NEW YORK, NY / ACCESSWIRE / June 25, 2015 / Metanor Resources Inc. (TSX VENTURE:MTO) (PINKSHEETS: MEAOF) (Frankfurt:M3R) is
the subject of a newly released advisory from mining analyst Jay Taylor of Hard
Money Advisors Inc. Metanor is a commercial gold producer at its 100%-owned
Bachelor Gold Mill in Quebec. With a current market capitalization of ~$17.8
million (356.6M shares outstanding X 5 cents) Jay Taylor believes MTO.V presents
a significant opportunity for investors that understand the latent opportunity
this gold producer presents as its primary asset, the Bachelor Mill, has a
replacement value several times the Company’s current market cap and is
increasingly being viewed as a coveted strategic asset being the only mill
within 200km in a gold-rich district.
Mining analyst Jay Taylor of Hard Money Advisors released an advisory to his
paid subscriber base on the merits of establishing a long position in MTO.V and
recommended they add MTO.V to their watch list. Mr. Taylor has a business MBA in
Finance & Investment, in-depth accredited studies in geology, has decades of
mining sector analysis under his belt, and is known for being reserved in his
advice. Mr. Taylor has decided investors should pay attention to Metanor
Resources and believes the Company is poised to appreciate in value and worth
adding to ones watch list for superior return potential. Important to note is
that Mr. Taylor has purchased shares of MTO.V (MEAOF on the US exchange) this
June for his own personal portfolio and has stated “I’m looking for at least a
twofold to threefold gain.“
Full copy of Mr. Taylor’s advisory along with chart and additional insight may
be viewed at http://sectornewswire.com/MTOJayTaylor-June-2015.pdf online.
Jay Taylor also took the opportunity to interview Metanor’s Vice President,
Treasurer, and Director, Ronald Perry about the opportunity for investors
establishing a long position in Metanor Resources Inc.; the 23 minute audio
interview may be listened to at
http://sectornewswire.com/JayTaylor-interview-MTO-June-2015.mp3 online. In
the interview Mr. Taylor offered sage investment advice, noting that “we should
always be looking to buy low and sell high” and that “it is times like these, at
the bottom of markets, when nobody is paying attention that profits are made by
smart investors,” Mr. Taylor noted that smart investors are starting to acquire
undervalued gold mining assets and that with a low market capitalization Metanor
presents opportunity stating “I know the asset value is there.“
Metanor was also recently the subject of a recent Mining MarketWatch Journal
review which corroborates Mr. Taylor’s analysis, the journal review may be found
at
http://miningmarketwatch.net/mto.htm online.
Trading with a market cap ~$17 million Gold producer Metanor is a bargain, and
is healthy both operationally and balance sheet-wise;
Assets-wise:
1) Steady cash on hand ($4.4M in its bank account and 785 oz of gold stored at
the Royal Canadian Mint (as declared in June 1, 2015 news release));
2) Positive working capital, book value at $56 million (>$0.15 cents per share),
and infrastructure replacement value on all properties in excess of $100
million;
3) MTO.V offers a significant latent tax savings windfall value for a future
acquirer with a loss-carry-forward on the books of ~$40 million, the impact
could generate $12 million to $15 million in tax credits; and
4) ~1.6 million ounces gold global resource in all categories (on all
properties, two of which are permitted mines (Bachelor and Barry)).
Liabilities-wise:
1) Metanor’s loan from Investissement Québec (originally $7M) only has $485,715
remaining and will be paid off by August 31st 2015; and
2) Metanor’s remaining convertible debenture has been paid down to $9 million
outstanding and the term extended to August 2017.
Operationally: Metanor’s latest gold production figures reveal the Company is
profitable, operating cash flow positively, and successfully executing on
cost-cutting measures, delivering cash costs of US$849/oz gold with all-in costs
of US$959/oz. Company produced nearly 12,000 ounces in the quarter ending Sept.
2014, it then encountered a setback (stope collapse), and has since evidenced a
rebound with 9,860 in the latest quarter, and this improving trend is expected
to continue over the next two quarters as the Company advances toward
normalizing again; possibly 10,500 to 11,000 oz for this next quarter, and then
attaining a near-50,000 oz per annum gold production run rate again. The
Bachelor Lake mill has a capacity of 1,200 tpd but is currently running at a
rate of ~800 tpd, with an effective rate of ~700 tpd with periodic routine
downtime for maintenance.
