Metals Exploration Reports Six-Week Production Deferral at Runruno

• Six-week production deferral implemented due to cyanide contamination affecting BIOX processing circuit
• FY2025 production forecast unchanged at 70,000-75,000 ounces, with results expected at lower end of range
• Contamination sources identified from illegal mining activities affecting water supply and ore quality
• New monitoring protocols being implemented to prevent future contamination
• Production restart expected within two weeks following remedial measures

Metals Exploration (AIM: MTL) is a gold production, exploration and development company with assets in the Philippines and Nicaragua. The company operates the Runruno gold mine in the Philippines and is developing the La India project in Nicaragua. The company completed the acquisition of the YMC Group in August 2024, which holds exploration tenements in the Abra area of the Philippines.

The company reports over 25 million man-hours without a lost time injury as at 31 December 2024. Production at Runruno is intended to fund development of the La India project, which has a planned annual production target of 145,000 ounces with production expected to commence in 2027 as Runruno approaches end-of-life.

Production Deferral and BIOX Circuit Contamination

Metals Exploration paused processing of ore while it determined the cause of contamination impacting the BIOX circuit, which was initially determined to have originated from cyanide contaminated water upstream from Runruno due to illegal mining activity. The contamination required the BIOX circuit to be drained, cleaned and new bacteria inoculated.

The new bacteria have been unable to recover fully due to ongoing contamination issues. The BIOX system uses bacterial oxidation to process refractory ores, but the bacteria could not cope with cyanide levels in the feed material. The company has implemented new process monitoring and production procedures to address the contamination.

During the contamination period, only minimal ore has been fed into the plant. The company states this will not result in material loss of overall gold production, but rather a delay, with deferred ounces to be produced later in the mine's remaining life.

Illegal Mining Impact and Contamination Management

The company recently discovered that a second source of contamination can be attributed to ore feed from Stage 5-6 small scale mining tunnels, where recent illegal mining activity has resulted in residual cyanide contamination of ore delivered to the run-of-mine pad. The company believes illegal miners began using cyanide processing following removal of illegal ball mills from the area last year.

An extensive network of illegal miners' tunnels are being discovered as mining moves through Stages 5-6 at Runruno, and although the extent of illegal mining is much larger than previously thought, the company believes the residual cyanide issue is isolated. Testing of run-of-mine pad ore is underway to identify remaining contaminated material.

The water contamination source from upstream illegal mining has been resolved, and the company will regularly test water feed to prevent recurrence. The company states it believes cyanide contamination will be limited due to ongoing policing and security efforts that have prevented most illegal tunnels from reopening.

Production Guidance and Recovery Timeline

The company estimates that production levels will return to planned levels within the next two weeks. Despite the operational challenges, no amendment to the FY2025 production forecast is required, though the company expects the final outcome will be towards the lower end of the 70,000-75,000 ounce range.

CEO Darren Bowden commented:

"We are disappointed that we have had to temporarily defer ore processing operations at Runruno due to the contamination impacting the BIOX circuit. However, we are pleased to have found the causes as to why this contamination has taken place."

The company is implementing additional monitoring processes to minimise future impact.

The company confirms that this event is not expected to have long-term effects on Runruno operations. New monitoring protocols are being introduced to manage contamination risks for the remainder of mining in Stages 5-6.

Next Steps and Recovery Outlook

Production restart is targeted within two weeks following implementation of enhanced monitoring procedures. The company will continue testing ore from the run-of-mine pad to prevent repeat contamination of the BIOX circuit. Regular water testing protocols have been established to monitor upstream contamination sources. Management expects no long-term operational impact from the current issues, with deferred production to be recovered during the mine's remaining operational life.

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