Metals Exploration - a buy suggests HotStockRockets...

Supply @ ME Interims – truly dismal and also just unbelievable: over to the FCA writes Tom Winnifrith HERE

Operational and financial struggles have meant that Metals Exploration (MTL) has been a long-term dog. However, it has now followed an October debt restructuring with an update showing record quarterly production and sales, which, as it becomes understood, suggests a dramatic share price recovery is on the cards...

Bowleven – shares explode to 8p: is a statement due, and should we all bank mega gains? Nigel Somerville reviews HERE

The production is from the Runruno project, 200 miles north of Manila in the Philippines. An Ore Reserve estimate last year suggested 0.50 million ounces of gold in the ‘Probable’ category and 0.10 million in the lower confidence ‘Inferred’ category. That was based on a Resource model developed in 2011 and there is a programme of infill resource and mine plan drilling this year looking to highlight considered significant resource prospectivity. In other words, those numbers will go up meaning that this mine has got a far longer life than most folks think. A Quarterly Update to the end of 2020 notes period-end cash of $15.6 million though still interest-bearing liabilities of “approximately US$129.3 million”. However, and despite greater than normal rainfall impacting on mining activities and COVID-19 response-related disruptions, Q4 2020 gold production was 19,907 ounces at a recovery rate of 79.8%, up from Q3 15,705 ounces at 71.3%.

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Gold sold was 20,295 ounces at an average realised gold price of US$1,869 per ounce – delivering sales of $37.9 million and, with all-in sustaining costs of $1,129 per ounce, significantly, free cash flow of $13.6 million. There remain clear financial and operational risks – the latter including some delays as resettlement of illegal miners and access development continues. However, there is also clear upside potential – for example, from an easing of the noted Q4 issues, from testing and design updates targeted to increase overall oxidation levels and recovery, from the infill resource and mine plan drilling and from the gold price.

Agronomics – interims, argues “considerable promise for future growth”. Is that discounted in the share price? Read more from HotStockRockets HERE

Assuming output stays at c80,000 oz per annum (4 times Q4), this mine already has a mine life of 6 years but we reckon that it will end up being more than 10. Even the noted quarterly free cash flow though equates to the debt being repaid in a bit over 2 years and compares to a current market cap of approximately $60 million – i.e. an annual multiple of not much more than 1x. We consider there potential to beat those numbers thanks to increased output and a higher gold price, so we predict that there will be a near-term exceeding of the above 3p share price reached in October.

This first appeared on HotStockRockets – for a new hot share tip from the HotStockRockets team JUST OUT THIS AFTERNOON for just £5.50 click HERE

Filed under: Metals Exploration, [email protected] Capital, Bowleven, Jubilee Metals, Agronomics, HotStockRockets

2021-01-29 14:05:12

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