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Special
Growth & Valuation Advisory:
New NI 43-101
Compliant Resource Estimate
Imminent
Shares of MTO.V are an ideal
vehicle for investors looking for exposure to gold and are
poised for substantial upside revaluation to reflect inherent
value
|
A new resource estimate is
imminent on Metanor Resources’ (TSX-V: MTO) 100% owned
Barry deposit, which possesses the potential for
significant growth as speculated by mining expert Jay
Taylor who has visited the property this year and has made MTO.V one of his
top gold mining sector investment selections. Metanor could
conceivably be positioned to move from a projected
60,000 - 70,000 ounces gold production per annum once
the Bachelor Lake underground mine comes online (expected
later in 2010) to mid-tier producer status on a second
front
at the Barry mine. |
“The
Barry deposit is expanding and growing. I’m expecting a
very significant increase in the 43-101 open pit numbers
and I think this stock has a lot of room to run on the
upside...”
– Jay
Taylor, BNN June 2010 |
The Barry Deposit has morphed over the year and now represents
a major asset for the Company
|
Figure 1.
Barry Deposit
|
The Barry deposit, located ~65km
southeast of the Bachelor Lake Mine/Mill, has morphed over the
year from being an interim source of ore (until the Bachelor
Lake underground comes online) into what is now being described
in some geological circles as a new world class mining camp.
Since acquiring the Barry deposit Metanor has extracted what
resource was originally thought to be there when they bought the
property and have added significantly but not quantified it
until now. The imminent Barry resource estimate report is
expected within days.
There are two zones at Barry going down to 400m, it is a 1 km
strike zone and is open at depth. Metanor has recently completed
a 20,000m drill campaign on Barry and has encountered quality
intercepts (i.e. 9.24g/t gold over 33m, 6.12g/t over 37.8m). The
image to the left shows numerous drill holes to ~100m, however
the drill intercepts at 400m - 450m are very telling as it is
important to remember that area miners such as Aur Resources
(now Teck Cominco), Agnico-Eagle and Sigma are currently mining
at depths of between 5,000 and 8,000 feet – the Barry deposit
has the potential, like the gold grade at their Bachelor Lake
property, to increases at depth and the strike is open in
directions. It is very common in this region for the grades to
increase at depth and with the values Barry is intersecting near
surface, it is clear the Barry open pit deposit too will be a
significant long term supply of ore for the company.
Valuation
& Growth - Metanor manages to accomplish what 99.9% of juniors
only dream of
Consider the following valuation and growth points and that fact
that MTO.V only has 128,450,005 shares outstanding and no long term
debt:
Balance Sheet/Book value: Metanor has infrastructure
valued at $150M including a proven, fully functional, permitted 1200TPD
gold mill operating with ~95% rates (over 30,000 ounces gold has
been poured to date). We note that Metanor’s market cap is currently at ~2/3
the replacement value of the infrastructure alone,
ignoring the 1Moz+ resource; the known gold resources between the 100%
owned Barry Deposit and Bachelor Lake of over 470,000 oz [this
will increase with the imminent 43-101 report on Barry expected
within days], plus
there is over 100,000 oz historic at the 100% owned Hewfran
extension (attached to the Bachelor Lake Underground and
adjacent to their 70% owned Nelligan project), and ~450,000 oz at
the 100% owned Dubuisson property.
Growth Potential in Revenue A
=> B => C:
A) Interim Period (pouring gold
now):
|
Figure 2.
Bachelor Lake Gold Mill |
Metanor
has been upgrading the Bachelor Lake mill while pouring (interim
Barry deposit sourced) gold along in progress. The Bachelor Lake
mill was designed for the high grade underground ore -- the ore
body should dictate the design of the equipment (the equipment
should never dictate how to mine the ore body), thus it stands
to reason Metanor will now concentrate on shifting from Barry to
mining the Bachelor underground. Because the Barry deposit had
morphed over the last year into what now appears as conceivably
a major long term second front for the Company, money was
diverted over the last year from Bachelor Lake underground
development to define the structure at Barry, build ounces, and
demonstrate the blue sky potential. The best course of action
that will maximize profit potential is to wean off mining (and
trucking from) Barry and step up the exploration there to affirm
the potential that conceivably would see the Barry open pit
systematically mined with a concentrator on site.
