New York, NY (PRWEB) February 8, 2010
Metanor Resources Inc. (TSX-V: MTO) (US Listing: MEAOF) (Frankfurt: M3R) is identified in newly issued analysts report by Laurentian Bank Securities as having significant upside market valuation justification in which the analyst has initiated coverage with a BUY (S) rating and a 12-month share price target of CDN$1.15.
A full copy of the qualified analyst's report is available via http://sectornewswire.com/LBkMTOFeb2010.pdf online.
Report highlights/excerpts: Target Price: $1.15
Initiating coverage of Metanor Resources Inc. with a BUY (S) rating and a 12-month share price target of $1.15. The improved production rates expected in mid-2010, coupled with the completion of the underground development at Bachelor (late 2010) should help Metanor's shares re-rate higher. We derive our 12-month target price by applying a 1.0x multiple to our estimated 7% NAVPS of $1.14, based on a long-term gold price of US$900/oz. We highlight the following.
Imminent commercial gold production in pro-mining Province of Quebec with tremendous exploration upside. The Company is operating one gold mine (Barry Deposit), with a second in development (Bachelor underground) and scheduled for production in late 2010. In 2010, we expect the Company to produce ~33,000 oz (annualized) ramping up to ~66,000 oz. annualized) at a cash cost of ~US$512/ounce in 2011.
Adding accretive (higher-grade) ounces adjacent to existing mining infrastructure. Systematic drill programs planned to expand/upgrade current resources (~1.0 million ounces of Au). New discoveries and historical resources (~1.5 million surrounding the Bachelor mill) open potential for additional feed to the 100% owned Bachelor Lake Mill.
The 2010 development/expansion program at the 100% Bachelor Lake Mine and Mill is expected to generate continuous news flow throughout the year. The Company is in the process of ramping up the Bachelor Lake Mill currently processing ~800 t/d to ~1,200 t/d (expected by Q2-2010). The Company plans to blend the higher-grade ore from the Bachelor underground (expected by the end of 2010) with the lower-grade ore currently being transported from the Barry open pit.
Investment Thesis - Ramping up Output & Exploration:
We believe the ramp-up of Metanor's current operations coupled with solid exploration potential (close to existing mining infrastructure) will transform the Company into a profitable gold producer. Metanor Resources Inc. is a mining and exploration company focused on developing its property portfolio in the pro-mining province of Quebec (Canada). The Company is in the process of developing the higher grade (underground) Bachelor Lake/Hewfran property to blend the ore with Barry open pit that is currently being mined and milled at the 100% owned Bachelor Mill.
Significant Operational Upside Anticipated in the Next 12-months: Operational improvements as well as the completion of the underground development of the Bachelor Lake property should enhance the share value in the next twelve months. Metanor has yet to reach commercial production as the operating team is currently applying its efforts on efficiently ramping up the mill from 800 t/d to ~1,200 t/d (expected by Q2-2010). The mill is currently processing the lower-grade (2.5 g/t - 3.0 g/t) ore from the Barry open pit mine and the Company plans to blend the higher-grade (6.0 g/t - 7.0 g/t) ore from the Bachelor Lake/Hewfran by the end of 2010. For 2010 (annualized), we estimate the Company will produce ~33,000 ounces of gold. Looking forward twelve months, we expect production to ramp-up by 230% (from 2009 production ~20,000 oz.) to ~66,000 ounces at a cash cost of ~US$512/ounce. We believe the market has failed to fully appreciate these anticipated operational upsides (due to the lack of awareness in the investment community) and we expect the share price to improve in lockstep with production and cost improvements at the Bachelor Mill over the next few years.
Potential to Increase Current Total Resources by ~50%: The completion of the 2009 drill campaign expected to be followed up by an aggressive drill program in 2010. The Company has been systematically drilling on its key deposits with the intent of expanding the current total resources (~1.0 million ounces of Au) to: 1) increase the mine life of Barry (open pit) and 2) delineate additional mineralization (new potential targets) around existing mining infrastructure (Bachelor Lake Mill). The encouraging results from the 2009 drill programs on the Bachelor Lake/Hewfran as well as the Barry property have resulted in the discovery of new gold bearing zones and expansion of known resources along strike as well as at depth. We believe the success of the 2009 exploration programs amalgamated with the expected drill programs in 2010 have the potential to increase Metanor's total resources by at least 50% (in the next 12-months).
Speculative Buy Rating with a $1.15 Share Price Target: We are initiating coverage on Metanor Resources Inc. with a BUY (S) rating and a 12-month share price target of $1.15. The improved production rates expected in mid-2010 coupled with the completion of the underground development at Bachelor (late 2010) should help Metanor's shares re-rate higher. We derive our 12-month target price by applying a 1.0x multiple to our estimated 7% NAVPS of $1.14, based on a long-term gold price of US$900/oz.