ASEAN Mineral Awards 2023, the Company was pleased to place as the 1st Runner-up in recognition of outstanding best practices in Sustainable Mineral Development (Mineral Mining - Metallic). ESG and the communities that we work in remain at the forefront of everything that we do at Metals Exploration.

Looking ahead to FY2024, my first month at Metals Exploration has given me every confidence that our production guidance of 74,000-80,000 ounces is well within reach. The continuing strong cash flow from operations at Runruno, without any ongoing debt repayments, will catalyse the Company's transformative growth period, providing us with opportunities to deliver significant shareholder value as well as looking at organic growth and M&A opportunities.

I am excited to continue nurturing the stakeholder relationships in the Philippines that serve as a cornerstone for the next chapter in the Company's trajectory, and, importantly, working diligently to continue the work begun by the accomplished team I have joined.

Nick von Schirnding

Independent Non-Executive Chairman 22 May 2024

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METALS EXPLORATION PLC

CHIEF EXECUTIVE OFFICER'S REPORT

The Group is pleased to report on what was a stellar year with record gold production, record gold sale revenue and record operating and net profits for the year. Pleasingly, the Group closed out the year with gold production exceeding its published, and re-stated, gold production guidance for the year.

With the Group's robust business fundamentals providing a strong platform from which to grow, we go into 2024 focused on opportunities to transform the Group into a multi-project company.

Most importantly, the Group continues to create a net-positive impact for its stakeholders and local communities. Our environmental, sustainability and social programmes continue to be of a very high standard, ensuring the Company continues to be accountable, transparent, and responsible in its corporate purpose.

SAFETY AND HEALTH

Safety remains at the core of the Group's business. During the year there were no material safety and health incidents throughout all Group operations. A safe working culture is actively promoted by a dedicated occupational safety and health department and is embraced across the Group and by all departments. All staff recognise their individual responsibilities for their own safety and the safety of others.

Evidence of adhering to these values is the excellent safety record that the Group's employees and contractors have achieved. As at the date of this report the Group has achieved in excess of 22.7 million man- hours with no lost time incidents occurring since the last lost time incident in December 2016. This is a remarkable achievement for an operation of this nature, and all employees and contractors are to be congratulated on this outstanding record.

FINANCIAL YEAR 2023 ("FY2023") OVERVIEW

Operational profit was US$29.2 million (FY2022: US$23.8 million) following record gold production for FY2023 of 85,194 ounces, being significantly higher than FY2022's production of 72,537 ounces. The gold production was achieved with average gold recovery improving to 88.7% from 85.7% in FY2022. The all-in-sustaining-cost ('AISC') for FY2023 was US$1,126 per ounce (FY2022: US$1,235 per ounce), which was slightly above the lower FY2023 AISC guidance of US$1,120 per ounce.

During FY2023 the gold price remained strong resulting in an average sales price of US$1,944 per ounce (FY2022: US$1,797 per ounce). Total sales for FY2023 were US$166.7 million (FY2022: US$124.4 million).

During FY2023 the cash generated from operations was US$74.6 million (FY2022: US$38.2 million). This enabled the Group to make US$64.8 million in debt interest/principal repayments during FY2023 (FY2022: US$33.8 million).

Management's operational focus during FY2023 was to consolidate plant performance improvements and operational reliability. Mill throughput was maintained above nameplate design levels, while numerous modifications and equipment upgrades throughout the process circuit have improved general performance and reliability of the plant.

GROUP DEBT

In October 2020 the Group completed a debt restructuring with Runruno Holdings Limited and D & A Holdings Limited (together the "RHL Group") and MTL (Luxembourg) S.à r.l. ("MTL Lux"). In the period to November 2022 the Group made regular monthly senior loan repayments such that, except for a nominal US$2,586, the senior debt was fully repaid. This nominal amount had been left unpaid to ensure various securities remained in place until the mezzanine loans were elevated to the status of secured borrowings (the "Elevation"). The Elevation process required completion of complex and multi-country documentation and the registration of new security arrangements in numerous jurisdictions. Although the necessary material documentation was agreed by all parties it has not been executed due to a dispute in relation to the applicable rate of interest applying to, and hence, the quantum of the remaining mezzanine debt.

