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Metanor Resources Inc - neue chance

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Metanor Resources is subject of Special Situation Report

Metanor negotiates certainty on debenture on favorable terms and avoids massive dilution -- currently presents buying opportunity during nominal related financing.

Feb 25, 2015 Special Situation Report - MTO.V

NEW YORK, NY, February 25, 2015 /Sector Newswire/ - Metanor Resources Inc. (TSX-V: MTO) (US Listing: MEAOF) (Frankfurt: M3R) is identified in a newly issued research report by Market Equities Research Group as the subject of a special situation advisory and dramatically undervalued. Metanor has renegotiated its debenture on favorable terms and is in the process of securing financing to secure the deal, in the process the share price is temporarily on sale and poised for upside revaluation.

The full research report may be found at… online.

Metanor Resources Inc. is an operationally-sound gold producer which has entered its third year of commercial gold production at its 100% owned flagship Bachelor Lake mill and mine located along the prolific Abitibi Greenstone belt in mining-friendly Quebec, Canada. The mill is currently operating at an effective rate near 700 TPD, yielding a rate of ~45,000 oz gold per annum (this is expected to improve as higher grades zones are tackled and less downtime is encountered). Bachelor is a rich underground mine with grades upwards of 26 g/t gold with an average grade of 7.38 g/t gold (fully diluted using long hole). The Bachelor mill is uniquely positioned sitting geographically as the only mill located within 200 km in a gold rich district.

In 2012 Metanor took on two debt obligations in order to pay for the refurbishment of its’ Bachelor Lake mill and ready the mine for reopening; a CDN$7 million loan from Investissement Québec, and a CND$10 million debenture. The investments have been a success; 1) Metanor owns the mill clear title and has total infrastructure and equipment that would cost over $200 million to replace today, 2) it has plenty of high-grade gold in the pipeline, 3) Metanor appears to be able to operate profitably on EBITDA basis (with quarterly ounces of production expected to be over 10,000 going forward), 4) Metanor is yielding solid metrics in an environment where it operates in affordable Canadian denominated input costs and derives ~CND$1,500/oz of gold (its cash cost (assuming normal operation) are listed at ~CND$873 per ounce, its all-in-sustaining cost are ~CND$1,123 per ounce sold (which is below US$1,000/oz at current rates of exchange)).

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).

The full research report may be found at… online.

This release may contain forward-looking statements regarding future events that involve risk and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual events or results. Articles, excerpts, commentary and reviews herein are for information purposes and are not solicitations to buy or sell any of the securities mentioned. Readers are referred to the terms of use, disclaimer and disclosure located at the above referenced URL(s).

SOURCE: Sector Newswire editorial
Metanor Resources Inc.: New Gold Corridor at Bachelor Mine

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Breaking News Alert
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1:10 PM (3 hours ago)

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Breaking News Alert
March 12, 2015
Metanor Resources Inc.: New Gold Corridor at Bachelor Mine
Metanor Resources Inc. TSX VENTURE: MTO

VAL-D'OR, QUEBEC--(Marketwired - March 12, 2015) - Metanor Resources Inc. ("Metanor") (TSX VENTURE:MTO) is pleased to announce that it has identified a new corridor with gold grades, located 860 m south of the Bachelor Mine.

This new structure was followed on a distance of 400 m long based from 4 drill holes from surface. As a reference, the gold structures presently mined at Bachelor are averaging 275 m long. More than 80 cuts grading gold between 0.5 and 10.9 g/T were obtained in these holes (see attached table). The geological context in the 4 holes presents similitude with the gold structures at the mine which are associated with hematized shears containing 1 to 8% of fine pyrite.

This new structure is located directly beside the limit of the high power inversed polarisation (HP IP) geophysical survey completed in the fall 2014. The presence of the tailing pond prevented the full coverage of the area with the geophysical survey. However, a HP IP trend is located 400 m east of the corridor identified by the 4 holes. No hole has been drilled between the new gold corridor and the geophysical conductor.

Metanor plans to concentrate it next surface exploration activities in this sector which present the best discovery potential on the Bachelor Property.
Hole No From (m) To (m) Length* Grade (g/t Au)** Remark
Bw-13-13 36.95 37.70 0.75 7.62 Foliated Basalt + 4% Pyrite (Py)
186.0 186.5 0.50 2.05 Hematized (hem) Basalt + 6% Py
249.00 250.50 1.50 2.35 Hem Tuf + 3% Py
352.95 353.25 0.30 2.47 Hem Tuf + 1% Py
413.60 414.00 0.4 9.90 Hem O'Brien Intrusion + 3% Py
476.85 477.15 0.30 10.90 Hem O'Brien Intrusion + 2% Py
Bw-13-19 217.90 220.20 2.30 5.78 Hem sheared (sh) Tuf + 1% Py
311.95 312.90 0.95 2.43 Hem O'Brien Intrusion + 5% Py
Hw-13-37 57.10 60.00 2.90 4.71 Hem sh Tuf + 1 to 7% Py
including 58.40 59.45 1.05 7.88
66.10 66.70 0.60 2.94 Hem Tuf + 8% Py
73.00 74.35 1.35 2.66 Hem Tuf + 4% Py
189.75 190.15 0.40 6.77 Hem Tuf + 8% Py
324.30 324.80 0.50 3.02 Hem Tuf + 1% Py
Hw-13-43 184.10 184.50 0.40 2.05 Hem Tuf + 3% Py
230.80 231.15 0.35 2.06 Hem Basalt fractured + 8% Py
263.20 263.50 0.30 6.38 Hem Basalt + 2% Py
* Core length
** Grade > 2.0 g/t

The true width is between 50 and 75% of the core length obtained in diamond drill holes. The cap-off grade used in the analysis is 51.5 g/T or 1.5 oz Au. The samples were assayed by fire-assay at the Metanor assay lab. The quality control program of the assay results (QA QC) adopted by Metanor includes a minimum of 10% of controlled assays being conducted as well as verification by an independent external assay lab.

About Metanor

Metanor is a Canadian based gold mining company with a focus on adding value per share through efficient production, exploration, and development of it properties.

Qualified Person

Pascal Hamelin, P.Eng, Vice-president of Operations, is the Qualified Person under NI 43-101 responsible for reviewing and approving the technical information contained in this news release.

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