Metals Exploration (LSE:MTL) — Investor Presentation

0:03 Good morning, everybody. It's, Darren Baden, the CEO of METALS EXPLORATION. Thank you for attending this, webinar. I'm coming to you live from, the Manila in The Philippines. I'd just like to run you through our, investor presentation, which went up on our website live about a week ago. I'll try and, there's a lot of overlapping information. So I'll, I'll try and speak to the slides where the detail is rather than where the summaries are in the majority, and only cover the information once, if possible, as we go through. If I miss anything, or there's something else you would like to ask, please, just add it to the live q and a. And, hopefully, at the end, we will have enough time to pick up on any key questions that, that everybody asks.

0:50 So with that said, I will, I'll move on to the presentation. And, really, just a bit of background. Metals Exploration owns, a project in The Philippines, the Runruna Gold Mine. It's, in the mineral rich province of Nueva Vescara in The Philippines, and it was developed, by the, company from greenfields to production. Currently, we're sitting on a reserve of around 11.7, million tons at a grade of 1.38 grams ton. That's about 500,000 ounces of of reserves in terms of gold group. We're basically fully permitted. 80 98% of the workforce is Filipino, of which 28% are female. Very small contingent of expats helping out to ensure the the stability in ongoing operations.

1:42 Today, we've invested over $300,000,000, and

1:48 that's someone else's phone in the background. And, yeah, we've in 2020, as in 2019, we achieved around 68,000 ounces in production. Our total all in sustaining cost, and this includes all costs, all corporate costs, head office in London, everything, $1,259 an ounce at a total revenue of around, a $122,000,000 in 2020.

2:21 Move on to the next slide. Our strategy, when we first started, it was very focused on getting the company back up into a positive cash flow. We focused on people Darren, Can I just stop you there? I beg your pardon. There was a a just the guys are doing should coming in the meeting now. Can we just start from the beginning? Apologies. Start. Oh, they're just coming in? Yeah. Good. That's it. Good morning, ladies and gentlemen, and welcome to the METALS EXPLORATION INVESTOR PRESENTATION. The company may not be in a position to answer every question received during the meeting itself.

3:06 However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor Meet company dashboard, and you'll be notified once they're ready for your review. I'd also like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. I would now like to hand you over to Darren Dowden, CEO of METALS EXPLORATION. Good morning, Darren. Good morning, Paul. Thank you for your time, and thank you everybody for attending this webinar of METALS EXPLORATION. I'm Darren Bowden, the CEO, and I'm coming to you live from Manila in The Philippines. We're gonna go through our investor presentation today. It was a presentation that was recently submitted to our updated website. It's been it's been live for about a week. And I'll go through the presentation focusing on, most of the key detail around the, the technical aspects of the recovery that we've seen over the last two years. There's a lot of overlapping information in some of the summary slides, so I'll probably skip over this so that we only talk to the same information once.

4:11 So please bear with me. If I do miss anything, please just, submit a question, and, hopefully, we'll catch it at the end. I'm gonna try and keep the presentation to thirty five, forty minutes so we have enough time to, have a question and answer session that hopefully covers all the key questions that you guys that you guys ask. I'll move on to the introduction. And just for anyone who doesn't know, METALS EXPLORATION owns and operates the Ronruno Gold Mine in Nueva Vizcaya. It's a mineral rich province in The Philippines, and it was developed from greenfield to production. The Ronruno Mine project at this stage contains reserves of 11,700,000 tonnes and average grade of 1.38 grams per tonne, which equates to about 500,000 ounces of reserves.

5:03 The project's fully permitted. We have the highest environmental standards, and, about 95% of the workforce is Filipino, of which 28% are FEMA. To date, there's been about $300,000,000 invested in the project. 2020 results, just under 68,000 ounces, all in sustaining cost of $12.59 an ounce. That does include all corporate overhead and London costs as well, and for a total revenue of $122,000,000 in 2020. I'll move on to the next slide. And just to talk through the strategy, we do focus on our people first, and, at this as of the March 31, achieved over 13,013 million man hours without a reportable injury.

5:57 In a mining environment, that that is something to speak of. And I take my hat off to all the staff and the team who have achieved that that result. This led us to recently receiving the safest surface mining operation award and safest overall mining operation by the Mines Geoscience Bureau. The focus of our recovery was twofold. There was a specific focus on the technical outcomes required to get the process plant into position where both recovery and throughput could assist in getting us to a positive cash flow. And the other aspect of the recovery was a restructure of the the debt. There are still some some outstanding issues around the plant technical aspects, which I'll talk about as we go forward. The main one being the BIOX recovery solutions, which are still being implemented.

6:58 We are focused on improving our exploration program, and the the key focus here, once we have clear access, is extensions of the existing ore body to the north, which I'll talk through in a little more detail.

