RE: TARGET 21 ? 1st bullet point correction 1st bullet correction to $1,400
Nonetheless I stick by an eventual technical target of $1.00 should these guys get their act together within the next quarter or so and POG turns north after some sort of bottom (possible around $1400).
This is quite a plausible prospect for the following reasons:-
- Even at $1,400 oz, analysts Industrial Alliance forecast a 12 month SP target of CAN 0.95 by October 2012 (see below).
- IA’s 12 month target was based on BL having demonstrated 470k ounces of [non 43-101 compliant] gold in their “Bull Case” for BL (page 4 of 34 IA 26.10.2011 report]
- According to a recent post I recall, possibly from Forg, Serge Roy is reported to have said recently that their drilling has already extended the mine life to 7 years. This was before the start of the drilling in the new B zone had started. As the mine life is based on total annual output, then the annual 60k oz of forecast production gives us 420k oz in 7 years – which is not far from the IA Bull Case.
- If Metanor exceeds the IA Bull Case 470k oz, which seems highly probable and also their October 2011 gold price estimate of $1400 is low, then the SP could easily be circa $1 in Q3 2012.
Unknowns:-
- How much gold can the B zone deliver, above Serge Roy’s reported pre drilling estimate.
- Gold price :- I/A’s (5% discount rate) gold price sensitivity analysis, on page 8, gives a SP of 0.95 at 1,250 oz gold, up to C$1.45 SP for 1,550 oz gold.
Industrial Alliance Securities Inc.
Metanor Resources Inc. (TSX-V: MTO) October 26th, 2011
RECOMMENDATION
With strong potential for growth and excellent economic factors contributing to the
Bachelor Lake Project, we initiate with a Speculative Buy recommendation and a 12
month target of C
.95. Our target is derived from a NAVPS of our conservative
DCF model of Bachelor Lake (5.0%, $1400/oz Au) combined with a 100$/oz in-situ
valuation of the wholly owned Barry Project. With the potential to restart operations
at Barry and more exploration upside at Bachelor Lake, it is very likely that Metanor
could exceed our target price.