01 Nov 2021

Quarterly Activities Report

CORPORATE DIRECTORY Level 5, 197 St Georges Terrace Perth WA 6000 Australia ASX Code: MLX T +61 8 9220 5700 E reception@metalsx.com.au ABN 25 110 150 055 www.metalsx.com.au Metals X L imited ( Metals X or the Company ) presents its activities report for the quarter ended 3 0 September 2021 . ENVIRONMENTAL, SOCIAL AND GOVERNANCE • Bluestone Mines Tasmania JV Renison Tin Operation ( Renison ) reported no Recordable Injuries during the quarter. • The 12 - month rolling Total Recordable Injury Frequency Rate ( TRIFR ) for Renison decreased from 18.7 to 16.7 at the end of the quarter and reflects the continue d emphasis placed on quality safety interactions, and the identification, control , and management of hazards with particular attention on supervisors understanding and implementation of risk management procedures . • The Company had no reportable incidents at its Wingellina operations and maintains a TRIFR of zero . • A number of engineering initiatives are underway at Renison to sustain environmental performance including updating the Rentails Feasibility Study to consider a number of alternative fuels , including the use of Hydrogen. • The Company donated a vehicle to the widow of our indigenous liaison officer who passed away during the quarter . • The JV is commencing an update of the rehab ilitation plan for the Mt Bischoff operations. This includes an eval uation as to reopening the mine to recover the remaining ore in parallel to implementing a progressive rehabilitation of the area. Discussions have been held with the relevant government authorities as to the final scope of required rehabilitation . COVID - 1 9 • There have been no cases of COVID - 19 within the Metals X or Renison workforce, nor any significant disruption to operations or critical supplies. • In support of the nationwide vaccine rollout, t he C ompany has offered financial support to all employees w ho wish to get fully vaccinated . • On 3 August 2021, the Company announced that it had received confirmation that t he Malaysian Smelter Corporation ( MSC ) has recommenced operations following the Malaysian Government imposed lockdown . 1 CORPORATE HIGHLIGHTS • During the quarter, the Thailand Smelting and Refining Co. Ltd ( Thiasarco ) agreed to accept additional shipments and agreements for the sale of tin were executed with Yunnan Tin China ( YTC ) for August, September, and October 2021. • By quarter en d, the MSC ha d materially paid for all outstanding shipments and as a result, the Company recommenced new shipments of tin concentrate on 30 September 2021 . • On 8 July 2021, the Company announced it had received payment of $11.0 million as settlement of the Conditional Copper Price Payment pursuant to the Mt Gordon Sale Agreement. 2 • The l oan facility with Asia Cheer Trading Limited ( ACT ) paid in full during the quarter . • C losing cash for the quarter increased by $ 8.2 million to $ 21.6 millio n . • T he Company has continued to advance the sale and spin out of its Nickel asset portfolio, including the Wingellina Nickel - Cobalt Project in Western Australia and the Clause Hills Project located in South Australia. 1 Refer ASX Announcement: 3 August 2021, Renison Tin Concentrate Update. 2 Refer ASX Announcement: 8 July 2021, Mt Gordon Copper Payment. QUARTERLY REPORT FOR THE QUARTER ENDING 3 0 SEPTEMBER 2021 ASX QUARTERLY REPORT (ASX: MLX ) FOR THE PERIOD ENDING 3 0 SEPTEMBER 2021 2 2 OPERATIONS REVIEW RENISON TIN OPERATION Metals X owns a 50% equity interes t in Renison through its 50% stake in the Bluestone Mines Tasmania Joint Venture ( BMTJV ). All data in this report is 100% of Renison unless stated as ‘MLX 50% share’. The Renison strategy is focused on continuing to convert ongoing significant in - mine exp loration success into a substantial long - life mining operation, to deliver higher cash margins through an increased mining rate, grade , and recovery, whilst continuing to seek productivity improvements and reduce costs. TABLE 1 – RENISON TIN OPERATION PRODUCTION AND COSTS (100% BASIS) – SEPTEMBER 2021 QUARTER Sep 2021 Quarter Jun 2021 Quarter Rolling 12 - months Physical and Revenue Summary Ore mined t ore 237,007 206,192 831,6 79 Grade of ore mined % Sn 1.50 1.39 1. 29 Ore milled (after sorter upgrade) t ore 177,098 165,227 665,524 Grade of ore processed % Sn 1.75 1.66 1.5 6 Recovery 1 % 7 9 . 5 77.9 77.6 Tin produced t Sn 2,471 2,136 8,09 2 Tin sold t Sn 2,3 81 1,530 7,52 6 Realised tin price (net of TC/RC) $/t Sn $ 43,999 $ 36,530 $ 33,739 C1 Cash Cost $/t Sn $ 14,403 $ 15,404 $ 15, 769 All - in Sustaining Costs (AISC) $/t Sn $ 21,088 $ 19,939 $ 21,2 1 4 All - in Cost (AIC) 2 $/t Sn $ 22,140 $ 23,425 $ 23,987 Imputed Revenue (net of TC/RC) 3 $M 108.71 78.03 273.01 C1 Cash Cost $M 35.59 32.90 12 7.60 All - in Sustaining Costs (AISC) 2 $M 52.10 42.59 171.66 All - in Cost (AIC) 2 $M 54.70 50.04 194.09 Imputed Net Cashflow 3 $M 54.01 27.99 78.91 EBITDA $M 70.32 41.43 134.68 1 Recovery is expressed as overall recovery, taking account of losses of tin through the ore sorter and the concentrator 2 AIC includes AISC plus project and exploration costs 3 Imputed Revenue assumes 100% of tin produced is sold. Imputed net cashflow ass umes no change to receivables or inventory. Metals X share of imputed net cashflow is A$ 27 .0 million Production and Costs • Multiple production records were achieved during the quarter for ore mined, tin metal treated , tin metal produced, and overall recove ry. • Mine planning improvements created opportunities with additional stoping areas and broken stocks. • Equipment availability was on or above target. • P roduction of 2,471 tonnes of tin - in - concentrate for the quarter represents a 16 % increase against the previous quarter. • All - in - sustaining cost ( AISC ) of $ 21,088 / tonne of tin . • Imputed EBITDA of $ 70 million (MLX 50% share - $ 35 million ) and imputed net cash flow of $ 54 million ( MLX 50% share - $ 27 million ). • Production guidance for FY2 2 is 8,500 – 9,000 tonnes of tin - in - concentrate at an A I SC cost of $ 2 1 ,000 - $ 25 ,000/tonne tin . • The Thermal Upgrade Project Sco ping Study was completed with a decision, as previously announced, to proceed with an update of the Rentails Definitive Feasi bility Study ( Rentails DFS Update ), to enable a F inal I nvestment D ecision for development of the full Rentails Project to be made in CY2023. The market outlook for tin remains strong and is expected to continue for the remainder of 2021 – 2022. ASX QUARTERLY REPORT (ASX: MLX ) FOR THE PERIOD ENDING 3 0 SEPTEMBER 2021 3 3 AREA 5 PROJ ECT UPDATE The A rea 5 upgrade has progressed significantly over the period , key activities included; • H V P ower U pgrade o Works have progressed well, design ~ 92% complete . • Ventilation U pgrade o Raise bore Leg #1 complete . o Raise bore Leg #2 pilot hold on hold whil st mining in the area . o Fan construction slightly delayed but no impact to overall schedule . • Backfill F acility and In frastructure o Paste plant EPC contract negotiated. o New plant required as used plant is no longer available . o Water treatment plant design progressing . o Paste hole drilling : ? O ne - h ole complete and other in progress . ? One - hole intercepted area of significant water flow technical solutions being evaluated Total Area 5 forecast costs are now $59. 2 million with approximately 4. 2 million of contingency remaining (June forecast $56.6 million) . The cost increases are due to the move to a new paste plant, additional scope in the water treatment, and electrical upgrade. MINE RESOURCE DRILLING PROGRAM During the quart er, 14,281 metres of underground and 867 metres of surface drilling was completed which included grade control drilling in Leatherwood and Resource development drilling in Huon North, Leatherwood and South Basset areas . As announced on 15 July 2021 3 , a ne w mineralised area, the Hastings Area, has been identified in a footwall area immediately adjacent to and below the currently identified Leatherwood mining area. The Hastings area currently has an extent of approximately 375m horizontally and 145m vertical ly. The Hastings area interpretation is currently based on 16 diamond drill holes; 13 of which contain significant tin intersections with the mineralised zone open to the north and at depth. Further follow - up infill drilling is planned to commence towards the end of CY 2021. Since the initial