Metals Exploration Aims To Double Gold Production and Increasing Margins by 2027

• Metals Exploration operates Runruno gold mine in Philippines (targeting 55,000 oz in 2026) and is constructing La India project in Nicaragua, aiming for 100,000+ oz production starting 2027
• La India construction ahead of schedule, marginally under budget with $45M cash at year-end 2025; major capex completed with critical path focused on electrical connection
• Company expects to double production to 140,000 oz annually at lower costs, funded entirely by Runruno cash flow without significant equity dilution
• Runruno mine life ending December 2026; management actively pursuing construction-ready assets in Central America and Asia for plant relocation by H1 2026
• Strong balance sheet positioning ($100M+ forecast free cash flow) enables disciplined M&A strategy targeting jurisdictions where others won't operate

Metals Exploration, the AIM-listed gold producer, is positioning itself for a significant production increase as its La India project in Nicaragua approaches completion ahead of schedule. CEO Darren Bowden, outlined the company's strategy to transition from a single-asset producer to a diversified portfolio capable of delivering 140,000 ounces annually by 2027 - more than double current production levels.

The company's approach centers on leveraging cash flow from its existing Runruno mine in the Philippines to fund construction of La India without requiring significant equity dilution, a commitment management has made to shareholders. With the Runruno mine scheduled to cease operations in December 2026, Metals Exploration is simultaneously pursuing additional construction-ready assets where its existing processing infrastructure can be redeployed.

La India Construction: Ahead of Schedule, Within Budget

The La India project represents the centerpiece of Metals Exploration's growth strategy. Construction is proceeding marginally ahead of the targeted schedule, with all major capital expenditures already committed. The company ended 2025 with $45 million in cash and expects to generate over $100 million in free cash flow from Runruno operations, providing comfortable funding for the remaining $90 million required to complete La India.

The construction team has demonstrated capital discipline by reusing components from the secondhand plant purchased from Alaska, and making strategic scope adjustments to secondary infrastructure to control costs. Additional financing has been secured through Caterpillar equipment financing and a $30 million gold prepaid facility on drawdown terms, providing a buffer for any cash flow timing mismatches, particularly around Philippine tax obligations in Q1-Q2 2026.

Production Profile: From 70k to 140k Gold Ounces

Metals Exploration currently produces approximately 70,000 ounces annually from Runruno, though production is expected to decline to the 55,000-ounce range in 2026 as the mine processes lower-grade material in its final year. La India will initially target just over 100,000 ounces in 2027, ramping to 140,000 ounces as underground operations come online.

The project's attractiveness extends beyond production volumes. La India will transition the company from open-pit to underground mining at higher grades and lower costs. The resource currently stands at 2.4 million ounces, with open-cut resources of 700,000-800,000 ounces and underground resources of 1.5-1.8 million ounces supporting a 12-15 year mine life.

Management has deliberately designed the operation with significant flexibility. The original feasibility study contemplated 800,000 tons per year throughput, but the plant was initially designed for 1.4 million tons and has since been expanded to 1.8 million tons annually. This overcapacity addresses potential dilution issues - a lesson learned from Runruno, where dilution reached 25% versus the 5% assumed in feasibility studies.

Operational Philosophy: Stability Over High-Grading

Bowden articulated a clear preference for stable, long-term mine plans over short-term high-grading strategies. 

"Maintaining our cost structure is nearly a priority one. I'd much rather have an all-in-sustaining cost at $1,150-$1,200 than have one at $1,500 in three years' time."

This philosophy reflects operational experience at Runruno, where the company has maintained cost structures and production levels through efficiency improvements rather than selective mining. At La India, the staged mine plan will actually produce a production spike in 2029-2031 rather than in the initial years, as higher-grade underground ore supplements open-pit production.

The company has built substantial conservatism into its planning, incorporating significantly higher dilution assumptions than typical feasibility studies. With processing capacity exceeding requirements, the operation can absorb dilution impacts without sacrificing ounce production - a critical buffer that distinguishes management's approach from industry peers.

Interview with Darren Bowden, CEO of Metals Exploration PLC

Nicaragua: Exciting & Willing Jurisdiction

Operating in Nicaragua presents both challenges and opportunities. While the jurisdiction lacks the foreign investment flows typical of more established mining regions, Metals Exploration has developed direct relationships with government officials, including weekly meetings with the Minister of Mines who maintains direct access to the president.

"There's no massive bureaucracy. You deal directly with the minister of mines every week," Bowden noted. The UK government has provided support through its Nicaraguan ambassador, helping facilitate the company's operations.

The geopolitical landscape includes increasing Chinese presence, though Bowden distinguished between smaller Chinese operators and responsible international miners. He acknowledged that Nicaragua's alignment with China creates some complications but emphasised that it doesn't diminish the value proposition for established operators like Metals Exploration.

The company is working to expand its Nicaraguan land position, particularly targeting ground previously owned by Newmont and then Newcrest, for which Metals Exploration holds historical data. Management believes Nicaragua has potential for 5-10 million ounces of resources, with multiple epithermal vein systems identified for future drilling.

