Metanor Resources MEAOD

MD&A - $400,000 Barry exploration

[JRaffles]

Metanor proposes to spend $400k over 3 years in order to earn a 100% interest in 644 acres located immediately to the west of the Barry pit (Barry-Souart).  A review of IP anomalies highlights that they extend into this property, which is surrounded by Metanor’s Barry property.  The MD&A also notes that 1997 & 2004 drill campaigns on this property produced up to 23.8g over 4.4m. 

It seems that Metanor realises that short term resources are going to be thin on the ground.  Therefore, the plan may be to extend ownership of a more commercially viable long term property, in order to:-

• Justify the economics for a JV development at Barry.
• Go for a longer term company strategy of 100% development at Barry.  The 3 year 100% earn in on the property next to the Barry pit would enable Metanor to decide best where to locate a concentrator.  Also, during the exploration phase on the new property to the west of the Barry pit, BL should be at its most productive in 2014 and 2015.

The BL LOM has recently been forecast at circa five and a half years, although this could rise further if more Metanor shareholder capital was expended, which would also provide SSL with a longer gold stream.  In contrast, Barry is 100% owned and directors have gone on record to suggest that the property could contain upwards of 5m ounces of gold.

Accordingly, it is possible that the director’s strategy could be:-

• Run BL as a cash cow for 5-7 years, applying minimal new capital, apart from drilling for a potential new development stage.
• Drill out the new property next to Barry with a view to getting this 100% project producing a long life cash flow in years 4/5.
• As BL is reaching the sunset of it’s existing LOM and requiring substantial new capital, Metanor give SSL a choice – contribute part of their 20% gold to new capital for ultra deep mining (if ore is proven), or alternatively, Metanor will mothball BL in 7 years and use its mill, for processing 100% of concentrates for an expanding Barry camp production.