Metals Exploration : QUARTERLY UPDATE TO 30 SEPTEMBER 2020

METALS EXPLORATION PLC

QUARTERLY UPDATE TO 30 SEPTEMBER 2020

Metals Exploration plc (AIM: MTL) ("Metals Exploration", the "Company" or the "Group"), the natural resources exploration and development company with assets in the Pacific Rim region, today provides a quarterly update on matters relating to the operations of its Runruno gold project ("Runruno" or the "Project") in the Philippines.

COVID-19 Impact

• Operations have continued although at reduced production levels.
• Only one COVID-19 case reported at the mine site to date.
• Necessary preventative quarantine and medical steps taken to best protect mine site employees and contractors.
• Some key senior personnel have been able to return to the mine site notwithstanding travel restrictions.
• Supply chain logistics stabilised however power interruptions have continued with a negative impact on the BIOX process.

Finance and corporate

• 16,094 ounces of gold were sold during Q3 2020 at an average realised gold price of US$1,943 per ounce (Q2 2020: 14,908 ounces at an average gold price of US$1,722 per ounce).
• US$31.3 million in gold receipts received in Q3 2020 (Q2 2020: US$25.7 million).
• In October 2020 the Company completed a restructuring of the Group's debt position
• Total interest bearing liabilities as at 30 September 2020 were, in aggregate, approximately US$134 million.
• A US$4 million repayment of senior debt was made during quarter.
• Cash available for use as at 30 September 2020 was US$9.6 million.

Mining Operations

• Ore and waste mined for the quarter was slightly above budget at 3.1Mt (Q2 2020: 2.4Mt) of which
  total ore mined was 687kt (Q2 2020: 568kt).
• Three new 100 tonne dump trucks purchased in Q4 2019 are assembled and are fully operational.
• On-groundactivities in relation to access development to mine plan Stages 3 & 4, and resettlement of illegal miners away from areas covered by mine plan Stages 3 & 4 continue. Further actions
  in relation to the access development and resettlement activities will be made in the forthcoming quarters.
• No loss time injuries during the period.

Processing Operations

• 15,705 ounces of gold poured during Q3 2020 (Q2 2020: 14,908 ounces).
• Power outages, including back up power system failures, caused instability in the BIOX process during the early part of the quarter.
• Gold recovery for Q3 2020 improved to 71.3% (Q2 2020: 68.7%).

Production and Finance Summary

Runruno Project Report			Quarter	Quarter		FY 2020	FY 2019
FY 2020			Actual	Actual		Actual	Actual
PHYSICALS	Units		Q3 2020	Q3 2019		9 Months	9 Months
Mining
Ore Mined	Tonnes		687,172	463,885		1,812,311	1,486,033
Waste Mined	Tonnes		2,453,508	2,304,111		6,867,634	6,971,697
Total Mined	Tonnes		3,140,680	2,767,996		8,679,945	8,457,730
Au Grade Mined	g/tonne		1.30	1.39		1.40	1.47
Strip Ratio			3.57	4.97		3.79	4.69
Processing
Ore Milled	Tonnes		490,921	524,158		1,530,727	1,446,636
Au Grade	g/tonne		1.39	1.44		1.39	1.52
S2 Grade	%		1.16	1.01		1.24	0.93
Au Milled (contained)	ounces		22,013	24,282		68,622	70,857
Recovery	%		71.3	77.6		69.4	70.0
Au Recovered/Poured	ounces		15,705	18,848		47,645	49,622
Sales
Au Sold	ounces		16,094	18,239		48,215	49,109
Au Price	US$/oz		1,943	1,479		1,746	1,370
FINANCIALS (Unaudited)
Revenue
Gold Sales	(US$000's)		31,271	26,967		84,162	67,259
Operating Costs - Summary
Mining	(US$000's)		5,466	6,358		15,214	18,154
Processing	(US$000's)		7,763	8,123		22,523	20,980
G&A	(US$000's)		2,733	2,292		8,297	6,457
Total Operating Costs	(US$000's)		15,962	16,773		46,034	45,591
Excise Duty	(US$000's)		1,265	1,086		3,392	2,703
UK/Philippine G&A	(US$000's)		2,156	2,118		5,221	6,145
Total Direct Production Costs	(US$000's)		19,383	19,977		54,647	54,439
Net Cash Income	(US$000's)		11,888	6,991		29,516	12,821
Total Capital Costs	(US$000's)		3,226	4,006		9,643	5,896
Total non-cash costs	(US$000's)		4,317	3,020		12,719	6,941
Free Cashflow	(US$000's)		8,663	2,985		19,873	6,925
Cash Cost / oz Sold - C1	US$/oz		979	989		947	950
Cash Cost / oz Sold - AISC	US$/oz		1,383	1,385		1,314	1,251

Note: AISC includes all UK Corporate costs.

