Metanor negotiates certainty on debenture on favorable terms and avoids massive dilution -- currently presents buying opportunity during nominal related financing. See https://sectornewswire.com/release022415mto.htm for full report.
Excerpt from report on Metanor:
THE DEBENTURE DEAL: The $10 million debenture’s term was set to come due in August 2015, and Metanor managed to remove uncertainty surrounding this by negotiating an extension of the maturity for 24 months to August 22, 2017 (
click here to see related February 23, 2015 news release) – this is conditional upon an equity financing of a minimum amount of $3.0 million being completed and an immediate repayment of $1.0 million in principal, plus accrued interest. This means Metanor needs to do an equity raise for up CND$4 million (the extra money would go toward realigning working capital – we estimate Metanor averages ~$5 million cash and gold on hand). The debenture deal struck is extremely beneficial for shareholders as it avoids dilution; renegotiating (or retiring) the debenture close to the term with the stock near 5 cents generally would have resulted in the convertible strike-price being forcibly lowered to 6 or 7 cents (or an equity raise of $10M at 5 cents) – shareholders should appreciate the fact management managed to avoid >150 million shares of dilution and be happy they only need to raise $3 million. Importantly, Metanor retains the debenture strike-price of 28 cents and low coupon rate, and bumps the debenture from short-term liability to long-term.
From our experience the nominal $3-4 million equity raise sets in motion a phenomena that creates an excellent short-term buying opportunity for investors that see the merit of establishing a long position here, as the most interested participants to the equity raise are existing shareholders that want to exchange their current shares of MTO.V with new shares from the equity raise which come with free half-warrants. So by selling their shares now, before the private placement, they can load up on the same shares that come with warrants for free and there is no extra capital outlay for them in doing so -- this creates a temporary depression in the price, a short-term buying opportunity for investors savvy enough to identify the opportunity. In our opinion any shares under CDN$0.07 are an outright steal considering you are getting an operationally-sound gold producer with sizeable infrastructure and significant gold assets. The value of the tax credits (from ~$40 million of carry-loss-forward on the books) is near $15M alone, this alone is close to the current market cap of MTO.V now – in short Metanor is a serious buy here and will likely not remain at a low price per share long. Important to note is that Metanor has stated it is considering a second mining front and Metanor is NOT restricted by its Gold-Participation-Agreement from processing gold sourced from outside Bachelor; the Metanor that will exist in 2.5 years from now could very well be a much healthier/more profitable/mixed-ore-sourced beast than it is now. Also important to note is that post March 31-2015, Metanor will no longer be spending over $500K a month in interest and capital to Investissement Québec as it is expected to be fully repaid by March 31.
Valuation commentary: Initial price target is 1/2 of ‘Book Value’:
MTO.V is extremely undervalued compared to its book value of $0.1952/share, the current share price is near $0.05/share (with 296,557,733 shares outstanding the current market capitalization is ~$15 million). A logical initial share price target for MTO.V stock is $0.10/share (half its current book value), Metanor is currently trading at approximately 1/4 its current book value and this is after it wrote-down ~$10 million of assets in 2013. As gold retrenches, and strengthens, MTO.V harbors potential to leverage to a multiple of book value and a multiple of earnings. MTO.V is currently trading at a fraction (below 1/8) of its infrastructure (replacement) value alone, ignoring the ~1.6 million oz global gold resource in all categories (on all properties), and ignoring the large resource growth potential. MTO.V also offers a significant latent tax savings windfall value for a future acquirer with a loss-carry-forward on the books of ~$40 million, the impact could generate $12 million - $15 million in tax credits (that is near the current market cap of MTO.V, certainly an indication the share price is a serious buy here).