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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.

 

 

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