Review of Operations

Operations during Q3 2020 continued to be negatively impacted by disruptions resulting from dealing with the COVID-19 pandemic. These disruptions included restrictions on the movement of people and goods in and out of the country. International and domestic travel restrictions have resulted in a number of senior personnel being unable to return to site; notably key maintenance and process managers.

Although interruptions to the Company's supply chain of operational consumables and spare parts continue, these issues are being managed. Early in the quarter numerous power outages at the mine site, combined with some back-up system failures, and the inability to move specialist maintenance personnel to site, negatively impacted production and, in particular, the performance of the BIOX process. Encouragingly, the later end of the period has seen some stability to the power supply which has resulted in an improved operational performance since quarter end. In addition, some senior expat personnel have managed to return to the project site since quarter end, however, this does not include key maintenance managers.

Notwithstanding these issues, Q3 2020 resulted in gold sales of US$31.1 million (Q2 2020: US$25.7 million),

producing a positive free cash flow of US$8.6 million (Q2 2020: US$6 million).

The Company has implemented various on-site procedures to test for and quarantine for potential COVID-19 cases ensuring as far as possible, the safety of its employees and contractors. The Company continues to be compliant with all relevant government directives with regards COVID-19. To date only one employee who has tested COVID-19 positive has been at the mine site. A small number of other employees and contractors have also tested positive for COVID-19 but the Company's processes have prevented all but one of these people from accessing the mine site.

Finance (Unaudited)

As announced on 23 October 2020, the Company concluded a debt restructure with its lenders. As a result trading of the Company's shares on AIM re-commenced on 26 October 2020.

Total interest bearing liabilities as at 30 September 2020 were, in aggregate approximately US$134 million. A US$4 million senior debt repayment was made during the quarter.

Notwithstanding the production issues resulting from impacts of the COVID-19 pandemic total year-to-date sales were US$84.2 million, a 25% increase over the sales proceeds received the same period in 2019.

Gold sold during Q3 2020 was 16,094 ounces, at an average realised gold price of US$1,943 per ounce (Q2 2020: 14,908 ounces, at an average gold price of US$1,722 per ounce).

Cash at bank and available for use as at 30 September 2020 was US$9.6 million.

Mining Operations

Mining production of ore and waste was 3.1Mt for Q3 2020 and the total ore mined for Q3 2020, of 687kt, was in excess of budget.

The reductions in mining activity that were introduced at the beginning of Q2 2020 have been lifted and mining operations are performing slightly in excess of budget.

Operations also took receipt of three 100 tonne Komatsu 785 trucks which commenced operations during July 2020. This additional fleet is critically important to support the longer haulage as the outer pit dump develops and to reduce the reliance on contractor equipment.

The programme of infill resource and mine plan drilling that commenced in Q3 2019 has been completed in Stage 2 and is expected to be completed during 2021, once the resettlement of the illegal miners allows access to Stages 3 & 4 of the Project site. A new resource model has been developed for internal use and will be incorporated into final resource statements once all drilling has been completed and the model finalised.

Process Plant

Throughput for Q3 2020 of 490kt was below budget due to ongoing issues with the BIOX circuit and unplanned tails lines failures. Overall gold recovery for the quarter was also under budget at 15,705 ounces at a recovery rate of 71.3% (Q2 2020: 14,908 ounces at a recovery rate of 68.7%).

While the impact of the COVID-19 pandemic continues the resulting lack of available resources, supervision and contractors to assist with site maintenance means that the reliability of BIOX and the complete plant will be an ongoing concern for operations.

Importantly, since quarter end the Company has successfully been able to move some senior expat management personnel back into the country and the project site however, this does not include key maintenance managers.

Residual Storage Impoundment ("RSI")

RSI construction has continued albeit at a slower rate than budgeted. The dam water freeboard level remains in excess of five metres, and is in compliance with local guidelines and the development requirements.

Occupational Health & Safety

Runruno continues to record an exceptional safety record with almost 12 million man hours without a reportable injury as at the quarter end.

Environment and Compliance

Compliance matters continue to be successfully monitored and the mine remains compliant, with no outstanding material issues.

Community & Government Relations

The Company continues its consultations with government agencies in relation to the removal of illegal miners, including their infrastructure and dwellings, from those areas scheduled to be mined as part of mine plan Stages 3 and 4. Access development to mine plan stages 3 & 4 continued during Q3 2020. Further actions in relation to access development and the resettlement activities will be made in the forthcoming quarters.

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

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