RE: RE: new find near bachelor is what
Canuk - both froggy & Q are right, but depending on whether managment try to gamble their way to success or focus resources on one project at a time:-
Froggy - if we could hit a rich seam that sent the share price up to $1, then existing shareholders could raise all the capital for Bachelor, without a loan, by issueing ~ another 20% of present equity. However, if the grades are not really high like Bonterra or Windfall, then the share price may struggle around
.50 and equity financing could be deeply dilutive.
All companies need some luck and Metanor have not had the breaks - or alternatively, managment played for high stakes at Barry, on the basis that it would be a passport for financing Bachelor. However, it seems that Barry may have gold in quantity, but not a high grade 43-101, even for open pit standards.
Canuk - yes we only need $34m to set Bachelor in production [in about 18m or so], which is a relatively small investment in order to set Bachelor producing 60,000 + ounces a year. However, lock stock & barrell, Metanor is only worth about $55m in the market, with no income to finance 61% loan gearing. At the present time, Metanor could be prey from companies whose managment have been succesful in ramping up their share price, in line with the doubling or more in gold price since Metanor started their production plans.
I respond to the sense of frustration illustrated by Q's note, as it seems that magement have given themselves a hard task of raising gold loan capital, from such a weak financial position. Predators may be circulating the Metanor camp and it may be difficult for the directors to see off a well reasourced company with a defence that we can look after the company shareholders, as we have done in the past .............
I note that when Metanor was floated, it was as a result of the prospects at Dubisson, then that was put on the back burner and Bachelor seemed to be the favourite child. Bachelor was then "mothballed" in preference to the game changing Barry, where the results last September seemed to illustrate a cavalier approach by Metanor using a different basis for calculating resource, compared to SGS. We are now, seemingly, in a position where Management wish to revert to back to Bachelor, which is probably a secure option, if supported with favourable financing. Metanor's management may be precived to be in a weak position if they cannot apply themselves to deliver any project to fruition.
Back in last summer, I suggested that possibly the best outcome for shareholders would be for the company to get a critical mass for fund raising by merging with another company with a cap of about $100m and other propspects - particularly fund raising capacity. My main concern is that management will "pay any price" in diluting shareholders, in order to achieve production which may not benefit existing shareholders.
Raffles