7:15 The restructuring of the debt, when we first arrived, METALS EXPLORATION was a company that did need some some help with regards to its debt structures. We started working diligently with the commercial banks. And by August last year, we'd come up with a debt structure, which gave us a very flexible, debt, maintaining a minimum capital buffer, payments being made after that capital buffer was maintained, and therefore, providing us with a a shored up balance sheet and a more flexible balance sheet at the end. Today, we paid $24,300,000 as at March 31, and there is still a 120,000,000 of outstanding debt to be repaid, both senior and meds.

8:11 I don't need to talk to who I and Mike are. You can read that at your leisure. I don't wanna talk to The Philippines, in general. You guys can work work through this. I see some questions popping up around the tax, and I will talk to those questions at the end of this this presentation. What I did wanna make mention of is that the Duterte government has currently, come out in favor of mining and come out specifically in favor of, open cut mining and large scale mining. So it is a a very positive move by the Duterte government to increase the opportunity for us to grow business like, like FCF in country through acquisition and or exploration in other territories.

8:57 And this is, something that is a positive outcome given our operating knowledge in country and the people that we have on the ground.

9:08 I don't need to talk to the overview where we recovered that off. I do want to say, though, that, you know, Renruno has been around for sixteen years now, and it is an an ore body that, I do believe, will increase, as the years go forward. How much, that's going to be the case is going to be something that, will be determined through our exploration programs as we go forward. You can see the picture there just giving you a a brief outline. The RSR, residual storage empowerment, is the tailings facility from the process plant. The stockpile area is the out of pit dump, which will become obsolete by the end of this year as we start backfilling the void that's created by the mining the mine plan.

9:55 And the process plant and the accommodation is all very close in in terms of relative access to the mine. When I'm on-site, I walk everywhere. So it's a it's a good fitness program for me just as much as it is to, get out and see the operations. I I will talk to, further detail around the operational record, but this graph just gives you a very strong indication of the performance increments that have been achieved over the, the last couple of years. The slight dip in 2020 is associated with the the issues we have had around COVID and the reliability of the power transmission, which you've seen in the RNSs, which did impact our recoveries due to the going offline and into hibernation.

10:45 We have done some work on that, and there were some questions to be answered as we go forward. I will talk more detail in what's still outstanding in terms of that BIOX program once we get to the detail. The critical actions undertaken in both mine and plant. The mine pit shell, we've redesigned. There was an absolute requirement to maintain access over the mine, which didn't exist previously. I might just flip back to the first slide, and it gives you a clear indication of the mining ramps that now exist on the mining phases. So if you look at those ramps coming from the bottom of the pit all the way to the top, because that the mine is actually moving to the north, you have now access on all mining phases as you're sequencing from stage one through to stage five. In general, we've got about two stages open at any one time with the third stage going into pre strip. And as that mining phase moves north, we fill the back of the pit to the south, using those access ramps running up and down the phase.

11:50 Just go back to where it was.

11:54 And and as we've talked about, the mine schedule has now been fully integrated, and there is still further resource drilling required. We'll talk about that when we get to the exploration slide. Plant recoveries, we're now consistently achieving over 80% recovery. BIOX is stable, but there still is some technical issues that we believe we've resolved, but the implementation of the design modifications to ensure that they've been resolved is still ongoing. However, with that said, 80% from where we started is a a great great achievement. We are targeting to get above 85. And at this stage, really, the key issue is to maintain a biox oxidation above 90%, which will increase CIL recovery to above 90%, pushing us above that 85% recovery.

12:43 The the real issue in the initial phases was to actually get the gold to biox. Really, it was all being lost through flotation. And in the initial instance, we were able to figure out the the the key components of the flotation recovery. Flotation's now averaging above 87%. It's actually closer to 89%. And, you know, we have started with some of the implementation changes to the box design, pushing us from a 65 up to an 83 recovery, and trying to maintain that steady state operation. We do have final modifications. There is a further blower being being put in as we speak, and there's some design modifications to the gearboxes and motors on the secondary reactors, is required to ensure that the air from that fourth blower is is delivered to the right locations.

13:45 I'm just showing you this slide here, which is an interesting one. I'm gonna see if I can figure out how to use this system. No. My I'm trying to find the it doesn't work for me. The that mining phase you see there is actually 2018, and you can see that there's no ramp on the actual mining phase itself. So to access this backfill void once you started backfilling on the, the southern side and took that ramp out was gonna be impossible. And that's why those those mining ramps are so important and why I I I've made mention of them through this presentation, which you can now see in in the slide that we have here.

