# Metals Exploration reports Q1 2026 free cash flow of US$29.4 million, lowers Runruno guidance

- Link: https://www.directorstalkinterviews.com/metals-exploration-reports-q1-2026-free-cash-flow-of-us29-4-million-lowers-runruno-guidance/4121249794
- Published: 2026-04-23T07:14:28+01:00
- Author: Amilia Stone

**Metals Exploration plc** (LON:MTL), a gold production, development and exploration
company with assets in the Philippines and Nicaragua, has announced its unaudited
quarterly results for Q1 2026.

**Finance**

·      Q1 2026 positive pre-tax free cash flow of US$29.4 million (Q4 2025: US$40.0
million).

·      Q1 2026 gold revenue of US$52.9 million (Q4 2025: US$63.9 million).

·      Q1 2026 gold sales of 10,821 ounces (“oz”) sold at an average realised gold
price of US$4,885 per ounce (“/oz”) (Q4 2025: 16,009 oz sold at an average US$3,995/
oz).

·      Cash in bank of US$36.5 million at 31 March 2026.

**Runruno – Mining Operations**

·      Q1 2026 mining production of ore and waste was 2.94 million tonnes (“Mt”)(
Q4 2025: 2.79 Mt), with a total of 396 thousand tonnes (Kt) of ore mined in Q1 2026(
Q4 2025: 710 Kt).

**Runruno – Processing Operations**

·      Q1 2026 gold production of 10,505 oz recovered from 461 Kt at a head grade
of 0.92 grammes per tonne (g/t) (Q4 2025: 15,156 oz recovered from 538 Kt at a head
grade of 1.04 g/t).

·      Q1 2026 all-in-sustaining-cost (AISC) of US$2,067 /oz (Q4 2025: US$1,584 /
oz) driven by lower production levels as the mine moves towards end of life.

·      Q1 2026 gold recovery of 77.1% (Q4 2025: 84.1%).

**FY2026 Revised Runruno Production Guidance**

·      Revised FY2026 gold production guidance of 40,000 – 48,000 oz, reflecting
BIOX circuit disruption from artisanal cyanide contamination in Stages 5 and 6, 
a geological model downgrade following grade control drilling, and the impact of
historical illegal small scale mining activity on recoverable ounces, as detailed
below.

·      Revised FY2026 AISC forecast for Runruno gold production: US$1,700 – US$2,000/
oz due to lower production levels.

·      A structured remediation programme has been completed, as further explained
below, and the BIOX circuit has since recovered and is currently operating at normal
production levels.

·      No formal guidance is provided for the La India gold project which remains
on track to commence gold production in December 2026. Guidance will be provided
for FY2027.

**Development – La India, Nicaragua**

·      Overall construction continues to be within the revised budget and ahead 
of schedule at 40% complete. Refer to the Company’s announcement dated 30 March 
2026.

·      Process plant foundations, general infrastructure and bulk earthworks are
all progressing ahead of schedule.

·      A 25-year renewal, effective from January 2027, of the main La India mining
concession was received on 27 March 2026.

**Exploration – La India Nicaragua**

·      Geotech drilling at La India South Underground returned the strongest intercept
of the programme, with drillhole LIGT612 intersecting **31.18 metres at 4.37 g/t
gold (“Au”)** from 181.6 metres, including a high-grade interval of 0.48 metres 
at 138.4 g/t Au and 1.93 metres at 21.3 g/t Au – confirming high-grade mineralisation
at depth.

·      Step-out drilling at the La India Phase 1 North Open Pit extended the known
mineralised zone by at least 30 metres on strike, with three drillholes returning
consistent near-surface intercepts:

o  LIDC620: 9.58 metres at 1.68 g/t Au from surface

o  LIDC621: 10.55 metres at 1.11 g/t Au from surface

o  LIDC626: 6.70 metres at 1.65 g/t Au, including 1.50 metres at 5.33 g/t Au

·      Exploration drilling at Cacao successfully defined a high-grade ore shoot,
with two drillholes intersecting significant mineralisation at depth:

o  CCRD043: 12.7 metres at 3.52 g/t Au from 270.8 metres, including 2.0 metres at
19.7 g/t Au

o  CCRD044: 10.7 metres at 1.92 g/t Au from 233.6 metres, including 0.52 metres 
at 21.3 g/t Au

·      Across many targets, the drilling campaign has identified several new zones
of gold mineralisation, with Cacao and La India North extension demonstrating the
potential to host additional high-grade resources.

