On the 23rd of July, 44.10% shareholder Solomon Capital Limited made an all cash offer for the remaining issued share capital of Metals Exploration. Compared to the closing price of the company's shares on the 22nd of July (10.25p), Solomon's 13p per share offer represents a 26.8% premium and values the company at GBP35.76 million.

Solomon is a private company incorporated in Guernsey for the purposes of investing in Metals Exploration. The company is wholly owned by well known property developer Christian Candy, and has long been a supporter of Metals Exploration. Currently holding 118,935,655 shares (44.10%), Solomon has also received letters of intent to accept its offer from a further 24,343,903 shares (9.03%), giving it control of 53.12% of Metals Exploration's issued share capital.

Solomon has stated in its offer document that it intends to continue to work with Metals Exploration's existing management who are currently in the process of arranging finance for the development of its Runruno mine in the Philippines. As stated in the feasibility study released on the 4th of May 2010, the Runruno project's capital cost is estimated at $149.3 million.

Runruno has a JORC-compliant resource of 25.4 million tonnes containing 1.42 million ounces of gold (average grade of 1.74 g/t) and 25.6 million pounds of molybdenum (457ppm). The May 2010 feasibility study specified a 12.2 million tonne per annum open pit operation producing an average of 96,700 ounces of gold (101,800 ounces in years 1-5, 92,700 ounces in years 6-10) for 10 years. The basic operation excludes a molybdenum circuit as test work continues, but capital costs on a gold operation were estimated at $149.3 million with operating costs estimated at $477 per ounce of gold. The inclusion of a molybdenum circuit producing 900,000 pounds per annum and generating credits of $15 per pound, would see operating costs fall below $400 per ounce of gold.

The Metals Exploration share price was hit hard after the resource downgrade in November 2009, and despite recent a series of positive announcements such as the award of the Environmental Compliance Certificate; the award of the Financial or Technical Assistance Agreement (the final major permit necessary before production) and completion of the Runruno Definitive Feasibility Study the shares have continued to trade at a low price.

The lack of value assigned to the Company in the market created ideal conditions for the offer from Solomon Capital. Metals Exploration is yet to respond to the offer but will do in due course.

As a result of Solomon's 53.12% control of the shareholding and with no known potential counter bidder to improve on Candy's cheap offer, we withdraw our recommendation and target price on the company.

# 12 months to 30th September
^ 3 months

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