14:36 Really, we as we've mentioned, the two stages are contiguously mined at this stage is stage one and two. Stage three is in pre strip. Backfill will commence into that southern pit by q '4 this year, which increases our efficiency in the mining area. I go from nine, ten trucks down to five, six trucks. So there's a significantly increase in efficiency, which does give us a lot lower risk profile with regards to the movement of, of material as we go forward. Access to stage three to five is being completed through a, a Skyway design from the, the current out of pit dump. And, really, the, the other optimization was required technical geotechnical design of the east wall, where we were noticing, the wall was not designed behind the fault, and, there were were stability issues with that wall. That redesign has led to some cutback work being done, which is ongoing through the next next two years.

15:47 With regards to process plan, as we mentioned, we we've solved the issue around flotation. And one of the other key issues within the the design that we've noticed is that, there there's a significant higher dilution, rate than was, ever in the feasibility study. That dilution rate is between 2530%. At this stage, we've been able to, maximize the, plant milling operations about a 120% of design up to about 2,100,000 tons. We haven't been able to get it beyond that yet. We are working on doing so, and if that is an opportunity, that will increase our our throughput and gold presented to the back end of the circuit. The the reconciliation of ounces processed versus ounces depleted is actually pretty good. There's not a significant mining loss against what was originally planned.

16:42 However, the area that we are in is well drilled and has proven to stand up to the resource versus reserve modeling that has been done by us and and previously. As we've mentioned, BIOX is stable. There are some modifications that are being implemented. They won't be fine. The first one, which is the new blower, will be finalized in q two. However, the the final implementation of the gearbox and motor changes on those secondaries will be by the end of twenty twenty one depending on lead time on those new components that need to be implemented there. Generally, we've been able to do a lot of this work and a lot of this increases in production with very minimal cost, and that's been one of the highlights of the the program that's been implemented.

17:28 It's focusing on low capital, high yield type projects, and that's worked very well for us. As I said, 2020, the overall gold recovery is 72.2%. However, that was still severely impacted by the pandemic with regards to reliability of power. We

17:45 have spent some capital now on the power internal to to the site, which has enhanced our our stability and reliability internally. However, we still have grid transmission issues if if the power goes offline externally. That impact is significantly reduced now because of the reliability of the internal power supply.

18:09 With regards to exploration, we have identified two near mine targets. We have been given a a small budget this year to drill a couple of holes in one of them. However, for me, the real focus for the mine extension and extending the mine life needs to be around the extension to the existing ore body. And the extension to the existing ore body will be north as we mine in that direction. Right now, there is limited drilling out there. There's limited drilling in that stage five area, and that has been limited by the illegal miners who occupy that, that area. There is a a clear focus to reduce that risk by, resettling those legal miners, and we've been working diligently at that over the last year with a a large portion of those miners being resettled as we speak. And, hopefully, by q three,

19:00 the majority or if not all will be will be resettled, allowing us access to start the the drilling in that area. And I believe that is our key focus for the mine extension into the future. What that number looks like, I can't say, but, the fact of the matter is if there's a legal mine is there, there's gold. We just need to drill it and figure out what it looks like for us. The processing opportunities, as we have gone forward, as you can see, we are getting a reducing head grade. That was always in the plan, and and that's a reducing head grade at a high dilution. 2021 is a bit of an a year where we've got a a bigger drop off than normal, and that is impacted by the access to stage three. If we do get access to stage three early, there might be an opportunity to bring some of the higher grade in stage three forward. However, that, that is just really a timing issue

19:55 where that, that grade will come into play, in in 2022, giving us a a bit of a increase in grade through 2022, which will be good to see once we've got all the biox solutions in pace and an increased recovery as well. So we're hoping for a a good recovery and gold feed year in 2022 once those miners are removed. On the next slide, you can see that the throughput for the mill, absolutely critical to the economics of the business given the dilution rates. If we weren't able to get the throughput up, the gold feed to plant would not be offset by recovery. And, by increasing that throughput, we have been able to offset some of those dilution issues and still maintain, that incremental recovery as we've gone forward. As I said, in 2020, there is some aberrant, months due to some transmission and some, power failures,

20:48 which puts bikes into hibernation. And as soon as bikes goes into hibernation, you are looking at a three to four week recovery time. During that recovery time, you're direct feeding the ore to CIL, and that direct feed has a recovery of around about 50%. And that's what impacted that overall year where we had three to four months with lower recoveries due to that that BIOX feed directly to CIL. And that's why the stability of BIOX is so critical for the business to maintain the recoveries that are required as we go forward. If I move on to our community relations health and safety, we have focused clearly as we've come into the business on behavioral safety.

21:38 We work closely with the teams. We've implemented golden rule programs, behavioral management.