**Exploration – Dupax, Philippines**

·      Drill programme did not outline a near term production opportunity to enable
re-purposing of the Runruno processing plant. No further work is planned at Dupax
in the short-term and other options to repurpose the processing plant are being 
considered.

> **Darren Bowden, CEO of Metals Exploration, commented**:
> “_The Quarter was a period of mixed success for Metals Exploration, with significant
> progress made in the construction, development and exploration of La India, coupled
> with some challenging developments from Runruno. Despite the issues faced in terms
> of lower production, gold revenue generated during the Quarter was US$52.9 million,
> resulting in free cash flow of US$29.4 million._
> _“Development of the La India Project continued with momentum, with construction
> now 40% complete and running ahead of schedule. Key activities, including process
> plant foundations, bulk earthworks and site infrastructure, are progressing well.
> Construction milestones achieved include the award of major installation contracts,
> commencement of tailings storage facility works, progress on the 138 kV substation
> in collaboration with ENATREL, and the stockpiling of commissioning ore ahead 
> of schedule. In addition, we were pleased to have secured a 25‑year renewal of
> the main mining concession effective from January 2027._
> _“While the La India project budget increased modestly by 4% to US$171 million
> due to higher power infrastructure costs, first gold production remains on track
> for December 2026. The project remains fully funded through Runruno cash flow,
> supported by our undrawn gold pre‑pay facility. Additionally, during the Quarter,
> over 1.2 million work hours were completed with no lost time injuries, reflecting
> our strong safety culture._
> _“The exploration results at La India continue to demonstrate meaningful upside
> potential beyond our current 12.5-year mine life. The identification of a high-
> grade ore shoot at Cacao, alongside continued step-out success at the North Open
> Pit, confirms our view that this district remains significantly underexplored.
> The recent granting of four new concessions – including the La Grecia project –
> further reinforces this view and materially expands our exploration pipeline. 
> We will continue to invest in exploration with the objective of extending mine
> life and delivering long-term value for shareholders._
> _“The revision to our FY2026 Runruno production guidance reflects three factors:
> BIOX circuit disruption from contaminated ore linked to historical illegal mining;
> downgraded ore tonnage and grades following detailed grade-control drilling, which
> revealed greater structural complexity in the Balcony lodes than modelled; and
> selective illegal small-scale mining in high-grade areas, which has disproportionately
> impacted gold ounces. I am pleased to report the BIOX circuit is now operating
> normally which will assist recoveries._
> “_We continue to extract maximum value from Runruno to fund the development of
> La India, which once in production, will deliver approximately double Runruno’s
> current production rate, strengthening our status as a highly profitable gold 
> producer delivering value for its shareholders. _
> _“As we approach first production in December 2026, the Company’s focus is on 
> developing La India, and I look forward to keeping shareholders up to date with
> our progress as we reach the necessary operational milestones to achieve this.
> Thank you for your continued support.”_