Note: In this interim period we DO
NOT say 'production' of gold from Barry sourced ore as even
though Metanor has the assets and ability to pour gold, and are
pouring gold (see related June 3, 2010 release entitled 'Metanor
Pours Record 747 & 744 oz Gold Bars'), Metanor is not even allowed to give statistics
unless they have performed a feasibility study on Barry which is
where the ore is currently coming from. Its pointless to attempt
to interpret metrics anyways during this interim period as there
is so much refurbishment, upgrade, drilling and employment of
tax incentives/flow through dollars. From a taxation, mining,
and environmental perspective Metanor is in production, but the
Quebec securities commission restricts the use of the word until
a 43-101 & feasibility study are supplied.
B) Bachelor Underground
(60K-70K oz gold/annum):
Although Metanor diverted money from Bachelor Lake underground
to Barry (which set back the time frame a bit) they still worked on the underground; the hoist was
installed, the hoist room was redone, and the shaft was
realigned. Being a small company without the resources to do
everything Metanor has tried to be judicious in its allocation of
capital and has been able to supplement matters with
cash flow from the gold pouring. The goal is to bring the
high grade ore from the Bachelor Lake underground online, this
is expected to be accomplished by the end of 2010 - at that
point the mill should comfortably generate 60,000oz per annum at
a cash cost of under US$500.
C) Two Locations (possible
mid-tier status within 3 - 4 years):
The
premise is that eventually Barry will become self sufficient as
every additional hole adds to the structure and will justify a
concentrator or mill of its own through a bankable (non
dilutive, amortized debt) feasibility study with capital costs
aided by positive cash flow from
Bachelor underground -- this scenario would see Metanor become a
potential 150,000 - 200,000 ounce per year producer having two mills.
Growth Potential in Resources: Both the Bachelor Lake
and Barry deposits are open at depth and along strike. Metanor
is targeting over 1M ounces at Bachelor Lake and Barry
appears to have the potential for 3-5M oz -- the upcoming
resource estimate at Barry is basically calculated at 100m depth, however
it is clearly open at depth, they have intercepts at 450m down,
it runs more than 1km in length located in the center of a 15km
long property, a Diagnos study pegs the current 1km strike at
Barry as potentially 4km, and Metanor has documented over 64 anomalies
outside the pit on the property. [See overview of
each project in the review further below]
----- ------ ------
Figure 3. Metanor's refurbished
Bachelor Lake Gold Mill - now in production
------- ------- -------
-------
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|
Figure 4.
Subject Company's Logo
|
Metanor Resources
Inc. (TSX-V:
MTO)
Metanor Resources Inc. is an
advanced stage development and exploration mining company listed on the TSX
Venture Exchange (ticker symbol
MTO.V)
(US Listing: MEAOF) (Frankfurt: M3R).
Metanor has come to our attention due, in part, to the extraordinary
opportunity afforded investors as a new gold producer
in the making utilizing their 100% owned Bachelor Lake Gold Mill in the
prolific Abitibi Mining District of Quebec.
|
Figure 5.
Bachelor Lake Mill |
Metanor
now has the Bachelor Lake Gold Mill functioning and processing the ore
extract from the open pit operation on their Barry gold deposit
(located approximately 65 km southeast of the mill).
Primary crushing is done on-site, with secondary
crushing and refining at the Bachelor Lake facility.
|
Fig 6.
Click
to enlarge |
Initial cash flow from production will be
used to expand the resource base at the Barry Deposit
and further develop the enormous potential at the Bachelor Lake Gold
Mine which produced over 131,000 oz of gold during the 1980's, it
currently has resources of 300,000 oz Au and is open in all directions
at depth with plans to upgrade to 1,000,000 oz.
NOTE: Metnaor is wide open at depth for big exploration potential at
Bachelor; the company has a deep hole intercept at ~3,500 ft.
