Metals Exploration (MTL) has announced results for the first half of 2021 showing it generating cash and that access to further resource is being developed. Production from its Runruno project in the Philippines enabled 34,745 ounce of gold to be sold in the half-year delivering revenue of $62.4 million and enabling net debt reduction of $8.9 million to $109.6 million, with total net current liabilities $5.2 million higher at $11.1 million but non-current liabilities $12.9 million reduced to $91.1 million.
That was achieved despite delays in accessing further stages of the mine plan impacting the grade, though “work is ongoing in relation to the resettlement of the remaining illegal miners”. The shares have responded a couple of percent higher to 1.35p, capitalising the company at £28 million, currently approx. $38 million.
There are clear risks with the development and the gold price – the results noting an average $1,797/oz, and gold currently at below $1,770. However, there is also the upside potential of the potential resource development and with the gold price and the sub £30 million market cap will look very cheap on debt reduction further building on the back of either of those.
As such, at anywhere around these levels this still looks an attractive risk/reward play with we seeing clear potential to more than double from here as debt is cleared and more of the EV is accounted for by equity. Buy.
Filed under: Metals Exploration, Patisserie Holdings, Ethernity Networks, Eight Capital, HotStockRockets
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