Metanor Resources Inc. (TSX VENTURE:MTO) (Pink Sheets:MEAOF) (Frankfurt:M3R) has released financial results for its initial period as commercial Gold producer at its newly refurbished Bachelor Gold Mine and Mill in Quebec. It appears Metanor has hit the mark it had projected in corporate presentations in which it anticipated initial $800/oz cash costs - it delivered US$766/oz.
In reviewing Metanor's numbers for the first quarter ending as a commercial Gold producer we note several important points that show good health; 1) The P&L bottom line of $410,000 net loss is extremely positive after factoring out depreciation (a non cash item) of $1.07 million and the fact it had to include two months of expenses that were not in the commercial gold production period. 2) Even though Metanor produced 4,514 oz Gold in December it could only show 2,863 ounces of that as sales in the quarter because 2,375 ounces of Gold (representing ~$2 million at cost to Metanor and ~$3 million in terms of sales) was on deposit at the mint. 3) Cash-wise Metanor should be currently sitting well with somewhere between CDN$4 million - $5 million as it would have received that aforementioned $3 million from the mint in early January + it already had ~$1 million cash closing out the period + it is understood to have had an abnormally large GST(sales tax) refund (receivable) of an extra $700,000. 4) Also important to note is MTO.V announced earlier this week the amendment of a ~$5.3 million note with the Quebec Government, pushing the note back over a year and thus negating the potential cash call in April 2014.
Excerpt Metanor's February 28, 2014 release:
Metanor Reports its Financial Results for the Quarter Ending December 31st 2013 with a Cash Cost of US$766/oz
February 28, 2014 - Val-d'Or, Quebec, Canada: Metanor Resources Inc. ("Metanor") (TSX - V: MTO) is pleased to report on its financial results for the quarter ending December 31st 2013 (Q2). This press release should be read in conjunction with Metanor’s interim consolidated financial statement for the three month period ended December 31st 2013 and related Management’s Discussion and Analysis (MD&A), which can be found on the company website www.metanor.ca or on SEDAR www.sedar.com. All amounts are in Canadian dollars unless otherwise stated.
Q2 2014 Highlights
- Metanor achieves Commercial production November 2nd 2013 (declared December 1st 2013).
- Gold production of 12,751 ounces for the quarter which 4,514 oz were produced in December.
- Gold sales of 10,427 ounces for the quarter of which 2,863 oz were sold in December.
- Gross Margin of $149,128 for the quarter after depreciation and depletion of $1,070,138.
- Net Loss for the quarter of $410,174 which includes revenues and cost of sales for December and three months of expenses.
- Milled 62,033 tonnes of ore at a feed grade of 6.6 g/T and a recovery of 97.5%.
- Total of $3,556,885 in gold sales in December (commercial production period) at an average selling price of $1,242/oz (US$1,167/oz at an exchange rate of US$0.94/CA$1.00).
- Cash Cost of $815 per ounce sold in December (US$766/oz at an exchange rate of US$0.94/CA$1.00).
- Began the payment on the capital totaling $933,333 during Q2 on the loan provided by Ressources Québec.
- Subsequent to December 31st, Ressources Québec and Métanor concluded an amendment distributing the balance of the loan until March 2015. (See the press release issued February 27th 2013)
Ghislain Morin, president and chief executive officer, and Serge Roy, executive chairman of the board, declared: « We are very pleased with our quarterly results which show that Metanor can already generate a positive gross margin at the onset of commercial production. We plan to improve these results during the coming quarters as we attain full production capacity.
The full financial release from source with P&L statement may be viewed at http://goo.gl/2cwUcw online.
Metanor will continue to develop new drifts to the west which will allow access to new zones and increase the production toward a full capacity. Additionally, Metanor will increase the diamond drilling in the coming months in order to eventually add new resources and reserves.
Metanor recently announced Gold production numbers for January holding steady above 4000 ounces, this while still processing development ore. Recent development work to open new stopes at Metanor's Bachelor mine appear to have translated into results, allowing MTO.V to have stabilized Gold production over 4,000 oz per month. The stage is now set for a cash flow positive scenario, and a push to stabilize in the higher range of a 4000 - 5000 oz per month Gold target (at 800 TPD). Managements near-term plan is to increase the mill capacity by ~50% at low capex (~$4 million) and target 6,500 - 7,500 oz Gold production per month in late 2015 (contingent of obtaining additional electricity from Hydro-Quebec planned for 2015). MTO.V with ~267 million shares outstanding provides an ideal vehicle for investors seeking exposure to precious metals. Shares of MTO.V are currently trading near C$0.20 and the time to pay attention is now while MTO.V is trading at a fraction (less than 1/4) of its infrastructure (replacement) value alone, ignoring the ~1.6 million oz Gold resource in all categories (on all properties), and ignoring the large resource growth potential. Metanor is also actively advancing on a second front, it's Barry Mine deposit, that many believe has a the potential to translate to a large increase of gold ounces in the ground and a significant percentage increase in production ounces on top of the >6,500 ounces Gold production per month target expected at Bachelor sometime in 2015.
Market Equities Research Group has identified the following related research links on Metanor:
- Mining Expert Jay Taylor's interview with Metanor's VP and recommendation to clientele:
- Mining Expert Lawrence Roulston initiates coverage http://sectornewswire.com/RoulstonMTO02-2014.pdf [PDF]
- Ronald Perry, Vice-President of MTO.V, November 15, 2013 Business News Network interview: http://watch.bnn.ca/#clip1044420 [Video]
- Recent Q4 2013 Analysts Report (C$0.47 price target): http://sectornewswire.com/MTOanalystOct2013.pdf [PDF]
- Metanor Resources Inc. Corporate Website: http://www.metanor.ca/en [Website]
- SEDAR Filings for Metanor Resources Inc.: http://goo.gl/fpbR3Z [Website]
- Recent Mining Journal article: http://miningmarketwatch.net/mto.htm [Website]
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 mentioned.
Simon Levinson, Editor in Chief
Market Equities Research Group