21:46 We felt good safety programs. We've put in place values for the business where the business is focused on the values that we believe they need the people need to work and operate within our business. And all of those things have made a a massive a huge difference to the outcomes that we have seen over the last two years, leading to us winning, the safest mining award, the overall safest mining operation, and, even the, the best mine supervisor. It was a good year for us, in terms of, the outcomes in in in those safety awards. We actively promote, responsible mining practices within local communities, and we we do work with in areas to to promote those those sustainable options around mining and responsible mining.

22:36 We are one of the leading

22:40 reforestation groups in the country. 2019 2018, 2019, we won the best forestry award. In 2020, we come second. We do lead the way from a mining project within the country with regards to reforestation and rehabilitation and maintain all our commitments in that area. Community and social development. This is a key focus. Minds in developing countries, it is an absolute fundamental requirement for us to achieve, a a good neighbor status. And to do that, we need to focus on being good neighbors to our communities.

23:27 This isn't just around building roads. It isn't around painting a school. This has to go to the fundamental integrity of what a community needs and that engagement strategy to work that out and work with

23:41 communities to achieve the results that actually benefit them. In our case, the key focus we do have is health and education, And these health and education programs are outside of the government requirement to to put one and a half percent of our operating cost to to to community funds. So we focus on our internal requirements around health and education among other things. Plus, we have another fund that is sponsored by us and managed with the government to to deliver infrastructure projects locally. Part of that in 2020 was the community support for food relief for local communities, particularly if families affected under the quarantine restrictions who couldn't work.

24:33 And our food aid program was a huge success within the local communities and local government.

24:46 So in summary, we we've been very focused on the recovery of the project with the management team. We have a a very high functioning group. We work very well together, and we've integrated well into the local local workforce. We now have a a long track record of operating in The Philippines, and the new management team are focused on on maintaining that track record, but also looking at where the opportunities might exist within The Philippines to further extend our influence and our opportunities. And 2021, we're focused on all in sustaining costs, including all our head office costs of, $12.75. And as we've mentioned, there is a number of programs we are working on.

25:31 There as I said, I do believe the the the, the near term upside to the run run project is in the extension of the existing ore body. However, some of the near target exploration, greenfield sites are something that are part of the plan, and we will be focused on delivering, outcomes to those as well.

25:50 As anyone on the call probably recognizes greenfields is exactly what that that means. It is it does take some effort to to find something that might come into an economic space, but we will be focused on key targets that we have seen. It is highly prospective ground, so there is some work to do there.

26:11 Recently and last but not least, we have appointed a more independent board. This is something that I think is key for us to move forward. And the three new members of the board are highly experienced with a new independent chairman. I'm just flicking to the board members. David Cather is one of the new independents. He's taken over as the new chairman. David has significant operating experience and experience in the financial markets in London. Jeremy Rathol, a geologist by background, also significant experience in the mining industry, especially in investment banking, but with a technical knowledge in the background.

26:58 And Andrew Chubb, the last last but not least, new director, his partner and the head of the mining and natural resources, of the, Henningman Partners Group. Andrew worked with us on the, consolidation and the refinancing of the debt, and, he has a a long career within the the mining space as well. With that said, that's that's the the group, and we are very looking forward to moving forward and making everything work as we go forward. And I will hand it back over to David for questions. Fantastic. Darren, thank you very much indeed for your presentation. Ladies and gentlemen, do please continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. Simply type in your question and press send. Just while it takes a few moments to review those investor questions submitted already.

27:55 I'd like to remind you that recording of the presentation, along with copy of the slides and the published Q and A, can be accessed via your investor dashboard on the Investor Meet company platform. I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide your feedback order that the company can better understand your views and expectations. Darren, perhaps before we move on to the live q and a, we had a number of presubmitted questions that have come in from investors, and I'll just run through those if that's okay. The first one reads, how confident are you of exploration success and that that will extend the mine life?

28:35 Yeah. Thank you, Paul. All exploration outside of the existing mine areas I've mentioned is greenfields. So it's difficult to comment on what that looks like even though I do believe the ground is quite prospective. I feel the real opportunity is to extend the mine life through the extension to the North as we're mining south to north on the stages one, two, three, four, and five. And the North is significantly underexplored, under drilled, and as we're quite aware, has a large contingent of illegal miners in that area, which, you know, they're probably the best, best gold, explorers I've I've found in my career in developing countries, not, the least of which being Colombia, in a preexisting life where they found a 12,000,000 ton ore 12,000,000 ounce ore body for me. So I do believe there is there is upside to the extension north, and that's where our focus will be once we've gone through the process of peacefully resettling the.