There exists opportunities to expand production beyond the current production
capacity of ~50,000 ounces of gold per year; the Bachelor mine sourced rock is
‘hard’, making it a limiting factor in-part, however this can overcome with a
nominal capital outlay to move to 1,200 tpd, also sourcing alternate sourced
material from a secondary front is another obvious option in this gold-rich
territory — the flexibility Metanor has on this front positions Metanor’s mill
as its primary asset and increasingly ‘in-play’. Hydro Quebec is planning an
area substation for this fall, thus then appears to be the optimum time for
Metanor to be positioned to focus on increasing the capacity (Metanor has been
waiting for that). The level of interest swirling around Metanor’s primary asset
appears high — shares of MTO.V are poised for upside revaluation as the
inherent value and accomplishments are appreciated by the market, and apt to
respond in multiples as gold retrenches and strengthens.
Metanor is ready to take advantage of three things; 1) improved grades and grade
control, 2) foreign exchange (MTO.V is protected to the downside by forex gain
from US to CDN, it is currently receiving a ~$280/oz price differential for gold
in Canadian dollars over US dollars), and 3) the price of gold.
Metanor currently has two permitted mines:
1) Bachelor Mine: Bachelor is a 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).
Recent drilling results (e.g. June 22, 2015 “Metanor Intersects 22.85 g/T Over
4.04 Meters at Bachelor Mine”, March 20, 2015 “Metanor Intersects 8.64 g/T Over
5.8 Meters at Bachelor Mine,” and May 14, 2015 “Metanor Intersects 12.24 g/T
Over 4 Meters in the Hewfran Sector of the Bachelor Mine”) continue to
demonstrate, in-part, Metanor’s ability to readily extend the mineable life of
Bachelor, similar to how other successful area miners have operated (and several
continue to this date) — typically lining up a couple years of initial quality
mineralized material but remaining operational for many decades, adding as they
go. MTO is able to sell 80% of its Bachelor Mine sourced gold at spot prices
with the balance sold to Sandstorm as per gold participation agreement (Note:
this arrangement is only on Bachelor-area sourced material, Metanor’s mill is a
separate asset that is 100%-owned by the Company and the mill may be used to
process material sourced from outside Bachelor without restriction (for
Metanor’s sole-benefit) as long as it meets minimum covenants to Sandstorm —
covenants Metanor has been more than able to satisfy to date).
2) Barry Gold Project, Quebec (located ~65 km from Bachelor): The 100% owned
Barry property is neighbor to Eagle Hill’s Windfall Lake Deposit. The resource
estimate at Barry now sits at 309,500 oz Gold of Indicated Resources (7,701,000
t at 1.25 g/t Au) and 471,950 oz gold of Inferred Resources (10,411,000 t at
1.41 g/t Au) and is wide open for large resource growth expansion. The current
1km strike at Barry is potentially 13km, there are in excess of 150 anomalies
outside the pit area. The Barry deposit is a potential multimillion ounce
target; the independent international professional geological firm SGS Geostat
has identified Metanor’s Barry deposit as comparable in potential to rival other
multi-million ounce deposits such as Canadian Malartic gold deposit (formerly
owned by Osisko, now owned by Yamana and Agnico-Eagle) & Detour Gold’s Detour
deposit. Metanor is not currently mining from Barry, however one option is to
put a concentrator on site and transport material to its Bachelor Mill. The
Barry deposit is open in all directions, and Metanor is currently looking at it
with consultants and will be doing a drilling campaign in the pit with the aim
of targeting 2+ g/T gold material for a new potential mining scenario. Important
to note is that Osisko Gold Royalties has recently orchestrated acquisitions
adjacent Metanor’s Barry deposit.
Excerpts from Jay Taylor’s advisory on Metanor Resources Inc.:
Subscribers who have been with me for a while would be justified in wondering
why I am bringing this name back to your attention after having suffered
considerable losses with it over the past few years. Of course Metanor Resources
is not unique among gold mining companies. Most of them have seen their market
caps plunge with this five-year bear market. But what hasn’t changed for all
these gold exploration companies is that mineralized gold material has remained
in the ground awaiting higher prices for its removal. In Metanor’s case, it has
had some commercial gold production over the past couple of years. It is guiding
toward 50,000 oz. this year. But its gold resources and exploration potential
from several properties, combined with its gold resources, mill, and
infrastructure in the heart of Quebec gold mining company give it value far in
excess of its current market cap of a mere C$16 million, or US$12 million.
Undervalued gold mining companies are more common than not. And until the gold
starts the next leg up in the secular bull market that began in 2002, many if
not most of the junior gold miners will continue to have a difficult time.
