Metals Exploration : Interim Results for Six Months Ended 30 June 2021

METALS EXPLORATION PLC

Interim Results for Six Months Ended 30 June 2021

Metals Exploration plc (AIM: MTL) ("Metals Exploration" or the "Company"), the Philippine gold producer, announces its interim results for the six months ended 30 June 2021.

Highlights

• Gold production of 35,316 ounces (H1 2020: 31,940 ounces), up 10.6%;
• Gold recoveries of 81.0% (H1 2020: 68.5%), up 18.2%;
• Operating profit of US$14.2 million achieved (H1 2020: US$9.2 million), up 54.3%;
• Positive cashflow from operations of US$21.3 million (H1 2020: US$8.3 million), up 156.6%;
• Net Debt as at 30 June 2021 US$111.0 million (H1 2020: US$126.2 million), down 12.0%, and
• New Independent Chairman and three new Non-Executive Directors appointed.

COVID-19

• Ongoing impacts from the pandemic do not appear to threaten the medium and long term viability of the Group's operations.
• Secured a supply of approved COVID-19 vaccinations sufficient to fully vaccinate the entire workforce, including on- site contractors - vaccination programme will commence in late September 2021.

Production Summary

Runruno Project

Production Summary

	Units
Mining
Ore Mined	Tonnes
Waste Mined	Tonnes
Total Mined	Tonnes
Au Grade Mined	g/tonne
Strip Ratio
Processing
Ore Milled	Tonnes
Gold (Au) Grade	g/tonne
Sulphur Grade	%
Au Milled (contained)	ounces
Recovery	%
Au Poured	ounces
Sales
Au Sold	ounces
Au Price	US$/oz

Actual		Actual		Actual
6 Months to		6 Months to		12 Months to
30 June 2021		30 June 2020		31 December 2020
713,742		1,125,138	2,473,400
4,537,749		4,414,126	8,922,496
5,251,491		5,539,264	11,395,896
1.27		1.44	1.40
5.92		3.92	3.32
1,048,290		1,047,099	2,057,274
1.29		1.39	1.41
1.11		1.28	1.22
43,620		46,939	93,568
81.0		68.5	72.2
35,316		31,940	67,552
34,745		32,121	68,510
1,797		1,647	1,782

Review of Operations

COVID-19 Impact

During H1 2021 the Philippines suffered from a new wave of COVID-19 infections that spread to the neighbouring cities/towns near the Runruno mine site. Despite enhanced on-site testing and strict site access protocols approximately 35 on-site cases of COVID-19 were detected. Interruptions to mining/processing operations were limited.

The continued spread of the 'Delta' variant throughout Asia however is evidence that the COVID-19 pandemic continues to be a source of concern and ongoing management for all businesses. To reduce the risk of future infections and to protect our workforce the Company has secured a supply of Philippine government approved COVID-19 vaccinations sufficient to fully vaccinate the entire workforce, including on-site contractors. It is expected that our vaccination programme will commence during September 2021.

All COVID-19 cases detected, along with the Company's response, have been reported to the appropriate government agencies. The Company continues to be compliant with all relevant government directives with regards COVID-19.

Other than disruptions due to the Q2 2021 on-site outbreak of COVID-19, the main operational disruption from the pandemic has been the ongoing and regularly changing restrictions on the movement of people in and out of the country.

Notwithstanding these issues H1 2021 resulted in gold sales of US$62.4 million, an increase of 18.0% over H1 2020 (US$52.9 million). Operations resulted in positive free cash flow of US$21.3 million, a 156.3% increase on H1 2020 (US$8.3 million).

The outstanding safety record of the operation continues with in excess of 14 million man-hours with no lost time incidents occurring since the last lost time incident in December 2016. All employees and contractors are to be congratulated on this ongoing achievement.

Finance

As at H1 2021 end the Group's net debt was US$109.6 million (H1 2020: US$125.5 million). Total debt repayments made during

H1 2021 were in excess of forecast at US$20.6 million (H1 2020: US$nil). Details of these debt facilities can be found in Note 6. The continued positive operating performance has strengthened the Group balance sheet such that it now shows a positive net asset balance.

Mining

Mining production of ore and waste was 5.3Mt for H1 2021 (H1 2020: 5.5Mt) and the total ore mined was 0.7Mt (H1 2020: 1.1Mt). Total ore movement was below budget and significantly impacted by a government prohibition of the use of explosives for several weeks at the beginning of the year.

Access to Stage 3 of the mine plan, which is critical to advancing mining operations, has been hampered during H1 2021 by delays in the resettlement of the illegal miners from this area. However, the resettlement process has progressed during (and since) the half-year period, although the Company does not yet have full access to the areas required to develop Stage 3. Work is ongoing in relation to the resettlement of the remaining illegal miners from Stages 3, 4 and 5 of the mine plan.

The programme of infill resource and mine plan drilling that commenced in Q3 2020 and was expected to be completed by the end of Q2 2021 has been delayed due to disruptions caused by the COVID-19 pandemic and equipment issues. In addition, further drilling is required in Stages 3 to 5 of the mine plan; however, this has been delayed due to the need to complete the resettlement of illegal miners in the area. Operations are targeting to complete this drilling during the 2022-2023 budget cycles. Notwithstanding the above, management is expecting to develop an updated resource model by calendar end 2021.

Process plant

Throughput for H1 2021 of 1.05Mt (H1 2020: 1.05Mt) was on budget, however, operations were managed to a lower feed grade. Ongoing delays in accessing mine plan Stages 3 and 4 continues to affect the head grade with higher grade material from Stage 3 now not scheduled to be accessed until Q1 2022.

Gold production for H1 2021 was 35,316 ounces at a significantly higher recovery rate of 81.0% (H1 2020: 31,940 ounces at a recovery rate of 68.5%) as a result of improvements in all aspects of process plant operations.

