Metanor Resources MEAOD

Starcore/MTO

[taylor1988]

Starcore while quite undervalued at these levels is still not comparable to MTO. Starcore is in a less favourable mining jurisdiction, has a production profile that is not growing and does not have sufficient ore to keep producing without new discoveries unless there's a find in the next 2 years. Metanor has the potential to be a 90,000 + oz producer just by bringing it's mill up to full capacity as they'll only be operating at 66% capacity with their 60,000 oz production for 2013. Metanor's in a much better jurisdiction being Quebec and also has a second property being worked on that could surpass' Bachelor's valuation in the near future. MTO has potential in the next 3 years for both underground operations at Bachelor of over 90,000 ounces and an expansion from Barry for an open-pit design with over 100,000 oz production if exploration continues to be favourable. Starcore has no production growth planned and is currently drilling to upgrade their resources before their stockpiles run out. The deal may have been better for SSL than it was for MTO but regardless they will be a 48k oz producer next year with over $1000 / oz margins giving them cash flow in excess of their enterprise value ($75 million market cap - $35 million in cash). With any new discoveries at their Quebec projects or talk of ramping up production MTO will be well on its way to being an over 75k / oz producer per year, something Starcore cannot achieve in the next 3 years barring a bonanza discovery and purchase of new operating facilities to allow the production upgrade. WIth MTO at these prices you are essentially getting their market cap in cash flow for next year, as well as Barry ( > 750,000 Resource Open pit exploration project) as well as their additional Quebec properties all for free. Starcore has no other pipeline properties and MTO's Barry deposit which is secondary for MTO is 5 X larger than Starcore's flagship producing asset. I won't deny Starcore is undervalued but MTO is much more de-risked with a guaranteed 3 + yrs of production ($150 million in cash-flow) and a secondary project being explored that has the potential to turn into a Hammond Reef type deposit based on current exploration results. Hammond Reef was acquired by Osisko with 6 + Moz at 0.8 g/t au for $380 million dollars last year. Given Barry's current exploration and delineation of over 750,000 ounces at 1.1 + g/t au with a larger exploration program the ability to become a 3 + Moz deposit at Barry at over 1 g/t au could place MTO in the 200k + / oz producer status by 2015. They also would need not to dilute shares to fund Barry's exploration/construction with their cash flows coming out of Bachelor. These numbers are assuming $1450 / oz gold, for every $100 above this gold price MTO's cash flows will be another $5 million dollars for next year.