What: The s
hare price of Metals Exploration Plc (LSE: MTL) is currently down 14%, following publication of an operational update in which the company revealed that the planned commissioning of the processing plant for its Runruno gold-molybdenum project in the Philippines is not now expected until Q2 2015, due to late delivery of final engineering drawings.
It also said that it has suspended its exploratory drilling activities to concentrate on construction of the project.
So What: The company says that the project build programme is progressing well, and that construction of the gold recovery process plant is within budget. However, the late finalisation of detailed engineering drawings by the contracted design engineers will now push back the commencement of the commissioning of the processing plant to the second quarter of 2015.
But the company says that the delay is offset by the fact that the construction cost is still anticipated to remain within the budgeted cost of US $182.8 million.
What Now: Metals Exploration says that drawing down of its debt facility has begun, and that it’s confident it has sufficient financial resources to absorb any additional costs incurred due to the delay.
The company says that exploratory drilling will recommence at the earliest opportunity, with the aim of further testing  the Runruno FTAA for additional gold deposits, and for the discovery of new copper mineralisation. It also stated that 90,000 ounces of gold delivery hedge orders have been placed.
Commenting on the news, executive chairman Ian Holzberger said:
“For the period being reported upon the rate of change experienced in the company and at the Runruno project site has been quite remarkable and it is pleasing to report the infrastructure components which were established in advance of the main build have proven capable of supporting the demands of a fast moving construction project like ours.
“The advanced procurement of the high value and long lead time plant components, most of which are now on site or in storage close by, supports an orderly approach to the erection of the processing plant minimising construction risk.“
Despite today’s drop, the share price of Metals Exploration is still up 36% so far this year, a period during which the AIM All-Share index has fallen 10%. However, over the past five years Metals Exploration’s share price has tumbled 56%, compared with a 30% gain by the AIM All-Share.
