Midas Letter Likes MetanorHere is from James West's Midas Letter website, "
Our goal is to find companies that are going to increase invalue over time, delivering relatively high yields with an acceptable modicum of risk. We aren't trying to find stocks that investors can get in and out of in a hurry. We are value investors. The companies herein identified are expected to increase in price by 100% or more over the course of 3 to 5 years.
...
I do not now, nor will I ever, accept any form of compensation for recommending companies in the Midas Letter Premium Edition. Any position I have with any company discussed will be disclosed clearly."
As far as I know, the Midas Letter has not added Metanor to the model portfolio.Maybe soon.
Best,
DRG
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Metanor Gold Production Increasing
By James West
MidasLetter.com
Thursday, May 28, 2009
Metanor Resources (TSX.CA: MTO) is one of those companies that hasbeen toiling diligently away at a disparate group of land holdings thatare no trip to Hollywood in their own right, but when viewed in thecontext of the company’s business model and collectively, they makeperfect sense. Escalating production of gold is the clear sign thatMetanor’s cash flow will start to yield a profit next year.
The stock has been trading sideways in the $0.50 range for the lastthree months, and by all appearances has built a solid floor at theselevels. No wonder, really, considering intrepid gold investor EricSprott acquired almost 20% of the company at that price. Investors whoclamber aboard now get to participate with one of Canada’s mostrespected resource financiers.
And Eric Sprott isn’t the only one betting that Metanor’s shares a buy at this level.
Northern Securities analyst Ovais Habib issued a research report onthe company last week that puts a buy target on the company of $1 ashare – a double from current levels.
According to the report:
“Looking forward twenty-four months, we expect production toramp-up by 104% (from 2009 production) to ~66,000 ounces at a cash costof ~US$452/ounce. Given that the grades and thicknesses drilled to datehave been notable, we believe we have been conservative in our model.We believe the market has failed to fully appreciate these operationalupsides and expect the share price to improve in lockstep withproduction and cost improvements at the mine over the next twelvemonths. In addition, Metanor is:
* Adding higher-grade ounces adjacent to existing infrastructure.Systematic drill programs in place to expand/upgrade current resources(~1.0 million ounces of Au). New discoveries open potential foradditional mineralization near the Bachelor Mill.
* Pending catalysts for the stock include: 1) results expectedthroughout the year from 2008 and ongoing drill programs on threeprojects; 2) resource updates from Bachelor Lake/Hewfran as well as theBarry deposits by the end of 2009; and 3) Progress reports on (a) theunderground development at Bachelor Lake/Hewfran and (b) ramping-up ofoperating capacity at the Bachelor Mill from ~800 t/d to ~1,200 t/d.
* Well-financed for aggressive exploration anddevelopment/expansion programs in 2009. Approximately $13.0 million inworking capital is expected to provide for substantial development ofthe projects in the next twelve months. The 2009 development/expansionprogram at the 100% Bachelor Lake Mine and Mill is expected to generatecontinuous news flow throughout 2009-2010.”
Besides Sprott and Northern Securities, Goodman and Company whomanages the Dynamic Mutual Funds Precious Metals collectively own14,350,000 shares
According to Vice President Ron Perry,
“The company started in 2004 with the Dubuisson Property and thenthey proceeded to put a NI43`101 on it . Serge Roy and Ghislain Morin -these two guys built up the company from the Dubuisson property whichnow has half a million ounces on it. However, they then felt it wouldbe better to find a property with a mill on it in order to be able tobe in production faster and create cash flow, so management proceededto acquire the Bachelor Lake Complex. First, acquiring 50% fromCampbell Resources then the remaining 50% from Halo Resources.
Right now we’re in the midst of redoing our headframe. We had abudget of $1.5M for that but we will manage to get it done for about$1.1 million. We are in great shape with all the Indian Bands, we’re inmining friendly Quebec and our millis running well.
In the area of Bachelor Lake we’re the only milOK, and within a100 km radius there’s about 1.5 million ounces of historical43-101resources of gold in small deposits, which puts us in a positionto acquire these smaller deposits on favourable terms because they’retoo small to drive the growth of another company on their own.”
“We are proceeding with our plans, making progress underground andbringing our mill up to 1200 tonnes per day capacity to process thehigh grade ore from the Bachelor underground mine at conservatively~7g/t and blend with the 3+g/t ore from the Barry open pit deposit. Weare being conservative in saying an average of 5-6 g/t at 1200 tonnesper d at 94% recovery will get us close to 70,000 ounces gold perannum, with a blended direct cash cost of ~US$458 - this should be inabout 13 months from now to July, 2010."
Metanor now has the Bachelor Lake Gold Mill functioning and iscrushing and processing the ore extract from the open pit operation ontheir Barry gold deposit (located approximately 65 km southeast of themill). The Barry property boasts a highly efficient ore-to-waste ratioof only 1:1.
Initial cash flow from production will be used to expand theresource base at the Barry Deposit and further develop the enormouspotential at the Bachelor Lake Gold Mine which produced over 131,000 ozof gold during the 1980's, it currently has resources of 300,000 oz Auand is open in all directions at depth with plans to upgrade to1,000,000 oz.
According to Metanor's President, Ghislain Morin, current depth ofthe shaft at the Bachelor Lake Gold Mine is 1,700 feet, the shaft willbe sunk an additional 600 feet to a depth of 2,300 feet and a 20,000meter drill program is expected to add an additional 700,000 ounces ofresources.
Mr. Morin has many years of mining experience with an expertise inboth underground development and shaft sinking. Prior to joiningMetanor Resources, Mr. Morin built mills for several area minersincluding Cambior (now owned by Breakwater), Aur Resources and
BHP Billiton.
The two main veins at the Bachelor Lake Gold Mine run parallel andare 75 feet apart at an 80 degree angle. Metanor expects to drop shaftan additional 700 feet in the near future and the potential is in placeto identify 1.5 million ounces going forward. Area miners such as AurResources (now Teck Cominco), Agnico-Eagle and Sigma are currentlymining at depths of between 5,000 and 8,000 feet. The gold grade at theBachelor Lake property increases at depth and the strike is open in alldirections at the 2,300 foot mark.
SOURCE:
https://www.midasletter.com/news/09052806_Metanor-Gold-production-increasing.php