29:44 Thank you, Paul. Thank you very much, Darren. Just moving on to the next question. Using the published 2021 production estimates, how much extra cash flow is generated for every $100 increase in gold price? Yeah. It's a it's a pretty simple equation. The the costs are are basically fixed for that, that answer. The only thing we would be paying excess is, excise tax. And, therefore, we're looking at about a $6,000,000 increment for every $100 above the above the gold price. That's great. Thank you. It's quite substantive. Thank you very much. Next one we have here is, can you explain the benefits of having access to stages three to five in q three this year?

30:36 Yes. As mentioned, the mines mines sequentially, the stage three is under development through the Skyway, but we don't have full access to stage three. And if we could bring stage three into 2021, it would add value to increasing the average, average grade to the mill. However, this is not lost. It's basically just moved to 2022. We aren't affected by stage four and five. Really would be a benefit to be able to do some resource drilling, but, other than that, from a production point of view, there's little effect, beyond stage three. Thanks, Darren. With the improvements that have been made to the power supply, does this mean the power outage that interrupted the BIOS process are effectively over?

31:26 Yes. Reduced, but not over. We don't have control over the national grid as as we've mentioned, so the reliability of transmission is something that we cannot control. However, the impact after the work that's been done on-site and the capital upgrades that have been made to the the cabling, to the backup systems, once we do lose in, transmission power, those backup systems kick in. And even so, we got about a ten minute delay. That ten minute delay probably affects BIOX up to seventy two hours, but we don't lose BIOX for a month. So, there is still an associated risk, but it is significantly reduced due to the work that has been done. Great. Thank you. Could you please confirm how much actual hard cash the company received from the current debt providers versus how much of that current debt is made up of interest and penalty charges?

32:19 Yeah. So the mezz principal was 41,000,000. And as of the April 30, the total mezz debt is 71,500,000. Under the current scheme, mezz debt gets paid after senior, if anyone's taken the time to read the papers. So it is in our interest to draw the senior down as quick as possible because as soon as the senior has been paid off, the METALS converts to a senior commercial debt, which means we drop that that current interest rate from 15 to 7% or numbers of that order. The remaining senior debt's all principal and sits at about $45,800,000. And year to date, we've paid 18,600,000 of principal and interest over the loans. Great. Thank you. We have touched on this, I think, in the presentation, but how's the recent performance been at run Roono project?

33:12 Yeah. Look. I it's been great once we once we got stable and we started to look at the BIOCs. You know, we hit record gold port in q four, record gold recovery in q four, record sales in q four. That's, been, enhanced in, q one twenty twenty one with a sustained gold recovery above 80% for the first time in the history of the project. And, really, the only, thing outstanding is our focus on managing those, those BIOX, BIOX upgrades. We do have, still you know, the COVID issues are still affecting reliability and, logistics. But in general, those are more minor rather major issues, and hopefully won't, impact us significantly this year as we bring Biox fully online with the design changes that are made.

34:04 Dan, I think you you've pretty much have covered this off just in case there's anything further you can add. You recently appointed three new nonexecutive directors. Can you tell us why and what they bring to METALS EXPLORATION? But if there is anything further you can add, that'd be great. Yeah. Look. I I suppose I did mention, you know, the majority of, our board pre, pre search for the new independent directors was, just nominees from the major shareholders. So we didn't feel that there was and the company didn't consider that we necessarily had a balanced board. So we were looking to balance the board, give the board more independence, which would support ideals from the minor shareholders rather than just the major shareholders. So after an extensive search, as I've said, we've we've now have and David Cathar, Jeremy Rathol, and Andrew Chubb have joined the board. And, that experience, I'm I'm very much looking forward to working with them further.

35:01 That's great. The final pre submitted question we have here, what are your plans for this year, and what should investors be looking for this year? Yeah. So our key focus is consolidation. It's to get the targets that we've put in front of ourselves achieved. It's to get the upgrades finalized and to achieve a more sustained, higher recovery process in the plant. This is going to lead hopefully, this is going to lead to a we we put out a forecast now first time with production range of 64 to 90 64,000 to 69,000 ounces. The key issue there being the grades drop, the recoveries up, and we're being able to maintain a range that we've achieved for the last three years at a lower head grade.

35:48 All in sustaining cost, as I mentioned, $12.75. And, really, last but not least, the the key risk to the business are the peaceful resettlement of the remaining illegal miners. That's fantastic. Thank you very much indeed, Darren. That does conclude the pre submitting question. If I could just ask you to click on the q and a tab. Obviously, you can see investors submitted a number of questions during the presentation. Perhaps if I could hand back to you, Darren, if you could just start at the top and work your way through those that are appropriate for you to to respond to, that'd be fantastic. Thank you. No problem. That sounds great. Nick submitted the question. What current future COVID protocols have do you have will be put in place to protect company the company workforce?