However, the recent announcement by Osisko Gold Royalties that it is investing
in the Urban-Barry area, which surrounds Metanor’s large Barry Property, which
hosts an open-pit gold deposit, has me believing Metanor is likely to become an
acquisition target. Not only does Metanor hold the dominant land position in the
Barry area, but it also has the only mill in close proximity to the Barry as
well as a host of other gold deposits pictured in the illustration above.
Metanor did have some limited production of gold ore from higher-grade material
at the open-pit Barry Deposit three or four years ago. The Barry currently has a
43-101 resource of 309,500 oz. in the indicated category grading 1.29 g/t, and
another 471,950 ounces grading 1.65 g/t in the inferred category. While those
grades may be economic with a mill on site, with a distance of approximately 116
km between the mill and the mine, it is not economic to truck that ore to the
mill for production under current market conditions.
However, on June 15, management announced that they are carrying out a drill
campaign in close proximity to the current pit, with the goal of outlining
sufficiently high-grade ore to economically haul it the 116-km distance from the
mine to the Bachelor Mill, where it would be comingled with Bachelor Mine ore.
Management has stated its goal of starting production from a second mine, and,
provided high-grade ore can be outlined from either the core 43 Zone or core
Main Zone along strike from surface, that goal may well be met quickly, because
permits are in place to mine and truck ore immediately from the Barry to the
Bachelor Mill.
One possibility in the future that management is still considering is to build a
concentration plant at Barry. By concentrating 1.25 g/t material by 10 or 20
times, such a concentrate might be hauled and produced economically at the
Bachelor Mill. But the immediate need of Metanor is to generate positive cash
flows to strengthen its balance sheet.
Longer term, the Barry Deposit has the potential not only to host multiple
open-pit gold deposits along a potential 13-km strike, but a high-grade core
from the likes of Zone 43 and the Main Zone provide the potential for the Barry
Deposit to eventually be mined underground as well.
Custom Milling Potential and Bachelor Mine Life:
Metanor’s mill capacity ranges between 800 tpd for the harder Bachelor Ore and
1,200 tpd for softer Barry ore. Presently the mill is being used exclusively for
Bachelor Mine ore. However, Hydro Quebec is expected to complete the
construction of a new substation 25 km from the mill by September of this year.
With that, management can expand the mill considerably with a nominal investment
and use excess capacity to treat Barry and/or ore custom mill ore from other
smaller deposits in the areas noted in the illustration on the prior page.
Meanwhile at the Bachelor Mine, a sufficient amount of high-grade ore from this
underground mine is in place to produce 50,000 oz. per year over the next four
years. But with a resource of 300,000 oz. and a potential to double that to
600,000 oz., Bachelor has a significant amount of material to anticipate a long
life at that level of production. The illustration on your left, showing the
mined out areas and underground workings as well as longer-term potential,
provides a conceptual picture of a long-life mine at Bachelor.
In addition, the company has three other deposits not factored into immediate
production plans, those being the Nelligan (which is really an extension of the
Bachelor Mine), the Dubuisson (where there is more than 450,000 oz. grading in
the 4.15 g/t to 4.82 g/t range), and the Wahnapitei Prospect.
The bottom line for me is that Metanor has assets that collectively are worth
several times the current market cap of this company. Of course I’m just one “voter” in the market. The market is deemed to be the supreme arbiter of value
and at this time it’s saying, “Taylor, you are wrong!” But what I see is a very
smart player entering this market, namely, Osisko Gold Royalties. It’s difficult
for me to see how this company, which is quickly becoming the dominant player in
Quebec, taking a significant interest in one of these little companies after
another, doesn’t have its eyes fixed on Metanor. For that reason I believe the
downside risk is very minimal for those who buy these shares at their current
price, which I personally did this past week. On the upside I’m looking for at
least a twofold to threefold gain, which would take the stock to a mere US$0.10
from its current price. I know the old saying, “Fool me once, shame on you. Fool
me twice, shame on me.” I’m willing to stick my neck out for a potential fool me
thrice, because, foolishly or not, I believe the upside potential is worth
placing at least a small bet on Metanor at this time, given the issues discussed
above.
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. Readers are referred to the terms of use, disclaimer and disclosure
located at the above referenced URLs.
Contact information:
Fredrick William, BA Ec.
Market Equities Research Group
f.william@marketequitiesresearch.com
SOURCE: Market Equities Research Group
ReleaseID: 430141
