Market Equities Research Group

 

 

  

Market Equities Research - Market Bulletin December 12, 2009 11:37AM EST

 

Resource Growth Prospects at Metanor's Barry Gold Deposit

  

Fredrick William, BA Ec., f.william@marketequitiesresearch.com


Figure 1. Barry Open Pit - Exploration Potential at Depth

Image shows drill holes with two zones going down to 400m.

Metanor Resource Inc. (TSX-V: MTO) (Pink Sheets: MEAOF) (Frankfurt: M3R) is a new gold miner in the process of upgrading to full capacity status while generating cash flow, pouring gold in the interim. The Company affirms it is on schedule to have the infrastructure upgrades complete by the end of Q2 2010. Production wise the pieces are falling into place and will be evident as the 2010-11e forecasts are validated, the other key ingredient of resource expansion is being addressed too and is the focus of our market bulletin below.

 

Metanor has a high grade resource with very large expansion potential at the Bachelor Lake/Hewfran underground, however the exciting and rapidly developing story is what it occurring at the Barry deposit.

 

Analysis of Resource Growth Prospects at Barry Deposit

Metanor now undertaking a 20,000m drilling campaign at Barry targeting a potential 1M+ ounce resource

 

Metanor's 100% owned open pit Barry deposit has been the sole source of ore extracted to date during this interim period. The Barry open pit is located approximately 65 km southeast of the Bachelor Lake Mine/Mill and will no longer simply be an interim source until the high grade underground source at Bachelor Lake is operational. This fall (2009) Metanor launched a 20,000m drilling campaign targeting a significant resource.

 

The Barry deposit was originally purchased with the understanding at the time to have a certain economic body, however Metanor has already extracted close to what was originally thought. Metanor soon discovered the original interpretation suffered from a lack of information and the exploration Metanor has performed since acquiring the property now indicates the mineralization is much greater, and as continued incremental exploration/drilling information accumulates it is becoming apparent Barry is developing into a major asset for Metanor.

 

The top right diagram (Figure 1.) illustrates the significance of what is developing. There are two zones at Barry going down to 400m, it is a 1 km strike zone and is open at depth. The image shows numerous drill holes to ~100m, however the drill intercepts at 400m are very telling as it is important to remember that area miners such as Aur Resources (now Teck Cominco), Agnico-Eagle and Sigma are currently mining at depths of between 5,000 and 8,000 feet – the Barry deposit has the potential, like the gold grade at their Bachelor Lake property, to increases at depth and the strike is open in directions. It is very common in this region for the grades to increase at depth and with the values Barry is intersecting near surface, it is clear the Barry open pit deposit too is likely a significant long term supply of ore for the company.

 

Market Equities Research recalls when Agnico-Eagle first first discovered the Goldex mine in this region, it started off looking similar to how the Barry deposit is now. If memory serves well, originally the Goldex deposit was small (starting below surface) pegged at around 12 million tonnes -- looking at the diagram above of Barry the author can see the strike zone and correlating with the intercepts to date the current potential of Barry is bigger plus Barry starts at surface, whereas Goldex starts over 1,000 feet down. The story here is what was discovered with exploration at depth and how much that small Goldex find grew; the Agnico-Eagle Goldex mine and plant reached commercial production in August 2008, becoming Agnico-Eagle’s second mine to open in the Abitibi region of northwest Quebec - it now has reserves of almost 1.6 million ounces of gold and growing.

 

Figure 2. Barry Open Pit

This image shows how the east pit meets the west pit. The Barry Deposit is growing width wise and length wise.

 

Figure 3. (Image to Left) Barry Open Pit - 1 km Strike Length

 

Metanor has had very good intercepts of late at the Barry deposit including 13.31 g/t Au over 5.2m (see Oct. 20, 2009 release), 9.24 g/t Au over 33m (see Sept. 24, 2009 release), 7.71 g/t Au over 7.75m (see Sept. 3, 2009 release), and 10.4 g/t Au over 7.65m (see June 11, 2009 release) among others. -- these results affirm the continuing expansion and long term viability of the deposit.

 

Intercepts of significance:

 

Drill Hole  Core Length (m)  Gold g/t 
BARRY (open pit) 
MB-09-385  30.15 3.04
Incl.  7.65 10.4
MB-09-409  7.75 7.71
MB-09-423   33 9.24
Incl.  22.5 13.38
MB-09-410  12 5.53
Incl.  5.2 13.31
MB-09-412  9.9 3.53
Incl.  3.2 10.2
MB 09-459 12.6 3
NELLIGAN (6km from Bachelor Lake Mine) 
NE-09-02  4.54 28.06 (Uncut)

 

Figure 4. Barry Open Pit - Further Potential

 

 

 

Figure 1. Bachelor Lake Gold Mill Currently in production at 800t/d with upgrade to 1200t/d planned in short order.

 

Figure 2. Ball Room at Bachelor Lake Mill

Forward Discounted Valuation Metrics

 

Forward discounted valuation metrics for Metanor Resources as an investment vehicle are predicated on Company forecasts for upgrades completed. As of mid-2010...

  • Bachelor Lake underground ore is expected to be online and the mill will be processing ore at 1200 t/d. The actual upgrade to 1200 t/d is expected to be sooner.

  • Projected production for 2010-11e = 60,000 ounces gold and cash costs are expected to drop under $500/oz once upgrades are complete.

  • Bachelor Lake and Hewfran mines will be mined, augmenting the mill feed from Barry.

Market Equities Research's sentiment on the forward projected valuation of Metanor echoes that of Howlett Research which provided a $3/share valuation based on milestones being achieved. Metanor is capitalized to accomplish its forecasted goals and now with in excess of 30,000 ounces having been poured to date proof of performance has mitigated production risk. In the process of operating the gold mill in this interim period management has developed a level of confidence to make the above projections. The risk-reward characteristics are highly advantageous for investors establishing a long position in Metanor Resources now as the Q2 2010 target dates are fast approaching and Metanor's share price should gravitate upwards according to accepted valuation metrics; production wise the pieces are falling into place and will be evident to the investment community as the 2010-11e forecasts are validated.

 

Shares outstanding (as of December 12, 2009): 118,405,005 shares; Note: the current market cap of MTO.V is less than half the replacement value of their infrastructure alone. ##

 

xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx

Content found herein is not investment advise see Terms of Use, Disclaimer, & Disclosure

     ©2003 - 2013 Market Equities Research Group

         All rights reserved.

         MarketEquitiesResearch.com

 Terms of Use, Disclaimer, & Disclosure   Privacy   Client login   Home

   

 

 

 

counter customizable free hit