According to Metanor's President, Ghislain Morin, current depth of the
shaft at the Bachelor Lake Gold Mine is 1,700 feet, the shaft will be
sunk an additional 600 feet to a depth of 2,300 feet and a 20,000 meter
drill program is expected to add an additional 700,000 ounces of
resources. Mr. Morin has many years of mining
experience with an expertise in both underground development and shaft
sinking. Prior to joining Metanor Resources, Mr. Morin built mills for
several area miners including Cambior (now owned by Breakwater), Aur
Resources and BHP Billiton. The two main veins at the Bachelor Lake Gold
Mine run parallel and are 75 feet apart at an 80
degree angle. Metanor expects to drop shaft an additional 700 feet in
the near future and the potential is in place to identify 1.5 million
ounces going forward. Area miners such as Aur Resources (now Teck
Cominco), Agnico-Eagle and Sigma are currently mining at depths of between 5,000 and
8,000 feet. The gold grade at the Bachelor Lake property increases at
depth and the strike is open in all directions at the 2,300 foot mark.
In 2005, Metanor completed a 15,000 meter
drilling campaign from the last underground level of the Bachelor Lake
mine and also drilled from the surface between 2005 and 2009. The
drilling campaign produced very good drill results which demonstrated
the development of new gold zones and higher grade ore at depth.
Examples of high grade ore at Bachelor Lake are as follows: 27.49 g/t
over 2.78m (Press Release-May 26,2005), 22.19 g/t over 3.77m and 18.81
g/t over 4.70m (Press Release-June 8, 2005), 17.77 g/t over 3.25m and
27.43 g/t over 1.25m (Press Release-July 13,2005) 26.50 g/t over
2.75m and 25.12 g/t over 1.95m (Press Release-August 17, 2005) and 17.76
g/t over 3.66m, 13.08 g/t over 7.62m, 9.46 g/t over 25.7m and 9.59 g/t
over 13.72m (Press Release-December 8, 2005).
Metanor will also acquire
advanced projects near the Bachelor Lake Mine and capitalize on their
good fortune of being the sole mill within a 100 km radius in an area
that contains in excess of 1.5M oz of gold from various entities. MTO
has an additional 100,000 oz (historic non NI43-101 compliant) gold on
their Hewfran extension and recently acquired gold properties (63
adjacent claims) contiguous to Bachelor Lake which hosts the once
producing (until 1967) Coniagas Mine. Metanor's Hewfran property,
adjacent to the Bachelor mill property, is also the subject of new
resource expansion; See Feb 12, 2009 release "NEW
DISCOVERY CONFIRMED" -- The results indicate that the mineralized
Hewfran West zone, directly adjacent to Metanor's 100% owned Bachelor
Lake Gold Mill and Mine, is continuous from surface to 180m elevation
below surface where resources were evaluated in 2005. Hewfran and the
Bachelor Lake Mine are connected underground. Bachelor Lake Mine’s 6th
and 8th gallery are part of Hewfran and these new results indicate
economic grade potential for mining via surface open pit or decline type
mine on the extension.
The corporate release dated March 17, 2010
entitled "50%
Incease in Capacity at Bachelor Mill" now places the operating at a
capacity at the Bachelor mill at 1200 tons per day (tpd). Metanor has
poured more than 30,000 oz. of gold to date at Bachelor Lake since
restarting the mill. Metanor has commenced work to go underground at
Bachelor Lake towards the development of the Hewfran section via level 6
and 8 where there are proven reserves. The shaft rehabilitation has been
completed.
Barry Property (100% owned):
|
Figure 7.
Barry Deposit
|
The Barry open pit is located 10 km from the Windfall property
presently owned by Eagle Hill Exploration (EAG - V) which
recently announced very promising drilling results, further
demonstrating the potential of a new Quebec mining camp in the
Barry-Urban township.
The Barry deposit, located ~65km
southeast of the Bachelor Lake Mine/Mill, has morphed over the
year from being an interim source of ore (until the Bachelor
Lake underground comes online) into what is now being described
in some geological circles as a new world class mining camp.
Since acquiring the Barry deposit Metanor has extracted what
resource was originally thought to be there when they bought the
property and have added significantly but not quantified it
until now. The imminent Barry resource estimate report is
expected within days.