Runruno Wind-Down & Asset Pipeline

Runruno's production profile is declining as expected, with grades dropping and recoveries falling from 88-89% to an anticipated 83-84% in 2026 due to transitional and oxide material near surface. However, rising gold prices have offset margin compression, enabling the mine to generate comparable free cash flow despite lower production.

The mine will exhaust its reserves in December 2026, with no viable extensions identified. Management is actively evaluating options for the Runruno processing plant, including complete relocation to a new asset. The company maintains 300,000 tons of mineralised waste at approximately 3 grams per ton, which could extend operations by several months if timing requires.

The Dupax project in the Philippines has been placed on hold due to political unrest and technical challenges, with the orebody proving deeper than initially hoped. Management views this as the correct strategic decision given reputational risks and community tensions, preferring to redeploy resources to more favorable environments.

M&A Strategy: Construction-Ready Assets Only

With over £400 million market capitalisation and strong cash generation, Metals Exploration is positioned to pursue growth opportunities that smaller explorers cannot execute. The company is targeting construction-ready assets in Central America and Asia where its in-house construction team and processing plant can be rapidly deployed.

"We are not looking to be a junior explorer. That's not who we are anymore," Bowden emphasised. The strategy focuses on jurisdictions where other companies are reluctant to operate, providing access to assets at attractive valuations while limiting competition from major producers.

Management expects to identify and announce a new asset by H1 2026, enabling the Runruno construction team to transition directly to the next project. This approach maintains organisational continuity and leverages the team's proven execution capabilities.

Metals Exploration has committed to avoiding large dilutive capital raises, insisting that any acquisitions must be value-accretive. With forecast free cash flow exceeding $100 million and $300 million treasury shares available, the company has multiple funding options for growth initiatives.

At La India, exploration spending exceeds minimum commitments under the conditional value rights (CVR) structure, with initial focus on near-mine assets including La India South and Cacao. Management has identified three to four additional prospective veins ready for drilling, with plans to expand beyond near-mine targets once the core resource is better defined. The staged approach to underground development will enable faster resource expansion once mining commences, as underground drilling provides better access than surface programs for epithermal vein systems.

The Investment Thesis for Metals Exploration

• Production Growth: Doubling production from 70,000 oz to 140,000 oz annually by 2027-2028 with declining all-in sustaining costs as higher-grade underground production commences
• Funded Development: La India construction fully funded through operating cash flow with no equity dilution; $45M cash, $100M+ forecast free cash generation, and backup facilities totaling $30M+
• Operational De-Risking: Construction ahead of schedule with major capex committed; conservative planning incorporates significant dilution buffers and excess processing capacity (1.8Mtpa vs. initial 800ktpa feasibility)
• Resource Expansion Potential: 2.4M oz resource at La India with multiple untested vein systems; Nicaragua positioned for 5-10M oz district-scale opportunity through exploration and land acquisitions
• Portfolio Optionality: Active M&A pipeline targeting construction-ready assets in Central America and Asia for 2028 production; in-house construction team and relocatable processing plant provide rapid deployment capability
• Jurisdictional Advantage: Willingness to operate in Nicaragua and similar emerging markets reduces competition for quality assets; direct government relationships facilitate rapid permitting and expansion
• Rising Gold Price Leverage: Declining production at Runruno offset by gold price appreciation; La India economics improve significantly at current pricing above feasibility assumptions
• Proven Management Execution: Track record of on-time, on-budget delivery; operational improvements at Runruno (throughput increases, cost control) demonstrate technical capability
• Favorable Valuation Entry: Current market cap ~£400M for company delivering 140,000 oz annually with exploration upside and near-term M&A catalyst

Metals Exploration exemplifies the strategic advantage available to mid-tier gold producers willing to operate in emerging markets during periods of elevated gold prices. While major producers focus on large-scale, low-risk jurisdictions, companies like Metals Exploration can access construction-ready assets in Nicaragua and similar markets at favorable valuations. The current gold price environment (above $4,700/oz) provides substantial margin expansion for new projects originally feasibility-studied at lower price assumptions, while also offsetting production declines at mature operations. Management's willingness to engage directly with governments in complex jurisdictions - building relationships through weekly ministerial meetings rather than navigating bureaucratic processes - creates competitive moats that larger, risk-averse producers cannot replicate. As Bowden noted: 

"We're willing to work in the spaces that others aren't. We're willing to work with governments such as the Nicaraguan government which has actually been very favorable. Building those relationships. Getting the decisions we can get with the government moving quickly." 

This approach positions the company to capitalise on stranded assets and underexplored districts where technical merit exceeds perceived political risk.

TL;DR: Executive Summary

Metals Exploration is executing a transition from single-asset producer to diversified gold company, doubling production to 140,000 oz/year by 2027 through the La India project in Nicaragua - constructed ahead of schedule using Runruno cash flow without equity dilution. With La India's 2.4M oz resource, 12-15 year mine life, and significant exploration upside across multiple vein systems, the company combines near-term production growth with long-term resource expansion potential. Management's M&A strategy targets construction-ready assets in emerging markets where willingness to navigate complex jurisdictions provides access to quality projects at attractive valuations, supported by $100M+ annual free cash flow generation and proven in-house construction capabilities.

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