**Runruno Production and Finance Summary**

| **Runruno Project Report** | ** ** |  | **Quarter** | **Quarter** |  | **FY 2026** | **FY 2025** | 
| **FY 2026** | ** ** |  | **Actual** | **Actual** |  | **Actual** | **Actual** | 
| **PHYSICALS** | **Units** |  | **Q1 2026** | **Q1 2025** |  | **3 Months** | **3 Months** | 
| **Mining** | ** ** |  |  |  |  |  |  | 
| Ore Mined | Tonnes |  | 396,064 | 503,463 |  | 396,064 | 503,463 | 
| Waste Mined | Tonnes |  | 2,547,538 | 2,432,347 |  | 2,547,538 | 2,432,347 | 
| Total Mined | Tonnes |  | 2,943,602 | 2,935,810 |  | 2,943,602 | 2,935,810 | 
| Au Grade Mined | g/tonne |  | 1.07 | 1.69 |  | 1.07 | 1.69 | 
| Strip Ratio |  |  | 6.06 | 4.79 |  | 6.06 | 4.79 | 
| **Processing** | ** ** |  |  |  |  |  |  | 
| Ore Milled | Tonnes |  | 461,049 | 537,233 |  | 461,049 | 537,233 | 
| Au Grade | g/tonne |  | 0.92 | 1.34 |  | 0.92 | 1.34 | 
| S_(2) Grade | % |  | 1.05 | 1.16 |  | 1.05 | 1.16 | 
| Au Milled (contained) | Ounces |  | 13,621 | 23,139 |  | 13,621 | 23,139 | 
| Recovery | % |  | 77.1 | 90.7 |  | 77.1 | 90.7 | 
| Au Recovered/Poured | Ounces |  | 10,505 | 20,992 |  | 10,505 | 20,992 | 
| **Sales** | ** ** |  |  |  |  |  |  | 
| Au Sold | Ounces |  | 10,821 | 18,219 |  | 10,821 | 18,219 | 
| Au Price | US$/oz |  | 4,885 | 2,661 |  | 4,885 | 2,661 | 
| **FINANCIALS (Unaudited)** | ** ** |  |  |  |  |  |  | 
| **Revenue** | ** ** |  |  |  |  |  |  | 
| Gold Sales | (US$000’s) |  | 52,856 | 48,476 |  | 52,856 | 48,476 | 
| **Operating Costs – Summary** | ** ** |  |  |  |  |  |  | 
| Mining | (US$000’s) |  | 5,198 | 4,790 |  | 5,198 | 4,790 | 
| Processing | (US$000’s) |  | 7,065 | 8,463 |  | 7,065 | 8,463 | 
| G&A | (US$000’s) |  | 2,174 | 3,882 |  | 2,174 | 3,882 | 
| **Total Operating Costs** | (US$000’s) |  | **14,437** | **17,134** |  | **14,437** | **17,134** | 
| Excise Duty | (US$000’s) |  | 3,717 | 1,952 |  | 3,717 | 1,952 | 
| UK/Philippine G&A | (US$000’s) |  | 3,850 | 3,972 |  | 3,850 | 3,972 | 
| **Total Direct Production Costs** | **(US$000’s)** | ** ** | **22,004** | **23,058** | ** ** | **22,004** | **23,058** | 
| **Net Cash Income** | (US$000’s) |  | 30,852 | 25,418 |  | 30,852 | 25,418 | 
| **Total Capital Costs** | (US$000’s) |  | 1,423 | 1,881 |  | 1,423 | 1,881 | 
| **Total non-cash costs** | (US$000’s) |  | 9,688 | 16,233 |  | 9,688 | 16,233 | 
| **Pre-tax Free Cashflow** | **(****US$000’s)** |  | **29,429** | **23,536** |  | **29,429** | **23,536** | 
| **Cash Cost / oz Sold – C1** | **US$/oz** |  | **1,236** | **875** |  | **1,236** | **875** | 
| **Cash Cost / oz Sold – AISC^(1)** | **US$/oz** |  | **2,067** | **1,303** |  | **2,067** | **1,303** |

_Note 1: AISC includes all UK Corporate costs. It excludes costs directly related
to the Nicaraguan assets._

**Runruno Operations**

**_Revised FY2026 Production guidance_**

Gold production at Runruno during Q1 2026 has been adversely affected by three operational
and geological factors, each of which is described below. The combined effect of
these factors has resulted in a revision to the Company’s FY2026 production guidance
to 40,000 – 48,000 oz, as set out in the table at the end of this section.

**1.    Process Plant Performance – BIOX Circuit Disruption**

Metallurgical recovery and overall plant performance has been materially impacted
by repeated interruptions to the BIOX circuit. The BIOX process uses bacteria to
oxidise the iron and sulphur in pyrite, thereby liberating refractory gold that 
would not otherwise be recoverable through conventional processing.

Following the commencement of mining in Stages 5 and 6 of the open pit, ore processed
through the BIOX circuit was found to contain toxic elements that inhibit bacterial
activity and therefore reducing sulphide oxidation. Toxicity has been attributed
to cyanide contamination, most likely originating from legacy small-scale mining
activity conducted in the extensive network of illegal tunnels within the Stage 
5 and Stage 6 ore body. This contamination caused several temporary suspensions 
of the BIOX circuit and significantly reduced gold output during the Quarter.

The Company has implemented a structured remediation programme, comprising: (i) 
systematic toxicity testing of ore samples prior to processing; (ii) blending protocols
to ensure contaminated ore is diluted with sufficient clean ore; and (iii) laboratory
trials using hydrogen peroxide as a detoxification agent, in collaboration with 
global processing expert Metso Corporation, with whom production data from the affected
period has been shared for independent evaluation and advice.