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METALS EXPLORATION PLC

The October 2020 debt restructuring agreements envisaged the interest rate applicable to the mezzanine debt being reduced from 15% pa to 7% pa once the senior debt is repaid and the elevation of the mezzanine debt to "new" senior debt is complete. The Company's position was that the intent of the October 2020 debt restructure was that the interest rate applicable to the mezzanine debt should have reduced from 15% pa to 7% pa in November 2022.

The Company's position was that the final payment due to the lenders under the Company's mezzanine debt facilities was made on 25 March 2024, on the basis of the lower interest rate of 7% (as opposed to 15%) applying from 3 November 2022, which the Company believed should apply under such facilities.

The Company's minority 29.3% mezzanine debt lenders, the RHL Group, disputed that the interest rate applicable to their portion of the mezzanine debt reduced from 15% to 7% from 3 November 2022. Further, the RHL Group claimed that several events of default have occurred under the Group's senior and mezzanine facilities, such that the relevant default interest rate (being a total of 12% under the senior debt facility and 20% under the mezzanine debt facilities) should apply with effect from 5 October 2023. The Company disputed these allegations.

In light of the RHL Group's position in respect of the application of 15% interest to its loans under the mezzanine facilities, MTL Lux. (holding 70.7% of the mezzanine debt), contrary to historical assurances otherwise, sought to receive this interest rate on its own loans to the Company. MTL Lux has formally recorded that it does not believe penalty interest should apply.

After a detailed consideration of the Company's legal position in this matter, and associated issues such as the cost of an ongoing dispute with the Company's two largest shareholders, the Company has attempted to resolve this matter by making a payment, in May 2024, of approximately 50% of the total quantum currently under dispute.

However, as this dispute has not been fully resolved, the Company has, at 31 December 2023, created a provision for possible increased interest of US$2.6 million, being the remaining difference between 15% per annum and 7% per annum on the mezzanine loans for the period 3 November 2022 to 31 December 2023.

The Company continues to negotiate with MTL Lux and the RHL Group on this matter.

RUNRUNO MINE

Mining Operations

Total material moved during FY2023 was above budget at 12.4Mt (million tonnes) (FY2022: 13.7Mt).

Mining operations during FY2023 were concentrated in Stages 3 and 4. In-pit backfilling, which will reduce closure and environmental restoration costs upon the eventual closure of the mine, continues in Stages 1 and 2, with resultant reduced haulage times.

During FY2023, a drill programme was undertaken with the aim of discovering additional economic resources outside of the current mine plan pit-shell, especially to the north, east and west of the current Stage 5 pit design. The objective was to discover new economically mineable ounces that would increase the Runruno life of mine ("LOM"). The area drilled encountered evidence of significant mining having been conducted by the illegal small-scale miners that delayed the Group's access to these areas. Unfortunately, no material new resources were discovered from this drill programme.

All relevant permits for operations remain in place for the Runruno mine.

Gold Reserve Statement

As the resource extension drilling was not successful there has been no calculation of an updated ore reserve statement.

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METALS EXPLORATION PLC

The most recent gold reserve statement was issued in February 2022, based on data as at 1 August 2021, as follows:

Table 1 - Ore Reserve estimate - published in February 2022

Reserve	Ore		Gold
Category	Mt	g/t		Moz
Proved	-	-		-
Probable	9.94	1.35		0.43
Total	9.94	1.35		0.43
Inferred resources included in LOM model pit
Inferred material	0.69	1.11		0.02

Using a Surpac block model, the Group modelled an internal estimation of the subsequent depletion of ore due to mining that has occurred since the above model was calculated (the period 1 August 2021 to 31 December 2023). The estimated resource depletion and the resulting depleted reserve statement (note that these calculations have not been independently verified) as at 31 December 2023 are:

