Metanor Resources MEAOD

RE: RE: RE: RE: RE: RE: GLORIOUS ASSET

[JRaffles]

Ref Seeking Alpha -

The comment in the Terrex investment that Sandstorm only put capital in for the project capital but not all the way to production is relevant to Metanor - RP should have stated at the outset that in addition to share cap fundings, borrowings of $7m and $10m would be required.  However, Metanor was backed into a corner in January 2011 but will get through as a result of the 33% rise in gold price from ~ $1200 when the SSL contract was signed.

Poor Management or Bad Luck?

Investors are rightly skeptical of Nolan Watson & Co. While he has been very successful building Sandstorm Gold (SNDXF.PK), the sister company has been much more challenged. The main question is whether or not the Sandstorm team is making poor investment decisions. Let's evaluate each streaming agreement Sandstorm M&E entered into.

1. Royal Coal, by Watson's own admission, was a poor investment. The asset had poor economics even in the best of times. Strike one.
2. Novadx represents a good asset with poor management, and perhaps the team at Sandstorm could have seen the warning signs. I count this stream as down but not out, as there are several ways to win if the asset is of good quality. Sandstorm can win if new management and financing is secured in the coming months (a long shot), or if Sandstorm takes control of the asset and negotiates a new deal with a new company and management team (more likely).
3. Terrex appears to have been a high-risk gamble on Terrex management's ability to raise future capital. Sandstorm's investment only funded the purchase of property, not the capital costs of putting it into production. The search for capital was announced in January of this year, and the new CEO was a company insider and may not bring many new ideas to the table. It is certainly a "show me" story and should be heavily discounted. The final verdict is not in, but based on the facts, I have a difficult time understanding why Sandstorm took on so much risk for an unexceptional asset. Unless Terrex succeeds in raising capital in the next few months, this will be strike two.
4. Thunderbird appears to be a solid asset with good management, held back by industry headwinds (natural gas prices). Given time and a little more capital, I expect this asset to succeed. Even if Thunderbird goes bust, Sandstorm can hold the asset as senior creditor for another 12-24 months until natural gas prices improve.
5. Donner appears to be a home run, barring any last-minute disasters. Donner was able to raise capital multiple times and its JV partner, Xstrata, has pushed hard to bring the asset into production.