The BIOX circuit has since recovered and is currently operating at normal production
levels, processing ore on a 50:50 blend of clean and affected material.

**2.    Geological Model Downgrade – Ore Tonnage and Grade Reduction**

The most recent JORC compliant ore reserve statement was published in 2021 and was
based on widely spaced exploration drill holes. Reserve estimates for the first 
four stages of the mine proved reasonably reliable, reflecting the thick and laterally
continuous nature of the M lodes mined in those stages.

Stages 5 and 6 target a fundamentally different geological domain: the thin, flat-
lying Balcony lodes. The 2021 resource model predicted these lodes to be continuous
with no major structural faulting. Resource definition drilling conducted in 2023
and 2024 was limited in density due to restricted land access and steep mountainous
topography and therefore did not yield sufficient data to revise the model at that
time.

With pre-strip mining of Stages 5 and 6 now complete, grade control drilling has
been able to define the ore body in detail for the first time. This work has revealed
a structural setting significantly more complex than previously modelled: the Balcony
lodes have been displaced by numerous faults that were not identified in prior drilling
campaigns, resulting in a reduction in both ore tonnage and grade relative to the
2021 reserves estimate.

**3.    Impact of Illegal Small-Scale Mining Activity**

Small-scale miners have been active in and around the Runruno area for decades. 
Illegal mining activity in the Stage 5 and Stage 6 zones continued after FCF Minerals
commenced production at Runruno, resulting in an extensive network of subsurface
tunnels, concentrated particularly within the Balcony lodes of Stage 5.

These illegal operators demonstrated a systematic focus on the highest-grade portions
of the ore body. The full extent of mined voids can only be determined as tunnels
are exposed during open pit operations and confirmed through grade control and blast
hole drill interceptions. Void models are constructed as this information becomes
available, and estimated gold losses are incorporated into short term mine plans.

Whilst the volumetric ore loss attributable to illegal mining typically represents
between 1% and 5% of total ore, the ounce loss is disproportionately higher given
that tunnelling was concentrated in the highest-grade zones.

**Revised FY2026 Forecast**

The combined effect of the three factors described above underpins the revision 
to the Company’s FY2026 production guidance. The table below summarises the key 
physical parameters against the original FY2026 budget:

|  | **Budgeted** | **Revised Forecast** | **Variance** | 
| Total Mined | 8.36 Mt | 10.04 Mt | 1.67 Mt | 
| Ore Milled | 2.27 Mt | 2.13 Mt | (136.5 Kt) | 
| Au Grade Milled | 1.07 g/t | 0.90 g/t | (0.17 g/t) | 
| Recovery | 81.5% | 75.9% | (5.65%) |

**_Finance_**

Q1 2026 recorded gold sales of US$52.9 million (Q4 2025: US$63.5 million), at an
average realised gold price of US$4,885 /oz (Q4 2025: average gold price of US$3,995/
oz); producing positive pre-tax free cash flow of US$29.4 million (Q4 2025: US$40.0
million).

The Company’s cash holdings at 31 March 2026 were US$36.5 million (31 December 2025:
US$41.6 million). The Group has no drawn debt.

**_Mining Operations_**

Mining production of ore and waste for Q1 2026 was slightly above management’s forecast
at 2.94 Mt (Q4 2025: 2.79 Mt). During Q1 2026, a total of 396 Kt of ore was mined(
Q4 2025: 710 Kt).

**_Process Plant_**

Gold produced during Q1 2026 was 10,505 oz (Q4 2025: 15,156 oz) from ore milled 
in Q1 2026 of 461 Kt (Q4 2025: 538 Kt), at an AISC of US$2,067 /oz (Q4 2025: US$
1,584 /oz). Head grade was lower than forecast at 0.92 g/t (Q4 2025: 1.04 g/t).

Average gold recovery rate for Q1 2026 was 77.1% (Q4 2025: 84.1%).

**_Residual Storage Impoundment (“RSI”)_**

The RSI dam water freeboard remains well above design minimum levels. Construction
of the RSI final in-rock spillway continues.

**Development**

**_La India Gold Project_**

Construction activities at the La India Project progressed well during the Quarter
with overall construction remaining ahead of schedule at 40% complete against a 
planned 35% at mid-March 2026. The total Project budget was increased by 4% to US
$171 million owing to increased power infrastructure costs. The Project continues
to be funded by the Company’s Runruno gold mine in the Philippines, supported by
an undrawn US$30 million gold pre-pay facility. First gold production at La India
remains on track for December 2026. Highlights for the Quarter include:

·      1.2 million hours worked with no lost time injuries.