There are two zones at Barry going down to 400m, it is a 1 km
strike zone and is open at depth. Metanor has recently completed
a 20,000m drill campaign on Barry and has encountered quality
intercepts (i.e. 9.24g/t gold over 33m, 6.12g/t over 37.8m). The
image in figure 7 shows numerous drill holes to ~100m, however
the drill intercepts at 400m - 450m are very telling as it is
important to remember that area miners such as Aur Resources
(now Teck Cominco), Agnico-Eagle and Sigma are currently mining
at depths of between 5,000 and 8,000 feet – the Barry deposit
has the potential, like the gold grade at their Bachelor Lake
property, to increases at depth and the strike is open in
directions. It is very common in this region for the grades to
increase at depth and with the values Barry is intersecting near
surface, it is clear the Barry open pit deposit too will be a
significant long term supply of ore for the company.
Figure
8. Barry Open Pit
This
image shows how the east pit meets the west pit. The Barry
Deposit is growing width wise and length wise.
|
Drilling highlights from the recent 20,000m
drilling program at Barry:
|
January 13, 2010 =
January 7, 2010 =
September 24, 2009 =
June 11, 2009 =
April 14, 2009 =
April 14, 2009 =
September 18, 2008 = |
3.42
g/t over 22.4 m
3.49 g/t over 45.6 m
9.24 g/t over 33.0 m
10.4 g/t over 7.65 m
48.9 g/t or 5.19 g/t (cut to 34.28 g/t) over 12.27 m
4.86 g/t over 27.0 m
6.12 g/t over 37.8 m |
|
Figure 9. (Above) Barry Open
Pit - 1 km Strike Length
Figure 10. Barry Open Pit (Above) - Further Potential
The upcoming resource
estimate is basically calculated at 100m depth, however it is clearly
open at depth, they have intercepts at 450m down, it runs more than 1km
in length located in the center of a 15km long property,
a Diagnos study pegs the current
1km strike at Barry as potentially 4km, and Metanor has documented over
64 anomalies outside the pit on the property.
Dubuisson (100% owned) and Nelligan
(70% owned) Properties: Metanor also has several other properties
of significance including their Dubuisson property which precipitated
MTO becoming a publicly traded entity in 2003. The Dubuisson property
lies within the city limits of Val-d'Or, Quebec, where 9,000 m of
exploratory drilling has confirmed a measured, indicated, and inferred
resource of over 450,000 ounces of NI 43-101 compliant gold. The
Nelligan property, which consists of 58 claims totaling approximately
2895 ha located immediately to the west of the Bachelor property and
approximately 8 kilometers southwest of the Town of Desmaraisville is
turning up significant results that investors need to keep an eye on as
new gold bearing zones of significance are being discovered; See
September 16, 2009 release "New
Discovery". Nelligan is in close proximity to the Bachelor Lake
Mill. Sheared and mineralized horizons at Nelligan similar to the Vein A
at the Bachelor Mine were exposed on the Billy group and the Valley
group of Nelligan property. On the Billy group, assay values of 582 g/t
Au over 0.53m and 3.15 g/t Au over 3.0m were obtained from channel
sampling. On the Valley group, the best assay result was obtained from a
grab sample of altered mafic volcanic with minor pyrite stringers and
quartz veining and returning 3.25 g/t Au. Values obtained in channel
samples demonstrate continuity of gold mineralization across the shear
zone with grades of 2.02 g/t Au over 2.10m and 1.47 g/t Au over 2.25m.
The Dubuisson and Nelligan
properties alone are a significant plum, however it is important to note
that Metanor's flagship and main focus is their 100% owned Bachelor Lake
Property; the exceptional revenue generation from the mill and vast resource base of the gold mine.
Valuation:
|
Figure 11.
New 10ft. Hoist; Metanor
has infrastructure replacement value of $150M including
headframe, roads, and all surface equipment.
|
MTO.V appears to be an exceptional buy
with over 30,000 ounces of gold poured to date. The mill is
configured to produce dore bars of gold, with a small
component of silver.
