About three years ago, we doubled our money in Metals Exploration, the minerals exploration business that boasts a promising gold project at Runruno in the Philippines. Now trading at much higher levels than then (the shares are currently priced 37p), there is every chance we could see the same again over time.

In fact, there is a strong opportunist case for climbing aboard now because the shares have suffered particularly badly in the recent market sell-off, having come all the way back from 44p to a recent low of 34.5p. This is despite the fact that Metals has just done a deal to acquire a nickel mine, the profits from which should be sufficient to fund the development of the Runruno gold project without further calls on shareholders.

With exquisite timing, Metals raised £6.3 million gross just before the market turmoil in mid-July. Most of that was by way of a share placing at 40p. Some £2 million was raised through the issue of a convertible note. That cash has financed the purchase of the remaining minority interest in Runruno and provided funds for the nickel laterite acquisition, which is located on Waigeo Island, Indonesia.

Like the bigger nickel producer, Toledo Mining, Metals plans to direct-ship the nickel laterite to smelters without processing. A resource of some 35 million tonnes of ore, with around 1.5 per cent nickel, is believed to be in place. Virtually all the revenues from the nickel will go towards developing Runruno, which is sitting on at least two million ounces of gold. Developing the nickel mine will need at least $20 million (£10 million) – but that is a fraction of what will be needed for Runruno. In effect, the latest deal means Metals will be getting Runruno on the cheap.

Further drilling is under way at the Runruno site and is likely to lift estimates of the resource to nearer 2.5 million ounces. Further news could emerge as soon as late-September or early October.

What is Runruno worth? Following the nickel deal, brokers’ estimates of a fully funded Runruno go as high as 90p per Metals share. There is no shortage of big blue-chip minerals businesses that would be only too happy to pick up the baton at Runruno and add a resource of this scale to their portfolios. In the meantime, take advantage of the recent pullback to add some Metals Exploration shares to your own.

Metals Exploration	AIM	£8.56m	7.62p	0.00p
Click here for interactive charting
Other company articles:
Brickbats for Metals Ex			02/10/2008
Project cheer from Metals Ex			15/04/2008
Exploration Insights by Robert Tyerman			29/10/2007
Pace quickens at Metals Ex			10/10/2007
Metals Exploration			28/08/2007