Initiation of Open Offer & Notice of AGM

10 May 2013

METALS EXPLORATION PLC

OPEN OFFER CIRCULAR POSTED TO SHAREHOLDERS

NOTICE OF ANNUAL GENERAL MEETING

As previously announced on 26^th March 2013, the Directors of Metals Exploration are pleased to initiate an Open Offer (the "Open Offer") to eligible shareholders to raise up to approximately €4.5 million via the issue of up to 55 million new ordinary shares of 1 pence each in the Company (the "Open Offer Shares") at a price of 7 pence per new ordinary share. Those shareholders that participated in the recent $57.7 million share placing have agreed to provide the Company with irrevocable undertakings not to take up their respective rights under the Open Offer. 

A circular is being posted to Shareholders shortly setting out in more detail the background to and reasons for the Open Offer and its terms.

1          Introduction

On 26 March 2013, the Company announced that it had obtained commitments to raise approximately US$57.7 million (before expenses) via the issue of a total of 545,033,044 new Ordinary Shares at a price of 7 pence per new Ordinary Share, from certain existing shareholders.  It was also announced that the Board wished to provide the Company's existing Shareholders with the opportunity to subscribe for additional Ordinary Shares at the same price as the Subscribers invested at under the Placing. Accordingly the Company is carrying out an Open Offer for a maximum raise of up to approximately £3.8million (equivalent to approximately €4.5 million) (before expenses).

As further set out below the Board believe the funds raised by way of the Open Offer are not critical to the construction of the Runruno Project and plans to fund the construction using the Placing proceeds and by agreeing debt arrangements with third party debt providers.

The purpose of this document is, amongst other things, to provide you with details of the Open Offer, to outline the background to and the reasons for the Open Offer.

The terms of the Open Offer are described in this document. Qualifying Shareholders may subscribe for Open Offer Shares above their basic entitlement under the Open Offer if they so wish by use of the Excess Application Facility.  Further details of the Excess Application Facility are given in Part 2 of this document.

The Open Offer is conditional, inter alia, upon Admission.

2          Background to and reasons for the Open Offer and Use of Proceeds

2.1       As announced on 8 April 2013, your Board has continued to actively progress the development of the Runruno Project by making significant advances in both the project funding package as well as the physical construction activities on the ground.  Step out drilling activities to further test the potential of the Runruno FTAA for gold and copper mineralisation were maintained with continued success.

2.2       In addition to the Placing announced by the Company on 26 March 2013, the Company is intending to raise the additional capital of approximately US$70 million required for the development of the Runruno Project via debt funding.  In total, the Company estimates that up to approximately US$130 million (before expenses) will be raised through debt and equity which will fully fund the Runruno Project and provide a sufficient level of working capital for the operations and/or commitments pre-commercial funds flow.

2.3       The combination of these two financing sources, the Company's current cash reserves and a credit for the completed Runruno Project capital works should provide adequate funding for the full construction of the Runruno Project including working capital through to production and the acquisition of the mining fleet.  The Company is now in a position to be able to proceed with the full construction of the Runruno Project whilst it seeks to finalise the debt package of approximately US$70 million.

2.4       As previously explained, the combination of the Placing and the proposed debt funding should fully fund the Runruno Project and therefore receipt of funds from the Open Offer is not critical to the construction of the Runruno Project.

2.5       Notwithstanding the above and regardless of the take up of the Open Offer, the Board are delighted to afford all Qualifying Shareholders the opportunity to increase their shareholding in the Company at a time when the Company has already benefitted from the considerable financial support of the Subscribers on equivalent terms.

3          Details of the Open Offer

The Company is making an Open Offer to Qualifying Shareholders on a pre-emptive basis.

The Company is not relying on this equity for its funding requirements and is making this facility available for any minority shareholder who wishes to increase their investment in the Company.  Each of the Subscribers who are participating in the Placing have waived their rights respectively (and will procure that any person acting in concert with it, will waive its right) to take up any Open Offer Shares.

The proposed Offer Price of 7 pence per Open Offer Share is the same price as the price at which the Placing Shares are being issued. However, the Open Offer is not conditional upon completion of the Placing or the level of applications made to subscribe under the Open Offer.

Qualifying Shareholders are invited to apply for Open Offer Shares under the Open Offer at a price of 7p per Open Offer Share, payable in full on application and free of all expenses, pro rata to their existing shareholdings on the basis of:

65 Open Offer Shares for every 100 Existing Ordinary Shares

held at the Record Date and so in proportion for any other number of Existing Ordinary Shares then held. Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Open Offer Shares. Fractional entitlements which would have otherwise arisen will not be issued.

