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Metanor Resources Trading Card
Website: http://www.metanor.ca.. Symbol: MTO.V | US routing symbol: MEAOF.PK
As you know, I prefer Canadian mining stocks to all others, so I was really excited about doing a review on this undervalued company. Metanor Resources is now one of my hot penny stock picks and definitely one of my top canadian gold stocks I own; with all of their projects being in the mining rich land of Canada. They are presently pouring dore gold bars at their 100% owned Bachelor Lake Facility in Desmaraisville Quebec. The ore processed is coming from the very promising Barry open pit ( see press releases for more info). Further, this undervalued junior mining company has undertaken a rapid expansion program, both at the mill and the underground at the Bachelor Lake Complex. Firstly, Metanor is proceeding with an ongoing mill capacity upgrade program augmenting the capacity from its existing 800 tpd to its targeted 1200 tpd expected before the end of this winter (2010). Further, the Company has begun work to enable mining underground at Bachelor Lake. This work is expected to be completed by July 2010. At that date, Metanor expects to begin producing approx. 70,000 oz/yr gold, whereby the mill will be operating at 1200 tpd. With a target share price of $3, penny mining stocks like Metanor are hard to come by.
Opportunity($):
Current Share Price: $0.48 | Target Share Price: $3.00 | Share Price Increase: ~6.25x
With 122 M shares outstanding and a share price of US $.48/share, Metanor Resources is arguably one of the best undervalued companies out there. I believe Metanor is extreme bargain at $0.48 cents and is a canadian mining stock in position for its share price to move substantially higher over the next 5-12 months if they continue to execute well. Metanor is already producing gold (already produced 30,000 oz of gold!) and has a 1 MOz+ NI43-101 compliant gold resource and counting! Resource expansion in on going and could add much more upside to this company by the end of 2010. They have a $140 million dollar mill and infrastructure in place at their 100% owned Bachelor Lake mine and no long-term debt. Metanor is expanding their operations from 800 tpd to 1200 tpd and expect to be producing about 70,000 oz/yr by July 2010. At an average gold price of $1100/oz, cost per oz of $458, and a standard valuation of 8x earnings, I am targeting a share price $3.00/share. For those of you sleeping at the wheel, that’s 6.25x the current share price! One of the most undervalued, lowest risk, junior mining stocks around. In fact, at their current share price, I challenge anyone to find a better producing junior gold mining company play than this one.
Strengths:
| Status- | New gold producer-has already produced 30,000 oz of gold to date, projecting 70,000 oz/yr starting 7/2010, cost $458/oz. |
| People- | A+ management team with excellent history of execution. These folks know what they are doing. |
| Property- | 7 properties- 6 in Quebec and 1 in Ontario.Bachelor Lake, Hewfran, Barry and Dubuisson have a total 1 Moz+ of gold (NI 43-101 Complaint).
Expecting 700 tpd from Bachelor Lake and 500 tpd from the Barry open pit. |
| Share Ownership- | 49% Institutional Ownership, 5% Insider Ownership.2 of Canada’s biggest investment firms bought in 4/09, Sprott Asset Management 20M shrs, Goodman & Co. 14.3M shrs around $0.50/share. |
| Financials- | No long term debt. Current market cap is < 50% the replacement value of their infrastructure ($140M).No hedges, currently cash flow positive! |
| Recommended by- | James West, Jay Taylor, Mining Market Watch. |
| Promotion- | Announcement of completion of expansion work of Bachelor Lake facility to 1200 tpd soon.Expansion of gold resources around Barry/other properties from ongoing drilling programs. Hopes to have 2 Moz+ resource by Dec 2010.
Announcement of achieving 70 k0z/yr gold run rate achieved. |
| Push/Time Frame- | You expect this stock to start moving up as we get closer to the July -2010 time frame and then substantially move upward after few quarters of solid gold production. |
Weaknesses/Threats:
| Minor Weakness- | Underground mining at Bachelor Lake. |
| Medium Weakness- | Continued general market weakness since late December 2009 has put some downward price pressure on gold/silver and related mining stocks. The gold market is expected to rebound by April 2010 or before. |
| Major Weakness- | None. |
Trading Strategy:
Strategy: A trader doing an analysis on Metanor would quickly conclude that the long-term upside potential is just too large to ignore and would start taking a position before gold makes a move higher and additional positive operation/drilling results start coming out. With minimum downside risk and the stock price being at a maximum entry point (i.e., near the bottom), the timing appears to be right for a purchase. The trading strategy for Metanor is straightforward and very simple; buy, buy, buy. This is a longterm trade for maximum return. Metanor shares are arguably some of the best gold mining shares available today among junior mining stocks.