36:33 And, really, it's, not just company workforce. It's comp company operations because, a sustained, healthy workforce means we can sustain our operations. We have a multilayered COVID strategy, to control the risk of COVID and ensure that we maintain operations. Our strategy involves the engagement with the local health authorities called the MHO, and to ensure that all our procedures and protocols are aligned with this, with this organization. The strategy starts with the off-site testing prior to the entry of, people on shift rotation, where all employ employees need to present a valid COVID test prior to starting their shift. At this stage, you know, we we have probably 300 people coming back on shift every week, and there's at least six to ten people who will test positive prior to either leaving their province to make the journey to site or, who have been tested by us at the front gate.

37:33 To support this, we actually purchased two new, antigen rapid testing machines, and all the local community can come to our front gate twenty four hours prior to their shift and get tested, to check whether they are negative so that they can come on shift the next day. In conjunction with this, we have started a significant amount of random tests on-site, and we have a buddy system where if someone's starting to show symptoms, then it is an obligation of buddies or their friends to report. And we work very diligently to get these communications out there. We test in the vicinity of 50 to 60 people every day on a random test. And at this stage, we are down to basically no cases. We had one case about five days ago.

38:18 The minute we have a case, we have we do very detailed contact on-site. Anyone who becomes a close contact, if they're local community, they're sent home to isolate. If they're not local community, they go to our isolation facilities, which we manage ourselves. One of them is a med medical facility, and the other is a a simple isolation facility for managing people who can't travel home to their province because they've been in close contact. There's then a protocol around how many times they have to test before they can come out of that facility back to work or go home. If local people found with COVID prior to entering the site, then the local authorities, the MHO, take these people and start the contract tracing and the isolation off-site. So working hand in hand with the local authorities, we manage people external to the local province, and they manage people internal to the local province.

39:13 Lastly, we've worked diligently with the MHO, the local authority, and we've been able to source vaccines for all of our employees and contractors. And we'll start a vaccination program mid July and hopefully have everybody vaccinated and therefore a workforce by end end of August, early September. And that is our focus on COVID. Michael e, can you give us details about the 50% government tax? There's a couple of questions around this. So I'll answer this as it stated and maybe a little bit broader, I I pick up the, the question further down. The FTAA, which is the agreement that we an umbrella, where we have a five year window from the start of commercial operation, where we pay zero tax.

40:09 Okay?

40:10 After this point in time, we have a 50% tax regime, and that 50% tax regime will start mid, 2022. So we've got basically a year of production left, where we don't have, any tax beyond excise tax and VAT, and then we will start paying a 50% tax on, on income. Now that 50% tax is all encompassing. It does take into account any VAT, any local taxes, all taxes that are paid. It all are accounted for within that 50%. There's not add ons to that 50% beyond what what we would normally pay. So, hopefully, that answers the question. But we've got about a window, a year left of that that five year window where tax is not paid.

40:59 Nick w, great safety stats. Can I suggest you record as people hours? I apologize profusely to anyone out there who who's got a got an old mining guy and and caught him out in the words he's so used to using. My my bad. And we will change that in the presentation update and resend. Thank you very much for that comment. Yeah. I I look. Nathan p, respect to the circa of the 20,000,000 company debt, I look. I don't feel I can answer this question adequately at this time. All I can say sorry. I'll read the question in full. In respect to the to the circa 20,000,000 a company did, is the board able to seek alternative to reduce the high interest rates to the current lenders, or are there restrictions from the major shareholders who provided this debt in place to stop this? That's a very complicated question. It's something that I probably can't answer in full. All I can say is that the company is absolutely laser focused on drawing down the senior debt at this stage, as fast as possible so the METALS debt will convert to a more commercial rate as the new senior debt.

42:22 Is the amount of equipment now working well from Michael Lee? We are still having, certain issues, Michael, around some of the, some of the equipment. There is reliability issues, I and you will find this everywhere in the world right now. Trying to get parts for mobile equipment, something that you get off the shelf, you know, two years ago is now six month lead time. We have started buying critical spares, and we have critical spares coming into the business. Actually, we started that last year. However, we are seeing that even some of the smaller items that you would think would normally be off the shelf, we are struggling getting the timely fashion, whether it's purchase, whether it's logistics. So there is still a reliability issue around some of our mobile equipment, and that is affecting our production in the shorter term.

43:13 So it's not it's not all roses yet for anyone coming out of COVID, but we are working hard to try and maintain that reliability as high as possible. That's why our key priority in the mining sequence in 2021 is to effectively start backfill into the Southern pit because that reduces our reliance on a large equipment fleet and increases our productivity significantly, making it a lower risk that we can ease more easily control as we go into the future. Ashley b, morning. A few items, please. Confidence in scope to extend mine life. I think I've adequately answered this question. At the moment, the company reports a cash available for use and total interest bearing liabilities every quarter. Would be great if, every quarter, the company could simply report the net debt figure in comparison to the previous quarter. This would be in line with other miners.