The Open Offer is subject to the satisfaction, amongst other matters, of Admission occurring on or about 6 June 2013, (or such later date, being not later than 31 July 2013, as the Company may decide):

The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares and the Placing Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.

Subject to the fulfilment of the conditions set out below, and in Part 2, the Open Offer has been structured so as to allow Qualifying Shareholders to subscribe for Ordinary Shares at the Open Offer price as close to pro rata to their existing holdings as possible.  Fractional entitlements will not be allotted to Qualifying Shareholders in the Open Offer, and where applicable, entitlements under the Open Offer will be rounded down to the nearest whole number of new Ordinary Shares

Qualifying Shareholders at the Record Date may, in addition, make applications in excess of their pro rata initial entitlement. Once subscriptions under the Open Offer Entitlements have been satisfied, the Company shall, in its absolute discretion, determine whether to meet any excess applications in full or in part, and no assurance can be given that applications by Qualifying Shareholders under the Excess Application Facility will be met in full or in part or at all. To the extent that additional Open Offer Shares are not subscribed by existing Shareholders, Open Offer entitlements will lapse. Further details of the Open Offer and the Excess Application Facility are given in Part 2 of this document.

Excess applications will be rejected if and to the extent that acceptance would result in the Qualifying Shareholder, together with those acting in concert with him/her/it for the purpose of the Code, holding 30 per cent. or more of the issued share capital immediately following Admission.

Qualifying Shareholders should note that the Open Offer is not a rights issue.  Qualifying non-CREST Shareholders should be aware that the Application Form is not a negotiable document and cannot be traded.  Qualifying Shareholders should also be aware that, in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer, but will be made available under the Excess Application Facility and the net proceeds will be retained for the benefit of the Company.

Settlement and dealings

Application will be made to the London Stock Exchange for the Open Offer Shares to be admitted to trading on AIM. It is expected that such Admission will become effective and that dealings will commence on or about 6 June 2013. Further information in respect of settlement and dealings in the Open Offer Shares is set out in paragraph 7 of Part 2 of this document.

The Open Offer Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared following Admission.

Overseas Shareholders

Certain Overseas Shareholders may not be permitted to subscribe for Open Offer Shares pursuant to the Open Offer and should refer to paragraph 6 of Part 2 of this document.

4          Action to be taken in respect of the Open Offer

If you are a Qualifying non-CREST Shareholder you will find an Application Form accompanying this document which gives details of your Open Offer Entitlement (i.e. the number of Open Offer Shares allocated to you). If you wish to apply for Open Offer Shares under the Open Offer, you should complete the enclosed Application Form in accordance with the procedure set out at paragraph 3 of Part 2 of this document and on the Application Form itself and deliver it by post or by hand (during normal business hours only), together with payment in full in respect of the number of Open Offer Shares applied for to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to arrive as soon as possible and in any event so as to be received no later than 11.00 a.m. on 31 May 2013, having first read carefully Part 2 of this document and the contents of the Application Form. If you are a Qualifying CREST Shareholder and you will receive a credit to your appropriate stock account in CREST in respect of your Open Offer Entitlement. You should refer to the procedure set out at paragraph 3(ii) of Part 2 of this document.

The latest time for applications to be received under the Open Offer is 11.00 a.m. on 31 May 2013. The procedure for application and payment depends on whether, at the time at which application and payment is made, you have an Application Form in respect of your Open Offer Entitlement or your Open Offer Entitlement has been credited to your stock account in CREST. The procedures for application and payment are set out in Part 2 of this document. Further details also appear on the Application Form which has been sent to Qualifying Shareholders. Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Open Offer.

5          Open Offer Statistics

Conversion rates used in this document (unless otherwise indicated) are set out as follows:           EUR 0.84425:£1

Source: www.oanda.com on 30 April 2013 at 13:00 UK time

6          Expected Timetable of Principal Events

Notes:

Statistics are prepared on the basis that all of the Open Offer Shares are subscribed for and that no new Ordinary Shares (other than the Open Offer Shares) are issued following the date of this document and before the completion of the Open Offer and the issue of the Second Placing Shares.

7          Notice of Annual General Meeting

Notice is hereby given that the 2013 Annual General Meeting of Metals Exploration PLC will be held at 11.00 a.m. on 19 June 2013 at 200 Strand, London WC2R 1DJ.

DEFINITIONS

The following definitions apply throughout this document unless the context otherwise requires:

A reference to £ is to pounds sterling, being the lawful currency of the UK.

A reference to EUR is to Euros, being the official currency of the Eurozone.

Save for the date of publication of this document, each of the times and dates above are subject to change.  Any such change, including any consequential change in the Open Offer statistics above, will be notified to Shareholders by an announcement on a Regulatory Information Service.

For further information, please contact: