Sector
NewswireTM
Sector: Mining - Metals and Minerals
:
News Release - July
22, 2016 4:32 PM ET
Gold Producer Metanor Resources
Issued Upside Market Valuation in Research Report
NEW
YORK, NY, July 22, 2016 /Sector Newswire/ -
Metanor Resources Inc. (TSX-V: MTO) (US Listing:
MEAOF) (Frankfurt: M3R)
is identified in a newly issued research report by Market Equities
Research Group with several potential catalysts that exist in 2016
and 2017 with potential to result in $120 million market cap
for MTO, translating to $0.28 per share -- MTO is currently trading near
8 cents/share. This
comprehensive report places a 12 month price target on shares of MTO.V at C$0.28
based on key valuation drivers which surround the Company executing
on a strategy to increase sources of ore to feed to its 100%-owned
Bachelor Gold Mill. MTO is currently focused on the Bachelor Lake
underground mine and Barry open pit mine located in the prolific
Abitibi region of central Quebec.
The full research report with chart, graphics, and analysis of value
drivers may be found at
http://sectornewswire.com/report0722-2016MTO.pdf
online.
-
The Company states it is aiming “to open the
access to more than 4 sources of ore to feed the Bachelor mill”,
and is aiming for “mill throughput of between 1,500 and 2,000 TPD”. We expect higher-grade (between 6 g/T - 9 g/T) gold Hewfran sourced ore to come online this Summer-2016, plus there
is potential production in 2017+ from a new 347,000 oz Au In-Pit
resource at the Barry deposit (~116 km by road from mill) under
an improved higher-grade (2+ g/T) model.
-
MTO is actively growing high-grade gold ounces
organically adjacent it’s Bachelor Mill, and at Barry it is
looking to realize district-scale potential of its large land
position and many untested targets along the Urban-Barry gold
trend; Barry lies at the center of and directly on trend in the
district, and is virtually surrounded with gold deposits and
highly active and successful drilling programs (to the NE is
Osisko, E is Bonterra, & Beaufield, N is Beaufield, & Urbana, SW
is Osisko.& Beaufield).
-
Potential to rationalize the district through
ownership of its strategic 100%-owned Bachelor mill, with
numerous local acquisition targets located within 100 km of the
mill.
This latest gold bull run has seen smart money
investors such as Eric Sprott (who recently increased his personal
equity position in MTO to ~10% of shares outstanding, last
purchasing shares on the open market near the current trading price
and higher) accumulate shares of MTO, they understand that Metanor
Resources offers potential for exceptional upside share price
revaluation as a junior gold producer and explorer, our analysis
concurs.
For the current year, Metanor has stated it expects
to produce 40,000+ ounces of gold. MTO’s most recent available
financials (ended March 31, 2016) revealed All-In cost of US$1,101
per ounce sold for the quarter ended (well below the current per oz
price for gold). Clearly Metanor is on solid footing as a positive
cash flow commercial gold producer and is undervalued; its book
value currently sits at ~$52 million (>$0.12 cents per share), and
infrastructure replacement value on all properties is in excess of
$100 million, including a 100%-owned mill. MTO.V also offers a
significant tax savings windfall value for a future acquirer with a
loss-carry-forward on the books of close to $50 million, the impact
could generate $15 million to $17 million in tax credits. MTO only
has one debenture liability on the books remaining to be paid of $9
million, with a maturity date of August 2017.
The financial potential for the emerging Barry open pit mine will be
investigated in the upcoming PEA analysis, to come shortly in
September. The obvious future value that Barry offers MTO is
apparent to us and we believe will soon be appreciated by the market
place and reflected in higher share price revaluation.