Summary:
Metanor is a low risk trade with substantial upside potential and is about as good as it gets in junior mining stock plays. Metanor is fully permitted, has 1 Moz+ NI 43-101 compliant resource, currently producing gold, expanding its milling capacity to produce 70 Koz/yr by July 2010 at a cost of only $458/0z! They are also very likely to see their gold resources expand substantially from current/planned drilling operations. Two of the largest and most prestigious investment institutions in Canada own roughly 30% of Metanor at about .50 cents/share. Seems like a real value play to me…..buy low sell high right.
Additional Resources:
http://preciousmetalsreview.com/PMRmtojan2010.pdf
http://www.miningmarketwatch.net/MTO.htm
http://www.midasletter.com/news/09052806_Metanor-Gold-production-increasing.php http://www.numeriquetechnologies.com/metanor/Metanor-Presentation_ang.pdf
http://www.prweb.com/releases/2009/04/prweb2292384.htm
Related Posts:
- Metanor Resources Update 7-2-2010
- Metanor Resources Update 6-04-2010
- Timmins Gold Now In Commercial Production
- Petaquilla Minerals Trading Card
- Timmins Gold Trading Card
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Disclosure: I have not received any compensation from Revett Minerals, Timmins Gold, Metanor, or Petaquilla Minerals. None of these companies are advertisers on GoldStockMania.com. I am extremely bullish on Petaquilla, Timmins Gold, & Metanor and currently hold shares.
Disclaimer: I am not a professional/qualified investment advisor. Readers should note I am not responsible for errors or omissions in this report. Also, I am not responsible for your trading decisions as you should do your own due diligence before making any investment decisions.
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Thank you so much for these excellent analyses, they are much appreciated. Keep them coming!
Have you studied OGC? A stable mid tier producer that seems very undervalued compared to its peers, even though the stock has rallied recently. Excellent risk reward in my opinion.
Hi Fredrik.
I have been looking at OGC for a while, but have not had a chance yet to write up a trading card on them. I have many good ones on my list, but the trading cards take a while to research and write up. Thanks for the tip, let me know if you have any more…
There is no need to write anything else than BUY when it comes to OGC
The risk/reward is almost unprecedented when it comes to OGC. Semafo for instance is a nice company, it produces 300k a year just like OGC, but take a look at its valuation, it’s more than twice compared to that of OGC! And Semafo is operating in Burkina Faso, not New Zeeland, and has to give back 10% of the company to the government at some later stage. And don’t get me wrong, I like Semafo and it is by no means expensive.
The reason for the undervaluation is probably that OGC used to hedge its production. Those hedges will be gone by April generating a cash flow of around 650 USD/oz. We will see 5 CAD sooner rather than later, and apply a 10x multiple and we should have a share price of around 10 CAD, that’s a gain of 400% from today’s almost overbought condition in this mid tier producer. Yes, the risk/reward is almost unprecedented. Normally you have to look at juniors to discover gems like this.
I’m looking forward to more trading cards and maybe one of them will be about Avion.
When I first looked at them last year, I noticed that OGC was hedging their production. That was one of the reasons I placed a lower priority on them. However if their hedging is almost over then I will move them up pretty quickly.
I have not come across Avion yet, but I will look into them.
Thanks for the tip.
You are not alone, those hedges turned away a lot of investors.
OGC announced a PP a couple of weeks ago, and that money will be used to terminate the hedges in April.
And with the hedges gone and trading volume over 1 MCAD per day, the stock will attract a lot of interest from larger institutiuons as the buyers of the PP-shares start to ‘pay back’ by promoting the stock to their costumers.
Avion has a target of 200k in 2012 and with a cash cost of 450 and 357M shares (FD) Avion is currently No2 in my portfolio, but it is way behind OGC.
Thanks for this excellent review!
Today the company issued a NR with the completion of the mill upgrade to 1200 TPD:
Good news!
However , I saw the most recent presentation on their website included a 2010-2011 estimated production of 60k instead of 70k before.
Thereby I saw that the current cash costs are currently around 800$ OZ!
Can’t really explain that. Would you have an idea?
Hi Willem,
I saw their March 2010 presentation and also noticed the chart showing a $800/oz cost. Essentially this happens at the production start for a variety of reasons. Typically these companies will use the average cost over time since the cost/oz usually comes down. They are still expecting an average cost/oz of $460, which is really good!
Hey, what do you think about Alexis Minerals? I know the play is a bit risky compared to Metanor (which I’ve also held shares in for some time), but given their tremendeous mill capacity – 3550tpd at two locations, 150k oz production target by Q1 2011 and a mkt cap around 70m CAD. They do need some funds to start up their newly aqcuired SNow Lake Mine, but once started it seems like they can go for the moon.
Hi Johan,
I have followed Alexis Minerals for quite some time now. I think they are a good buy especially at their current share price. I don’t think they will get too much lower. I wanted to do a trading card on Alexis, but I keep getting side tracked on other stuff. They are not as well managed as Timmins Gold or Metanor, but their management is trustworthy. I would consider Alexis a decent long term trade.