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The Gold Stock Strategist analyzes leading junior gold producers and major gold mining companies.

Comments are welcomed!

Wednesday, March 12, 2008

Metanor

CURRENT PRICE: $1.03
TARGET PRICE RANGE: $2.86-$6.91

Metanor Resources is an exploration, development, and producer of gold. Metanor is headquartered in Val d' Or, Quebec, Canada.

Metanor recently had their first pour on February 21, 2008, a 700+ ounce bar of gold and they are projected to be pouring a bar every 10 days (listen to David Bond share his experience at Metanor's first pour).


In addition, Metanor is acquiring properties adjacent to their existing properties and aggressively drilling to prove up resources. Just today, they announced an acquisition of a property near the Barry deposit. On March 5, they announced a diamond drilling program of 15,000m on the Barry property.

I have met Serge Roy (Chairman & CEO), Ghislain Morin (President & COO), and Ron Perry (Treasurer) on two occasions. They have impressed me as a passionate and determined team.

METANOR SUMMARY

TSX: MTO

U.S. OTC: MEAOF

Shares Outstanding: 66.6 Million (81 million fully diluted)

Market Capitalization: ~$68 Million

Telephone: 819-825-8678

Metanor Web Site

PDF Presentation

Metanor has a portfolio of properties with over 1 Million oz of resources ( NI 43-101 ).

Metanor has potential of a further 1.5M oz in a radius of 100 km of the mill (historical resources not compliant with NI 43-101).

Metanor owns seven properties, 6 in Quebec (Bachelor Lake, Barry, Dubuisson,, Opinaca, Nelligan, Vassan) and 1 in Ontario (Wahnapitei). 2008 production is currently based on the Barry property. Bachelor Lake production is projected to come on line by 2009.

Production is projected to be 35,000 oz. in 2008; 50,000 oz.in 2009; 65,000 oz. in 2010.

Metanor production is not hedged.

Metanor has no debt.

Metanor has the only mill (completely refurbished in 2007) within a 100km radius of the Bachelor Lake camp. Replacement value of infrastructure, including the mill, is $120 million.

Metanor has warrants outstanding that are not trading but should eventually produce cash

- 14,846,056 warrants outstanding
--4,221,056 at $0.55, maturity 2008
--10,625,000 at $1.00, maturity 2012

Cash currently available as of February 2008 = ~$11,000,000 ($6m on February 9 with $5m from Raymond James financing)

There are several ways to value junior gold miners. The following valuation methods are what I use to value Metanor for my investment purposes and provide a range of short-run and potential long-run value.

SHORT-RUN CASH FLOW SHARE VALUE
$2.86 per share in 2008 using a cash flow model valuation and assuming the following:

10x cash flow
$1,000 per ounce POG
$310 per ounce production cost
35,000 ounces of production
$1,000,000 G&A costs
81,000,000 shares outstanding (fully diluted)

POTENTIAL LONG-RUN RESERVE SHARE VALUE
$6.91 per share if Metanor can prove up another 1 million ounces of gold at the Barry Deposit and Bachelor Lake mine through their aggressive drilling program.

The majors are paying about $280 an ounce for buyouts at $950 an ounce POG. 2 million times $280 an ounce equals $560 million. $560 million divided by 81 million shares (fully diluted)equals $6.91 per share. Metanor's current market cap is about $69 million. If Metanor can prove up more than 2 million ounces, the long-run price potential increases even higher.

DIRECTORS
• Serge Roy – Chairman & CEO
• Ghislain Morin – President & COO
• Ronald Perry – Treasurer
• Yves Rougerie – Director
• Malcolm P. Duncan – Director
• Raymond Couture – Director
• Marie-Louis Roy – Director

MANAGEMENT
• Serge Roy – Chairman & CEO
• Ghislain Morin – President & COO
• AndrĂ© Tremblay, P. Eng. – Exploration Manager
• Claude Imbeault –Vice-President Operations and Mine Manager
• Kathy Gagnon – Investor Relations
• Robert Turgeon CFO
-------------------------------------------------------------

Full disclosure: I own shares in Metanor Resources. The information provided in this post is believed to be correct, but not guaranteed. Investing in junior gold miners entails risks. Readers are responsible for their investment decisions. Do your own due diligence.

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