This week, Metanor Resources Inc. (TSX-VENTURE:MTO) (Pink Sheets:MEAOF) (Frankfurt:M3R) was identified in a newly
issued analysts report by Secutor Capital Management with upside market
valuation. MTO.V also received a noteworthy endorsement from yet another mining
analyst, Mr. Thibaut Lepouttre, Managing Director at Belgium-based mining and
commodity research BVBA firm Caesar (managers of Caesars Report mining
newsletter), when Lepouttre made public the results of his search over five
continents to find those juniors that offer superior value. Below is a review
his top Canadian pick, new junior Gold miner Metanor which made his list and was
the subject of a recent site visit. This week Metanor announced it poured 3,231
ounces Gold in the month of September at its refurbished Bachelor high-grade
gold mine and mill in Quebec. Recent development work appears to now be
translating into results, allowing MTO stabilization of production at over 3,000
oz per month. This sets the stage for a cash flow positive scenario and a push
to stabilize at a 4000 - 5000 oz per month Gold target (at 800 TPD). Forward
looking, once commercial production status is attained at Bachelor, it is
managements stated plan to increase the mill capacity by ~50% at low capex and
target 80,000 - 90,000 oz Gold/year in 2015.
Secutor Capital Management has
provided a new updated market valuation. Earlier in 2013 the analyst had
initiated coverage with significant upside re-rating based on several factors;
1) Metanor currently executing on the Company's production target at its 100%
owned Bachelor mine and mill in Quebec, 2) Net Asset Value (NAV) projection of
readily achievable resource growth and extension of mine life scenarios at
Bachelor, 3) blue sky potential at Metanor's Barry open-pit gold project, and 4)
The new (October 17, 2013) Analyst report may be found at http://sectornewswire.com/MTOanalystOct2013.pdf online.
The qualified analyst has identified Metanor Resources Inc. as significantly
undervalued at current share price valuation; the analyst forecasts a $0.47 per
share price for MTO.V under a comparison of the NAV calculated for in an upside
resource and production scenario.
Additionally, yet another mining analyst has weighed in and recommended Metanor;
Thibaut Lepouttre said, "Now more than ever, investors simply can't afford to
wish upon a star and hope the drill bits will deliver something; they need to
focus on miners that have what it takes to get through the down times" --
Metanor is focused on adding shareholder value via Gold production, development,
and exploration. MTO.V is now in development ramp-up mode, gearing-up toward
eventual official commercial Gold producer status. Mr. Lepouttre is able to
issue the latest recommendation on Metanor Resources with authority as he has
recently conducted a site visit to several of Metanor Resources’ properties,
including its flagship Bachelor Gold Mine and Mill in Quebec.
Taking a mine into production is a non linear step-up function fraught with
development challenges, but nothing a skilled technical team can’t solve. The
ramp-up process is analogous to climbing Mount Everest; go up as high as you can
and then come back and acclimatize before you push to the next level. The total
production at Bachelor since reopening in July 2012 is 27,816 ounces of gold.
Near the beginning of 2013 Metanor demonstrated an increasing pattern of
production with two step-ups that resulted in 3,017 ounces of gold produced in
February. However, the development work performed recently (necessary to open
multiple access points/workstations) generated a large amount of lower-grade
gold-bearing ore that needed to be processed through the mill with a lack of
other workstations open to blend and maintain a high-grade (ironically
temporarily exacerbating the very issue the development creating this ore is
meant to cure). Now the new opening of access points appear to be resulting in
production stability above 3000 ounces; Metanor produced 4,312 ounces of gold
during the month of August, and 3,231 ounces in September, with ounces coming
from both development and stope ores.
Bachelor is a very rich underground mine with grades upwards of 26 g/t gold with
an average grade of 7.38 g/t gold (fully diluted using long hole). Metanor mined
from between only 1 and 2 stopes for the first half of 2013 and only recently
opened a third access point (still in development). During this quarter ending
December 31st, development toward the ore zones on level 10, 11, and 14
continues while production continues on levels 12 and 13 toward the west zone of
the mine where an enlargement of the Main vein was identified. The increase in
active stopes will enable the company to deliver a steady grade and flow of ore
to the mill and achieve greater and sustained daily tonnages.