discovery hole in February 2021, ongoing follow - up drill testing of the Hastings area has now reported multiple high grade tin intersections of very significant widths, with the most significant reported below . Hole True Width (metres) % Tin Downhole (metres) U8220 35.0 1.87 237 U8227 17.0 3.52 385 U8223 9.3 3.65 261 U8221 2.3 10.72 320 U8222 14.0 1.61 305 U8218 24.0 0.87 298 U8230 0.8 24.77 165 U8232 6.1 2.83 174 3 Refer ASX Announcement: 15 July 2021, Significant Intersections at Recently Defined Renison Mine Hastings Area . ASX QUARTERLY REPORT (ASX: MLX ) FOR THE PERIOD ENDING 3 0 SEPTEMBER 2021 4 4 METALLURGICAL IMPROVEMENT PROGRAM The Metallurgical Improvement Program progressed over the period with record tin recoveries attributable to work completed. Key Metallurgical Improvement Program workstreams progressed during the quarter were: • HP power up grade 92% complete . • Fine Spirals Replacement – Commissioned September 2021. • Table Feed box upgrades – Complete . • Key ongoing activities include : o Complete remaining HP power upgrade. o Gravity Concentrate Pumping Improvements Commissioning late November 2021 . o CMC mixing and dosing system (for Talc management) Commissioning December 2021 . o Primary Grinding/Sulphide Feed Stability Commissioning November 2021 . o 50’ Thickener Removal Target final decommissioning Q1 2022 . o “Table Vision” trial (table monitoring/control system) Equipment fabrication/delivery in December & January . o Sulphide R egrind S tability c ommissioning March 2022 . o Leach circuit de - bottle necking EPC contract executed, Q1 2022 commissioning . THERMAL UPGRADE PROJECT AND RENTAILS PROJE CT Work on the updated Rentails Definitive fixability study continued over the period key activities included : • The JV steering committee approved the funding for the first phase of the u pgraded feasibility study . • A project manager for the study has been hired and the owners team defined . • The work breakdown structure for the study has been prepared and preliminary discussion with engineers and contractors has commenced . NEAR MINE EXPLORATION The Company announced on it had committed to an exploration program consisting of a regional so il sampling and geochemistry campaign across the Renison mine lease and a diamo nd drilling program targeting a recent electromagnetic survey. 4 These programs signal a renewed commitment to targeted regional exploration by the JV and will both commence in the final quarter of 2021. LIFE OF MINE UPDATE Work has commenced on an update of the life of mine plan ( LOMP ) taking into account updated tin price forecasts , and new development areas such as Leatherwood and updated metallurgical recoveries . The updated LOMP is scheduled to be presented to the JV in December 2021 and will i nclude updates of the capital and operating costs over the updated plan CORPORATE UPDATE ON THE SPIN OUT OF NICKEL - COBALT ASSETS The Company has previously announced the execution of a binding terms sheet with NICO Resources Limited ( NICO ) for the sale and spin out of its Nickel asset portfolio, including the Wingellina Nickel - Cobalt Project located in Western Australia and the Claude Hills Project located in South Australia (the Terms Sheet ). T he parties have completed the draft Prospectus and Share Sale Agreement. Under the T erms S heet, the C onditions P recedent were to be satisfied by 21 September 2021, being 120 days after the date of the Terms Sheet. Both parties are in the process of extending the date for completion of the Conditions Precedent which have resulted from procedural delays in obtaining the necessary approval from the Foreign Investment Review Board ( FIRB ) . 