·      Processing plant construction tracking at 13% as planned; key concrete footing
pours across the site are near completion.

·      Local contractor, Duroblock S.A (“Duroblock”), has been awarded the structural,
mechanical, piping and electrical installation contract alongside Degbed Company
Limited as the specialist mill installation contractor.

·      The Company agreed a collaborative arrangement with ENATREL, Nicaragua’s 
national electricity transmission company, to construct the 138 kV substation at
a total cost of US$6.2 million, representing a saving of US$6.2 million against 
ENATREL’s original turnkey proposal of US$12.4 million.

·      The construction of the Tailings Storage Facility has commenced following
contract award to Duroblock, with access road and earthworks activities ongoing.

·      Approximately 100,000 tonnes of commissioning ore is stockpiled on the run-
of-mine pad in-line with targeted 500,000 tonnes by the processing plant commissioning
date.

**Exploration – Nicaragua**

**_La India Project_**

Since acquiring the La India Project, the Company has completed a total of 15,638
metres of drilling. To date, the Company’s focus has been on step-out out drilling
from planned mining areas and exploration drilling at Cacao. Two drill rigs continue
to operate at the La Inda Project, with one rig dedicated to extensional drilling
adjacent to the planned mining areas and the other dedicated to exploration at high
priority targets.

·      Drilling at La India South Underground intersected wide high-grade mineralisation:

o  Drillhole LIGT612 intersected 31.18 metres at 4.37 g/t Au from 181.6 metres to
212.8 metres including 0.48 metres at 138.4 g/t Au (from 187.6 to 188.1 metres) 
and 1.93 metres at 21.3 g/t Au (from 240.3 to 240.8 metres).

·      Step-out drilling at La India Phase 1 – North Open Pit has returned significant
interceptions confirming and extension of the mineralised zone of at least 30 metres:

o  Drillhole LIDC620 intersected 9.58 metres at 1.68 g/t Au and 13.15 g/t silver(“
Ag”) from surface to 9.58 metres.

o  Drillhole LIDC621 intersected 10.55 metres at 1.11 g/t Au and 6.77 g/t Ag from
surface to 10.55 metres.

o  Drillhole LIDC626 intersected 6.70 metres at 1.65 g/t Au and 1.64 g/t Ag, including
1.50 metres at 5.33 g/t Au and 3.71 g/t Ag.

·      Exploration drilling at Cacao has successfully defined a high-grade ore shoot:

o  Drillhole CCRD043 intersected 12.7 metres at 3.52 g/t Au from 270.8 metres to
283.5 metres, including 2.0 metres at 19.7 g/t Au (from 276.5 to 278.5 metres).

o  Drillhole CCRD044 intersected 10.7 metres at 1.92 g/t Au from 233.6 metres to
244.3 metres, including 0.52 metres at 21.3 g/t Au (from 240.3 to 240.8 metres).

**_Other_**

Post-Quarter end, Metals Exploration was granted four new highly prospective exploration
concessions adjacent to the La India Project, covering a combined area of 64,400
hectares, granted for a term of 25 years. Within these concessions, four high priority
targets have been identified. Refer to the Company’s announcement dated 10 April
2026.

**Exploration – Philippines**

**_Dupax Project_**

An initial drill programme at Dupax indicated that the target ore zone is significantly
deeper than predicted, leading the Company to conclude that an economic resource
at Dupax will not be able to be defined within a time period such that the Runruno
process plant can be converted to process Dupax ore. Other options to re-purpose
the Runruno plant are being considered.

**_Abra Project_**

Drill programmes on the Abra tenement remain on hold while the National Commission
for Indigenous Peoples further advances its consultation activities with the potentially
impacted local communities. The Company’s expectation remains that drilling in the
Abra project area will commence later in H2 2026.

**ESG**

**_Occupational Health & Safety_**

The Company completed the Quarter without a lost time injury in either the Philippines
or Nicaragua.

**_Environment & Compliance_**

Compliance matters continue to be successfully monitored, and all operations in 
both the Philippines and Nicaragua are compliant with no outstanding material issues.

**_Community & Government Relations_**

The Company continues to receive strong support for Runruno and La India from local
communities and government agencies in both the Philippines and Nicaragua.

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