When comparing the advanced stage of the Barry deposit with respect
to other deposits / prospects in the Urban-Barry area; we see
Bonterra now trading at a ~C$27 million market capitalization, with
Beaufield trading at ~C$17million market capitalization -- MTO now
trades at a market cap of only ~$34 million and it is a healthy
commercial gold producer with a 100%-owned mill. Certainly Metanor
is due for upside revaluation on a comparative basis. We believe
that the Barry deposit appears to have very strong potential to be
production ready in 2017, following a PEA and perhaps a subsequent
PFS. The recently released in-pit resource appears easily
exploitable versus the underground resources of Bonterra’s resource.
The exploration potential at Barry is also very highly compelling.
While we believe that both Bonterra and Beaufield offer investors
tremendous upside, there is in our view even more potential with MTO.
With Eric Sprott recently increasing his ownership to near-10% of
shares outstanding, this would appear to be a ringing endorsement of
this potential.
When comparing the Barry deposit to Osisko's Windfall deposit PEA
and the costs it will take to bring the deposit to production,
Windfall will need ~C$250 million to get a mine going with mill, the
IRR is very low (~23%) on Windfall compared to an open pit mine
scenario at Barry. In our analysis of what MTO's upcoming Barry Mine
PEA might look like, it is plain to us that the IRR on Barry is
going to be phenomenal, possibly well over 100%, our calculations
vary upwards of 200% depending on how some of the investment needed
is treated (as possibly coming right out of working capital). The
investment to take Barry to production is negligible, and the
metrics are dramatically better now than when MTO last operated
Barry; MTO shut Barry down when gold was at C$1,100/oz (now gold is
near C$1,700/oz), the mill is better (was 82%, now it is 95 - 97%
recoveries), transportation costs will be better, the shaft at
Bachelor is no longer being rehabilitated, MTO is a more
seasoned/experienced operator now, and MTO knows how to cut costs.
Although we do not believe All-In Costs of C$1,200/oz gold will
materialize (we expect much lower) from a new Barry open pit mine
scenario, we used C$1,200 All-In for analysis should MTO focus its
gold production efforts entirely on Barry (MTO can unilaterally
shutter higher-cost Bachelor underground mine without penalty from
Sandstorm as MTO has satisfied its US$20,000,000 cash flow
guarantee, although juxtaposing Bachelor and Barry makes sense for
better grade control); at current gold prices MTO would throw off
C$500/oz profit, multiplied by 35,000 ounces per year =
C$17,500,000/annum that MTO can use to grow larger, MTO can use the
loss carry forward on the books to not pay any taxes on this, and
such a scenario does not take into account the stated goal of the
CEO to increase mill throughput. Forward discounting metrics dictate
a much higher share price for MTO will materialize as such a
scenario approaches fruition.
We believe a market capitalization closer to C$120 million
($0.28/share) for MTO is achievable near-term (within the next 12
months) as catalysts materialize that match the CEO’s recent stated
objectives, and market awareness of the accomplishments underway are
appreciated by the market place. This assessment is based on current
gold prices near-US$1,300/oz, at US$1,600/oz gold, even higher
revaluation is in order.
The signs at the Bachelor operation bode well for the future
-
A well-developed, stable mining and milling
operation at Bachelor.
-
Excellent potential to combine the new Barry
resource into the Bachelor Lake mine complex.
-
A growing realization among the mining and
investment community of the true potential of the Urban-Barry
greenstone belt, with MTO’s Barry large property located in the
heart of the district.
-
The highly strategic Bachelor Mill located in
proximity to the Urban-Barry area and also in proximity to
several other known deposits as shown above.
As events unfold through 2016 and into 2017, we see
strong potential for some very eventful news through this period.
The full research report with chart, graphics, and analysis of value
drivers may be found at
http://sectornewswire.com/report0722-2016MTO.pdf
online.
This release may
contain forward-looking statements regarding future events that
involve risk and uncertainties.
Estimates of potential made by the mining analyst are non 43-101 and not from
the Company.
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.
SOURCE: Sector Newswire editorial
editorial@SectorNewswire.com
Additional Disclaimer and Disclosure I
Contact I
Terms and Conditions I
Copyright I
Privacy Policy
|