Table 2 - Ore depletion estimate

	Reserve			Ore				Gold
	Category			Mt			g/t			Moz
	Estimated ore mined from
	August 2021 to December			4.80			1.35			0.21
	2023
				Table 3 - December 2023 Depleted Ore Reserve estimate
	Reserve			Ore				Gold
	Category			Mt			g/t			Moz
	Proved			-		-		-
	Probable			5.14		1.35		0.22
	Total			5.14		1.35		0.22
Inferred resources included in LOM model pit
	Inferred material			0.50		1.00		0.02

Process Plant

Plant performance in FY2023 continued to show improvement in gold recovery from both the flotation and BIOX® circuits. During FY2023, the Group achieved an overall gold recovery of 88.7%, an improvement upon FY2022 which was 85.7%. Total gold produced in FY2023 was 85,194 ounces compared to 72,537 ounces in FY2022.

During FY2023, further upgrades to the process plant return water and BIOX® tank cooling systems were undertaken, improving plant availability and throughput rates. This upgrade also improved the ability to control BIOX® temperatures with further marginal production gains in BIOX® anticipated. These modifications combined with a largely uninterrupted supply of power during FY2023 resulted in a stable operating environment leading to the record average gold recoveries achieved over the year.

Unplanned downtime during FY2023 resulted mainly from tails line failures and repairs to the SAG mill girth gear, conveyor belts and return water line. Overall unplanned downtime has reduced through the Group's programme of proactive maintenance.

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METALS EXPLORATION PLC

Notwithstanding the above, the process plant operated above design throughput with the following points of note:

• The crushing and grinding circuit operated above design throughput, achieving a utilisation rate of 91.8% (FY2022: 86.5%) and processing 2.10Mt of ore (FY2022: 2.07Mt);
• The gravity circuit achieved a recovery of 28.5% (FY2022: 27.9%);
• Fine-tuningof the flotation circuit resulted in incremental increases in recovery to 93% (FY22: 91%);
• The CIL circuit achieved an overall CIL recovery of 91.6% (FY2022: 89.9%);
• A major upgrade to the cooling water circuit was completed providing greater control of temperatures in the BIOX®; improving sulphur oxidation to 76.1% (FY2022: 67.5%); and
• The other plant circuits and ancillary systems all operated adequately.

Residual Storage Impoundment (RSI)

The Group's tailings products are delivered to a residual storage impoundment (RSI) structure. This structure has been designed and is being constructed to international standards that relate to water storage dams. The standard to which the RSI is being constructed far exceeds international standards that apply to traditional mining tailings dam structures.

The final scheduled lift to the RSI has been completed, with construction of the in-rock final spill-way underway. This final in-rock spillway will ensure the RSI has the capacity to cope with a 'Probable Maximum Flood' event.

The RSI remains in compliance with local guidelines and local development requirements, although it has not reached the final design stage of being capable of successfully coping with a 'Probable Maximum Flood' event. The in-rock final spillway is expected to be completed in Q1 2025.

The performance of the RSI is continuously monitored by independent international consulting engineers.

Government Industry Awards

During Q4 2023, the Group was awarded the following Philippine Government awards:

• Presidential Mineral Industry Environmental Award (PMIEA) in the Surface Mining Operation Category 2023, awarded for the second year in a row.
• 3rd Runner-up, Best Mining Forest Contest - Metallic Category 2023.
• Ronald Wayan, Safety Officer, was the winner on the Best Safety Inspector (Surface Award).

In addition, the Group was selected to represent the Philippines at the third ASEAN Mineral Awards. At these awards the Group was awarded:

• 1st Runner-up in recognition of outstanding best practices in Sustainable Mineral Development (Mineral Mining - Metallic).
• 2nd Runner-up in recognition of outstanding best practices in Sustainable Mineral Development (Mineral Processing - Metallic).

These awards are given to mining companies in recognition of outstanding levels of dedication, initiatives and innovations in the pursuit of excellence in environmental protection, health & safety management and social/community development. Winning the Presidential award is the highest Government mining award attainable in the Philippines.

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