The 4th blower to the BIOX circuit was installed during Q3 2021, with the aim to increase the available air for, and hence increase efficiency of, the BIOX circuit.

Implementation of minor design modifications to the flotation circuit continue; with the aim to increase the consistency of gold recovery of this circuit.

During H1 2021, major shutdowns were undertaken to install the SAG mill variable speed drive, to replace the SAG mill liners and to upgrade electrical cables to the BIOX and mill circuits. Unplanned downtime consisted in the main of tails line failures and conveyor belt repairs.

Residual Storage Impoundment ("RSI")

The RSI is operating to design with an excellent environmental performance record. Staged construction of the RSI continues with development of Stage 5.5 completed in August 2021.

The performance of the RSI is continuously monitored by an independent international consulting group. Engineering and geotechnical studies on finalising the location and structure of the final in-rock spillway are well advanced and should be completed by calendar end 2021.

Community & Government Relations

Productive relations with both the community and the government continue. The Company continues its consultation with the government in relation to removing illegal miners, their infrastructure and dwellings from those areas scheduled to be mined as part of mine plan Stages 3 to 5. Access to Stage 3 of the mine is being developed.

Corporate

In April 2021, the Company appointed three new Non-Executive Directors:

• David Cather as Independent Non-Executive Chairman; formerly CEO (Mining) of Abu Dhabi Capital Group and Avocet Mining plc
• Jeremy Wrathall as Independent Non-Executive Director; CEO of Cornish Lithium Ltd and formerly Global Head of Natural Resources - London at Investec
• Andrew Chubb as Non-Executive Director; Partner and Head of Mining at investment bank Hannam & Partners

Further to this, on 31 August 2021 Steven Smith replaced Andrew Stancliffe as the MTL Luxemburg nominated Non-Executive Director.

These appointments have significantly strengthened the Board as they have brought considerable experience and knowledge across mining, mining finance and investment areas.

This Announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 ("UK MAR"). Upon the publication of this Announcement, this inside information is now considered to be in the public domain.

For further information please visit or contact www.metalsexploration.com

Metals Exploration PLC
Via Tavistock Communications Limited	[phone]
Nominated & Financial Adviser:	STRAND HANSON LIMITED
James Spinney, James Dance, Rob Patrick	[phone]
Financial Adviser & Broker:	HANNAM & PARTNERS
Nilesh Patel	[phone]
Public Relations:	TAVISTOCK COMMUNICATIONS
	LIMITED
Jos Simson, Barnaby Hayward	[phone]

CONDENSED CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME for the six months ended 30 June 2021

Notes

Continuing Operations

Revenue

Cost of sales

Gross profit

Administrative expenses

Operating profit

Impairment loss

5

Loss on sale of assets

Net finance and other costs

Share of (loss)/ profit of associates

Profit/(loss) before tax

Tax expense

Profit/(loss) for the period attributable to equity holders of the parent

Other comprehensive income:

Items that may be re-classified subsequently to profit or loss:

Exchange differences on translating foreign operations

Items that will not be re-classified subsequently to profit or loss:

Re-measurement of pension liabilities

Total comprehensive profit/(loss) for the

period attributable to equity holders of the parent

Earnings per share:

Basic cents per share

4

Diluted cents per share

6 month period		6 month period
	ended		Year ended
ended 30 June
	30 June 2020		31 December 2020
2021 (unaudited)
	(unaudited)		(audited)
US$		US$		US$
62,439,246	52,890,892	122,098,677
(44,363,193)	(39,906,887)	(83,258,806)
18,076,053	12,984,005	38,839,871
(3,897,168)	(3,805,015)	(8,377,651)
14,178,885	9,178,990	30,462,220
(798,275)	-	(1,292,814)
(78,206)	-	-
(7,324,104)	(10,521,655)	(19,403,985)
(6,642)	(4,783)	2,625
5,971,658	(1,347,448)	9,768,046
(29,910)	(29,634)	(19,749)
5,941,748	(1,377,082)	9,748,297

(1,428,287)	788,963	2,947,074
-	-	(28,655)
4,513,461	(588,119)	12,666,716
0.29	(0.07)	0.47
0.28	(0.07)	0.46

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET as at 30 June 2021

	Notes	30 June 2021		30 June 2020		31 December 2020
	(Unaudited)		(Unaudited)		(Audited)
		US$		US$		US$
Non-current assets
Property, plant and equipment		99,810,635	104,544,555	103,159,132
Other intangible assets		65,396	52,675	52,030
Investment in associate companies		157,391	156,625	164,033
Trade and other receivables		5,606,159	4,978,226	5,500,577
		105,639,581	109,732,081	108,875,772
Current assets
Inventories		16,524,182	10,924,581	14,620,743
Trade and other receivables		7,023,876	8,313,738	11,807,274
Cash and cash equivalents		4,702,995	7,322,055	8,931,792
		28,251,053	26,560,374	35,359,809
Non-current liabilities
Loans	6	(85,041,950)	(8,222,018)	(98,150,386)
Trade and other payables		(1,938,387)	(973,000)	(1,799,862)
Deferred tax liabilities		(838,661)	(765,814)	(808,757)
Provision for mine rehabilitation		(3,310,074)	(2,898,035)	(3,291,388)
		(91,129,072)	(12,858,867)	(104,050,393)
Current liabilities
Trade and other payables		(10,095,399)	(13,188,760)	(12,032,486)
Loans - current portion	6	(29,264,218)	(124,611,179)	(29,264,218)
		(39,359,617)	(137,799,939)	(41,296,704)

Net assets/(liabilities)

3,401,945

(14,366,351)

(1,111,516)