CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT for the six months ended 30 June 2023

* Restated 30 June 2022 repayment of borrowings with a value of US$17 million into its principal and interest elements to align with disclosures in the 2022 full year financial statements.

Notes to the condensed consolidated interim financial statements

1.             General information

These condensed consolidated interim financial statements of Metals Exploration and its subsidiaries (the "Group") were approved by the Board of Directors on 26 September 2023. Metals Exploration is the parent company of the Group. Its shares are quoted on AIM market of the London Stock Exchange plc. The registered address of Metals Exploration plc is 38 - 43 Lincoln's Inn Fields, London, WC2A 3PE.

The condensed consolidated interim financial statements for the period 1 January 2023 to 30 June 2023 are unaudited. The group has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing the interim financial information. The condensed consolidated interim financial statements incorporate unaudited comparative figures for the interim period from 1 January 2022 to 30 June 2022 and the audited financial year ended 31 December 2022.

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory accounts for the year ended 31 December 2022, which were prepared under UK-adopted international financial accounting standards, were filed with the Registrar of Companies. The auditors reported on these accounts and their report was unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006.

2.             Basis of preparation

The interim financial information in this report has been prepared using accounting policies consistent with UK-adopted international accounting standards. The financial information has been prepared based on UK-adopted international accounting standards that the Board of Directors expect to be applicable as at 31 December 2023.

These condensed consolidated interim financial statements have been prepared under the historical cost convention, except for derivative financial instruments, which are measured at fair value, and in accordance with UK-adopted international accounting standards. There have been no changes in accounting policies as described in the 2022 annual financial statements.

3.             Going concern

These condensed consolidated interim financial statements of the Group have been prepared on a going concern basis, which contemplates the continuity of business activities, the realisation of assets and the settlement of liabilities in the normal course of business.

Although as at 30 June 2023, the Group's current liabilities continue to exceed its current assets, primarily due to the estimated external borrowings the Group expects to repay within the next 12 months, there is no obligation to adhere to a set loan principal or interest repayment schedule.

The Group is not subject to any set principal or interest repayment schedule. Excess free cashflow is required to be paid to lenders on a minimum quarterly basis only when net working capital is in excess of US$5million. In addition, the Group is not in default if it is unable to make a quarterly payment to the lenders, but would continue to be obliged to pay out the excess free cash flow as soon as possible. As a result of these debt repayment arrangements, including the ongoing existence of a US$5million positive net working capital balance, together with the sustained positive cash flows being produced by the Runruno Project, the Directors believe there is no material uncertainty over the Group's going concern.

The Group and its ability to operate as a going concern and to meet its commitments as and when they fall due is dependent upon the ability of the Group to operate the Runruno Project successfully so as to generate sufficient cash flows to enable the Group to settle its liabilities as they fall due.

The Board of Directors believes that the Runruno Project will continue to operate successfully and produce positive cash flows for at least 12 months from the date of this interim report, being 26 September 2023. As a result, the Board of Directors considers it appropriate that the half-year financial information should be prepared on a going concern basis.

4.             Earnings per share

The earnings per share was calculated on the basis of net profit/(loss) attributable to equity shareholders divided by the weighted average number of ordinary shares.

* Restated to remove 94,125,000 warrant instruments previously incorrectly included as these were anti-dilutive in nature.

5.             Impairment reversal

Property, plant and equipment ("PPE")

The Group considers that the entire Runruno project (encompassing capitalised property, plant and equipment, mining licence costs, deferred exploration expenditure and the provision for mine rehabilitation and decommissioning) comprises a single cash generating unit ("CGU") as all stages of the project are interdependent in terms of generating cash flow and do not have the capacity to generate separate and distinct cash flow streams.

The Group assesses the recoverable amount of the Runruno project CGU based on the value in use of the Runruno operations using cash flow projections over the remaining expected life of mine ("LOM") and at appropriate discount rates. Based on assumptions current as at 30 June 2023, in particular the ongoing relatively high gold prices and the increased productivity of the Runruno mine, the Group considered that a partial reversal of the 2018 impairment of PPE be recognised. Accordingly, and in accordance with IAS 36 -- Impairment of Assets, an impairment credit has been raised in H1 2023 to increase the book value of the PPE by US$10 million.

6.             Loans

Senior debt

The US$83,000,000 senior debt facility has effectively been fully repaid with only US$1,253 outstanding as at 30 June 2023. This small balance has remained in place to maintain the existing security while the process of elevating the status of the mezzanine debt from unsecured to secured debt (the "Elevation"). This Elevation process provides for the interest rate on the mezzanine debt to reduce from 15% to 7%.

The process of elevating the status of the mezzanine loans to that of secured debt is continuing. The mechanics to achieve this requires new securities to be created across several jurisdictions. The documentation to achieve all aspects of the elevation is largely agreed, and the process of executing these documents is expected to commence in Q3 2023.

Mezzanine debt

Since 2015, the Company has entered into numerous facility agreements with two major shareholders, MTL Luxembourg Sarl ("MTL Luxembourg") and Runruno Holdings Limited (the "RHL Group") (the "Mezzanine Lenders"). The purpose of these unsecured advances was for general corporate and working capital requirements of the Company and to enable completion of the Runruno Project.

In October 2020 the various original mezzanine facilities were consolidated into two new facilities (the "New Mezzanine Facilities") and a £100,000 revolving credit facility. There is no obligation to make any repayment of any amounts due under the New Mezzanine Facilities until the senior debt is fully repaid.

The majority mezzanine lender, MTL Luxembourg, Nick Candy's investment vehicle (holding 70.7% of the mezzanine debt), has confirmed in writing that, subject to completion of the elevation documents within a reasonable period, the interest rate on its portion of the mezzanine debt will reduce to 7% per annum from 15% per annum as from 3 November 2022 (being the date that the Company could have fully repaid the Senior Facility, but for the requirements of the Elevation).

The minority 29.3% mezzanine lender, the RHL Group, has not confirmed the same in writing; however, the Company is hopeful the RHL Group will apply the 7% interest rate from 3 November 2022 and that this will be formalised once the elevation documents are completed within a reasonable period.

Total mezzanine debt payments of US$35.0 million were made during H1 2023 (H1 2022: US$17.0 million).

The net debt position of the Group as at 30 June 2023 was US$48.8 million (H1 2022: US$92.9 million).

The Group's outstanding debt is summarised as follows:

* Given the Group is not subject to a fixed repayment schedule then, in accordance with the restructured debt facilities, there is no certainty as to what amount of debt will be repaid within one year from period end. Thus, the determination of what debt is deemed current and what is deemed non-current is subject to estimation. In making this calculation the Group has taken account of the Group's estimate of what principal repayments will be made during the next 12 month period.