4 Refer ASX Announcement: 14 October 2021,Near Mine Exploration Program to Commence at the Renison Tin Mine. ASX QUARTERLY REPORT (ASX: MLX ) FOR THE PERIOD ENDING 3 0 SEPTEMBER 2021 5 5 Updates on the completion of the Conditions Precedent will be announced in due course. MT GORDON COPPER PAYMENT UPDATE On 8 July 2021, the Company received $11 .0 million from Capricorn Copper Holdings Pty Ltd comprising the first and second instalment s of $5 .0 million each, plus t he agreed extension fee of $0.25 million and interest due. TIN CONCENTRATE SHIPME N T UPDATE During the previous quarter , the Malaysian government instigated a nationwide lockdown of economic activities which impacted the operations of the Kuala Lumpur Tin Market ( KLTM ) which sets tin pricing for the Company’s tin concentrate to MSC. The lockdown resulted in the MSC declaring Force Majeure on all concentrate contracts , including those associated with the Company. During the quarter, t he Thailand Smelting and Refining Co. Ltd ( Thiasarco ) agreed to take additional shipments and an agreement was executed for the sale of tin concentrate to Yunnan Tin China ( YTC ) to mitigate the Company’s risk related to any p otential long - term disruptions of the smelter operations in Malaysia . On 30 September 2021, the Company resumed shipments of tin concentrate to MSC having materially received payment for all shipments previously subject to Force Majeure and the extended p ayment terms. INVESTMENTS – CONVERTIBLE NOTES AND OPTIONS The Company continues to hold $36.0 million in aggregate in convertible notes and 40.6 million options issued by Cyprium Metals Limited (CYM). 5 Further details on the activities of CYM are available from their ASX releases. UNSECURED LOAN FACILITY WITH ACT On 13 July 2021, the Company announced it had repaid $7.75 million, comprising 50% of the outstanding principal amount of $15.50 million to Asia Cheer Trading Limited ( ACT ). 6 On 27 July 2021, the Company announced it had agreed to extend the Loan Facility Termination Date from 31 July 2021 to 31 January 2022, with all other terms and conditions remaining unchanged. On 30 September 2021, the Company made a final payment of $7.76 million, c omprising $7.75 million remaining principal plus interest, to ACT. The Company has now repaid the ACT loan facility in full. 5 Refer 30 June 202 1 Annual Report for further details. 6 Refer ASX Announcement: 13 July 2021, Part Repayment of Loan Facility. ASX QUARTERLY REPORT (ASX: MLX ) FOR THE PERIOD ENDING 3 0 SEPTEMBER 2021 6 6 CASH GENERATION At t he end of the quarter, Metals X had $ 21.6 million in the bank ( 30 June 2021 : $ 13.4 m illion), tin metal receivables of $ 16. 9 million ( 30 June 2021 : $ 9.2 million) , tin metal inventory of $ 16.1 million ( 30 June 2021 : $ 14 .4 million) and payable s of $ 10.5 million ( 30 June 2021 : $ 7.6 million). Metals X share of imputed net revenue from Renison operations is $ 27 .0 million for the quarter (Q4: $14.0 million) and the Company’s cash balance increased by $ 8.2 million during the quarter ( 30 June 2021 : decreased by $16.4 million) . The following table reconciles opening cash plus imputed net cashflows to actual closing cash at quarter end. Movement in cash balance A$(m) Opening cash at bank 13.4 Add Metals X share of imputed net cashflows from Renison 27.0 Unadjusted closing cash position 40.4 Less Timing difference between imputed and actual revenue ( 19. 1 ) ACT final loan repayment (15.5) Change in working capital (2. 9 ) Add Increase in tin metal receivables 7.7 Mt Gordon copper payment 11.0 Closing cash at bank 21.6 T his quarterly report has been authorised by the board of directors of Metals X Limited ENQUIRIES Mr Brett Smith - Executive Director E: B rett. S mith @metalsx.com.au ASX QUARTERLY REPORT (ASX: MLX ) FOR THE PERIOD ENDING 3 0 SEPTEMBER 2021 7 7 Competent Person’s Statements The information in this report that relates to historic Exploration Res ults is based on, and fairly represents, information that has been compiled by Bluestone Mines Tasmania Joint Venture Pty Ltd technical employees under the supervision of Mr Colin Carter B.Sc. (Hons), M.S c. (Econ. Geol), AusIMM. Mr Carter is a full - time employee of the Bluestone Mines Tasmania Joint Venture Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and types of deposit under consideration and to the activities w hich he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. The Company confirms it is not aware of any new information of data that materially affects the Exploration Results and the form and conte x t in which the Competent P erson ’s finding have been presented has n ot been materially modified form the original announcement as noted.
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