Metals Exploration (AIM:MTL) has announced that it is seeking shareholder approval to place approximately 104 million shares at 11.5 pence per share to raise £12 million (US$18 million). The funds will be used to complete a bankable feasibility study on the Runrunog gold-molybdenum project in the Philippines, and to carry out step-out drilling and some early construction works with the remaining £1 million earmarked for contingency.  A previously arranged £8 million debt facility will be terminated if the placing goes ahead.

Metals Exploration has an 85% interest in the Runruno project, with an option to increase to 100%.  Runruno currently hosts a JORC compliant inferred, indicated and measured resource of 31 million tonnes grading 2 grams per tonne gold and 0.05% molybdenum, or 2 million ounces of gold and 34.4 million pounds of molybdenum.

Solomon Capital, which already controls 29.9% of Metals Exploration, has agreed to subscribe for £8 million in the placing, which would take its stake in the company to 44.1%.

Jonathan Beardsworth, CEO of Metals Exploration said he was delighted to have received strong support for the placing from existing and new investors: The new funding enables us to complete the Bankable Feasibility Study without drawing down on the loan facility, as well as providing the opportunity for step-out drilling outside the existing project area.

'The BFS was initiated on 1 February 2009, and is targeted to report by 31 January 2010. To date 13,000 metres have already been drilled and resource updates can be expected as we receive assay results and process them into the resource model.  With metallurgical testwork proceeding satisfactorily and the FTAA awaiting final Presidential sign-off, we are in a strong position to deliver on our objectives as planned.

Christian Candy, beneficial owner of Solomon Capital and joint founder of the Candy & Candy property firm, also lent his views on the potential of Metals Exploration: I have visited site at Runruno and seen the potential for myself.  We met with Government officials and saw at first hand that the permitting and regulatory process in the Philippines is run in a professional and efficient way.  I have been impressed with the Government's commitment to support responsible mining development as a means of contributing to economic growth.  Metals Ex's focus on the local environmental and humanitarian issues was a major consideration in our investment.

A pre-feasibility study released in November 2008 estimated that Runruno could produce 183,000 ounces of gold and 1.7 million pounds of molybdenum per annum for an initial mine life of nine years. Key metrics included a strip ratio of 5.9:1, capital cost of US$208 million (including $22.8 million contingency) and anticipated cash operating cost of only US$285/ounce once molybdenum credits are applied, based on a price of US$20/pound.Without the molybdenum credits, the cash operating cost is anticipated to be US$462/ounce.

The mine will process approximately 3 million tonnes per annum of ore (25.5 million tonnes over 9 years) with an average gold grade of 2.09 grams per tonne and a recovery of 90.6%, and a molybdenum grade of 0.056% and 45% recovery.