Additionally MTO currently trades under CDN$0.70 per share and has a current
market cap that equals value of their Bachelor Lake Gold Mill structure
alone (with a replacement value of
$150M including headframe, roads, and all surface equipment). Metanor possesses
known gold resources between the Barry Deposit and Bachelor Lake of over
470,000 oz + over 100,000 oz historic at the Hewfran extension but more
importantly the Bachelor Lake Gold Mine has a proven geological model
that is open in all directions at depth with plans to upgrade to
1,000,000 oz. They also currently have ~450,000 oz at the Dubuisson property. With gold production now underway MTO.V
appears to offer exceptional opportunity as a debt free unhedged gold producer. The current market cap relative to expected
revenues is disproportionate; according to a recent (Feb 2010)
Laurentian Bank
Securities
analyst report
MTO is in line for a serious upside price change,
they initiated coverage with a 12-month share price target of CDN$1.15. |
Metanor’s tax credit incentives found in mining friendly Quebec :
Because of incentives offered by the government of Quebec, for every $1
that Metanor invests in underground development and exploration, they
will receive ~$0.46 in the form of a tax credit. Tax incentives will
benefit the company greatly, as plans include ongoing underground development and a exploration.
Quebec is unanimously agreed in the mining community to be a stable,
mining friendly region and is ranked the #1 jurisdiction by the Fraser
Institute; Ranking within the Fraser Institute's Annual Survey of Mining
Companies released April 2010 may be viewed
here.
Metanor's Technical Leadership and Management:
-
Mr. Serge Roy, Chairman CEO, is a licensed professional
who has held key positions for such companies as Stabell Resources Inc.
and Ovaltex Consultant inc. (mining consultants and geological
engineers), has made has made key strategic decisions that have
maneuvered Metanor to a position of great strength in the region and is
well qualified to maximize shareholder value as Metanor transitions from
explorer to gold produce.
Mr. Ghislain Morin is President
& COO. Mr. Morin participated in many feasibility
studies with a view to implementation of mines, mining projects and
mining product installation companies. Between 1981 and 1989, he
founded Équipement Minier GRM Inc. for which he is now vice
president. Mr. Morin has been involved in planning, management,
monitoring, construction and evaluation of various mining projects
since 1974.
Andre Tremblay, V.P. of Exploration, holds a
bachelor's degree in geological engineering and a masters' degree in
earth sciences (structure) from the Universite du Quebec in Chicoutimi .
He's acted as a director of exploration and/or various senior geologist
positions with companies (as Ressources minieres Coleraine, GeoNova
Explorations, Gestion S.R.C. Inc., Groupe Minier O, Mines Camchib,
Campbell Resources Inc.).
|
For a full review of Metanor Resources Inc.'s
properties see the related URL's: |
|
Bachelor Lake
Gold Mine & Mill
The Bachelor Lake property is Metanor's main
focus.
|
Barry Gold
Deposit
The open
pit operation on MTO's Barry gold deposit will be processed at
Bachelor Lake.
|
|
Dubuisson (Val-d'or)
The Dubuisson Property
is 432 hectars within the city limits of
Val-d'Or, Quebec, where 9,000 m of exploratory drilling has confirmed a
measured, indicated, and inferred resource of over 450,000 oz
gold. |
Whahnapitei (Sudbury)
The Wahnapititei Property
is 130 hectares in which diamond
drilling performed demonstrates the area is prospective to high grade
gold (7-15 g/t), along with significant amounts of cobalt and nickel.
Mineralized zones identified are located less than 5 km north-east of
the Nickel Rim South deposit, where Falconbridge is investing
over $368 million in underground development of its deposit and it is
already understood that mineralization from Falconbridge's property
extends into Metanor's. |
|
|
Vassan (Val-d'or)
Holding Property;
The property is located in a favorable geological
context for different types of mineralization, such as
auriferous in the veins inside the Vassan intrusive,
volcanogenic sulphides in the intermediate to mafic volcanic
sequences and of the platinoids type mineralization in the
ultramafic sequences of the Dubuisson Formation. |
Note: This list is not intended to be
a complete overview of Metanor or a complete listing of Metanor's projects.
|
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To have a complimentary
investor package on
Metanor Resources Inc . sent
to you
CLICK HERE |
For more information
contact Metanor Resources Inc.'s head office:
Ph (819).825.8678
E-mail:
info@metanor.ca
Company's web site:
www.metanor.ca
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The time to pay
attention is now as Metanor Resources is pouring gold and growing.
With 128,450,005 shares outstanding and currently trading under
CDN$0.70/share, the present valuation appears to present exceptional
opportunity. Metanor
at its 100% owned 1,200 TPD mill north of Val d'Or is expected to increase its annual production
rate to 60,000oz - 70,000oz gold. The mill is configured to produce dore bars of
gold, with a small component of silver.