Commercial Gold Production Imminent
Metanor is working toward commercial production and is in effect crossing the
chasm from development to higher-grade stope production, however the fact is MTO
is still in development ramp-up mode sitting at ~50% development ore and 50%
stope ore. This results in a fluctuation of production, however when the stopes
become the main focus the monthly production numbers will stabilize (4000 – 5000
oz per month) and commercial production should be declared.
MTO is leveraged to the price of gold, able to sell 80% of its Bachelor Mine
sourced gold at spot prices with the balance sold to Sandstorm as per gold
participation agreement. Fully permitted and sufficiently staffed with
professional mining personnel able to handle the ramp-up, MTO presents investors
with an exceptional opportunity as the first new gold miner in Quebec's Plan
Nord. Operational highlights of this new low-cost gold producer include;
• Low geopolitical risk.
• Low hydro-electric costs, not affected by oil prices.
• Targeting 60,000 oz per year production at 800TPD, >96% recoveries.
• Cash cost are TBD, once MTO is at speed cash costs will drop, it appears MTO
is comfortable targeting $700 - $800 direct cash cost (a ~US$464/oz gold
pre-feasibility estimate from Stantec was made prior to a sector-wide rise in
• Identified zones should lead to resource growth and extension of mine life
over 10+ years as Metanor appears to have over 1 million ounces Gold in the
process of being targeted for quantification at Bachelor; Industrial Alliance
analyst calculated (non 43-101) 700,000 oz Gold achievable based on deep hole
intercepts and extrapolation of data, plus we speculate a new (Q2 2013)
deformation shift gold discovery readily accessible off levels 12, 13, and 14
may add another 300,000+ ounces Gold on top of the aforementioned 700,000 oz
Metanor's infrastructure is valued (estimated replacement value) at ~CDN$200M.
The intrinsic value of Metanor’s known resources (~1.6M oz gold in all
categories on all its properties) and infrastructure are several times the
company’s current market capitalization. With MTO now entering steady-state gold
production and cash flow positive status around the corner, this should result
in improved market awareness and appreciation for the Company; the reality of
the infrastructure and resource value, cash flow growth, and clear ability to
add ounces should translate to share price appreciation.
Metanor has two projects of significance (Bachelor and Barry) that together many
believe will take MTO.V to near mid-tier producer status (between 150,000 oz -
200,000 oz Gold per annum) within a few years. The time to pay attention is now
while MTO is trading at a fraction of its infrastructure value and closing in on
its gold production target. MTO has only $17 million in long-term debt ($7M from
the government and $10M on a convertible debenture with a buyback provision) at
very manageable terms. This summer MTO received ~$2.4 million from the Quebec
government (for mining tax credits that were on Metanor’s receivables and are
now in cash) – as of mid-August 2013, the new funds together with the cash on
hand and gold bars in transit, liquidity stands at ~$5 million. MTO appears to
now be approaching 'cash flow positive' operational status, possesses large
organic resource growth potential, and is sitting geographically as the only
mill located within 200 km in a gold rich district -- MTO with ~267 million
shares outstanding (~290M fully diluted, however we note most warrants are deep
out-of-the-money and will expire unexercised) provides an ideal vehicle for
investors seeking exposure to precious metals.
Market Equities Research Group has identified the following related research
links on Metanor:
- Recent Q4 2013 Analysts Report (C$0.47 price target):
- Metanor Resources Inc. Corporate Website:
- Interview with Thibaut Lepouttre at The Au Report:
- SEDAR Filings for Metanor Resources Inc.:
- Recent Mining Journal article:
This release may contain forward-looking statements regarding future events that
involve risk and uncertainties. Readers are cautioned that these forward-looking
statements are only predictions and may differ materially from actual events or
results. Articles, excerpts, commentary and reviews herein are for information
purposes and are not solicitations to buy or sell any of the securities
located at the above referenced URL.
Fredrick William BA Ec., Managing Director
Market Equities Research Group
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