44:10 Can you confirm? And by the way, the CFO is sitting with me, so, he'll take that on board, and we'll look at, if we have to, maybe not change, but report as well to, satisfy that. We'll look at that, Ashley. Not that I can answer it straight off the top of my head. Can you confirm the cutoff grade? And in the higher pricing environment, does this improve mine life? The cutoff grade currently sits at, 0.56 grams a ton. There there is an opportunity. We are rerunning the optimizations in August this year once, with the new res the the new resource definition drilling that we have done does flow into the resource model. We will be creating a new, a new mine planning model where we will do optimizations around the mine plan using the higher, pricing scenarios.

45:03 I will say though that the previous work that was done was done on an NPV basis, therefore, it provided, through different forcing factors, the optimum cutoff grade for our pit. Even with higher pricing, that should not change significantly. Okay? There so you're looking at optimizing NPV versus optimizing total resource tons. We will be doing that work. That work will be be available later this year. It won't change the short term aspects of the way we do business. And if more ore does come into the mine plan because of that, what it will do, it will lower the head grade. It might extend mine life, and it will be that extension to mine life versus the cash upfront that will be offset and valued on an MP bay b basis as we go forward. Last can you confirm the kind of last question from Ashley?

45:53 Fantastic to see the company engaging more now with its shareholders. Can such calls become more of a regular thing? Ashley, look. I I like this as much as I like crotching sheep. And if you don't know what that is, look it up. It's actually that that's actually I've taken that as a cliche from Mel Gibson when he was interviewed once. However, with that said, I do like engaging and and talking about the business. So I do believe this will become more of a focus for us. We are now in a position where we have a business that has potential. We are in a have a business that has good cash flows. We have a we have a story to tell, and we are looking forward to telling it. So, look forward to engaging more with you in the future, Ashley.

46:42 Alan, good to see you online. What is the number of ounces forecast in gold production in 2022? Well, that will depend on the the optimization. Right now, at the in the current forecast, I can't give you a number, but it will be more than what we are targeting this year purely simply because we will be increasing head grade. Our total tons feed to the plant won't change. We'll be targeting 2.1. With the increased head grade, we will get, an increased ounces in production, and therefore, it is higher than 2021 at this stage. However, as I said, if that optimization sees an extension to mine life at a lower cutoff, that could come back down. So I'm not going to give you a a firm commitment of what those look like until that optimization work is done and a new NPV can be found to optimize the the project around that higher pricing scenario.

47:37 In 2022, 2023 is the target this is from Kashmir s. Is the target gold output likely to increase to a 100,000 ounces as per the FS? Kashmir, I I and sorry, Kashmir. I I I shouldn't shorten your name. It's a it's a bad Australian habit, and I apologize. My the CFO is laughing at me. The the answer is no, quite put it bluntly. Why? Because the feasibility did not include a dilution. And the dilution that actually exists in the mine, as I've said in the presentation, is between 2530%. So if you had a an average ore in the feasibility of 1.5, the average feed to the plant is 1.2.

48:29 And while we have been able to push up the tons through the plant, the overall impact of that is quite significant in terms of what the, the ounces output can be. I would also like to caveat that, we're targeting a a recovery after all the work that's been done of 85%. Okay? And if we can get to 85% with the plant we have, we will be happy. Now the feasibility also had a 92% recovery because there was a significant amount of secondary losses, which were not accounted for in the feasibility that once you account for those losses, it does reduce the overall recovery down to the numbers that we are we are targeting. The what is the total debt outstanding, please, and schedule it, and the schedule for paying it down? Well, the schedule for paying it down is, Simon s.

49:22 The schedule paying down is purely driven by the, the gold price. If the gold price pops to over 2,000, then the the senior debt, could easily be paid off by mid next year. The gold price drops, and we may never pay the debt off. I I look. I cannot answer that, that question in full. The debt as of March 31 was a 120,000,000 as previously stated. Trevor s, can you speak to the remaining tax shelter and when the company will pay the corporation tax? Yeah. As I mentioned, it's August 2022, Trevor, and it will then become a 50% overall tax. Yeah. Neil m. All in cost this year go from $1.75 to $2.75 this year. This suggests quite a significant increase. Look. There's two things associated with that.

