Runruno feasibility for Metals Exploration in Luzon

A feasibility study on Metals Exploration‘s (MTL-L) Runruno gold-molybdenum project on the island of Luzon in the Philippines has “transformed” the project “from a promising resource into a mine in waiting,” the company’s managing director, Jonathan Beardsworth, says.

Runruno has proven and probable reserves of 12.6 million tonnes grading 1.93 grams gold per tonne for 780,000 oz. contained gold and the study demonstrated life-of-mine gold production of 1.01 million oz. or an average of 96,700 oz. gold per year over a mine life of 10.4 years.

Average operating costs over the life of the mine are estimated at US$477 per oz. gold yielding an after-tax internal rate of return of 20% at a gold price of US$1,000 per oz.

Capital costs are forecast to run to about US$149.3 million with a payback within three and a half years at US$1,000 per oz. gold.

The average gold  recovery rate would be 91.9% at a grade of 1.89 grams gold per tonne.

The average effective life-of-mine tax rate is roughly 33%.

The study did not take into account molybdenum credits but further work will be done to pursue the recovery of molybdenum and enhance the project’s economics. The target is to get recoveries of at least 45%, or average annual production of about 900,000 pounds of contained molybdenum.

So far testwork has shown recoveries of 60% are possible through flotation into the bulk concentrate, and 80% recovery of the balance into the BIOX solution.

Assuming production of 900,000 lbs of contained molybdenum and a molybdenum price of US$15 per lb., resolving the molybdenum circuit could cut annual operating costs by US$7.5-$10 million. That would mean net operating costs falling under US$400 per oz. gold.

Any molybdenum recovery circuit would be a modular add-on after the BIOX process.

Metals Exploration acquired the project in February 2005 and holds an 85% interest with an exclusive option over the remaining 15%.

Runruno is an extinct intact volcano which hosts a silica under saturated alkaline mineralising system.