50:11 We have been able to manage the marginally higher grade for the first quarter through the plant because of the stockpiles that did exist. Those stockpiles are running out and the plant the sequencing, as we've mentioned, coming into the from the mine into the plant at this stage is reducing in grade, therefore, we are dropping ounces as we go forward against what was achieved in the first quarter. Secondly to that, there was an underspending capital in the first quarter. We are still trying to manage that below the budget, but there is a catch up associated with that capital as well. Combining both of those issues, Neil Neil, and we will see that number push up to the $2.75, which is our estimate at this stage. Do you see other opportunities to extract other minerals in future stages?

51:01 No. We're a gold mine. Our process plant only processes sulfide golds. It will be difficult to go any further than that. Is the new blower Chris s. Is the new blower installed, what effect will it have on recovery? The new blower is being installed as we speak. There is secondary modifications, as I've mentioned, in the bioc circuit required to use this air effectively, but it the increasing recovery is associated with the increased oxidation of sulfur through biocs. We are expecting a small uplift with the blowers and then a secondary uplift with the changes in the secondaries. The BIOX design do I have time? I have I have a couple of minutes. I'll I'll try and be a little bit, technical here. The bike's design has two stages, primary and secondary. The primaries were supposed to were supposed to achieve a 70% oxidation, and therefore, the secondaries had only 30% of the work to do. The primaries have actually only achieved 45 to 50%. They've never achieved above that, and they can't achieve above that at the design sulfur throughput.

52:10 What we've had to do is therefore upgrade the secondaries with higher air and higher motor power to get them to achieve the rest of that oxidation. The testing we've done shows that that is possible. Okay? So that is what we're working on, and once all of that work's done, we will see those incremental uprisks in BIOPS as we go forward. Current mine life, Trevor s is at this stage 2026 to 2027 is where we are, and as I've mentioned, the extensions are to the north of the pit. Neil m, q four production was strong. This reduced in q one. Again, this is back to head grade, and I've already meant answered this question through the issue associated with head grade. Q one from a throughput point of view was the same. Recovery point of view was higher. The head grade was significantly less.

53:03 Trevor s, current gold price at the current gold price, when do you anticipate the company being debt free assuming no additional debt taken on? I think the best way to answer that question is it's worthwhile going to the investor note that was put out by Henneman Partners. There is some information in there which gives their take on that. We we believe that's fairly reasonable without any other changes. It does target a gold price about the $18.50 mark, and it does have a recovery of 85%. And it did use our baseline information that come out of the life of mine plan. So I think that is probably the one you should read if you wanna understand that question in detail.

53:50 How likely is it to achieve the target within the next year or so planned due to this pandemic? Yeah. Look. Our protocols work on-site. We know that. We don't, and I'm sorry. I didn't pick up the name of who asked that question. There will be and always is reliability issues that are going to affect us during the pandemic, and I think every miner is seeing that around the world. At this stage, we're able to manage them, and we're able to minimize them. And as long as we keep focused on that, I do believe that our target range is viable, and we are still tracking well to that target range. So, at this stage, my answer is it's, it's doable. And unless you get an Indian strain that comes through and puts a third wave through the The Philippines, which puts all communities at risk and the government makes changes to its protocols, I believe we're in good in a good position to make maintain that that run rate that we've targeted.

54:53 That's all the the q and a questions. I think I went through all of them. So I hope I hope that answered everything. Paul, over to you. Thank you, Darren. Thanks so much for answering every single question that's come in. That's greatly appreciated, I'm sure greatly appreciated by investors. Just before we redirect investors to give you some feedback, Darren, just perhaps a a final couple of words just to wrap up if possible, please. Yeah. Look. I I I I really do appreciate the the the investors that we have. I've worked closely with a lot of the minority groups, and I know the minority groups the minority shareholders formed blocks, and I tried diligently through through the process over the last two years to work closely with those groups to ensure that they were engaged and part of the part of the process to to rebuild METALS I'd like to say thank you to all the groups, Les, Alan, Josh, in particular.

55:49 Thank you for your time. I do I do think that the the debt that we do have, right or wrongly, as part of the maintenance of an ongoing company, in the first four years of operation, if that debt wasn't put in by the major shareholders, we wouldn't be here. So, realistically, it's a debt we're dealing with, and it's a debt that, while we we would love to see it go away or be less or whatever, it's something that has saved this company, and I think people need to recognize what the major shareholders did to ensure that this company did at least survive through a a period of difficult operations.

56:35 Generally, I'm very very happy with the team I have. We have great local support, and I feel that Ranuno is an operation. We will we will extend, and, hopefully, we can provide you guys with some some real outcomes into the future. Thank you for your time. Darren, thank you very much indeed for updating investors today. Could I please ask investors not to close the session? It should be automatically redirected for the opportunity to provide your feedback in order that Darren and the management team could better understand your views and expectations. This will only take a few moments for you to complete and be greatly valued by the company. On behalf of the management team of METALS EXPLORATION PLC, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good morning.