MTO.v, great write up.
Reasons to Invest in Metanor Shares
Near-term Commercial
Production
1. Metanor is currently mining at Barry (open pit) with development at Bachelor underground
underway and scheduled for production by the end of 2010. The bulk of Management’s efforts
in 2010 are expected to be allocated towards ramping up the 100% Bachelor Mill (from 800 t/d to
1,200 t/d) and conclude the development of the Bachelor underground. We expect the Company to
produce ~33,000 oz in 2010 and achieve the 66,000 oz mark by 2011 (~230% increase from 2009
production level of ~20,000 oz.).
Exhibit 2: Estimated Metanor Production Profile
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2008-09A 2009-10E 2010-11E 2011-12E
(troy ounces)
Gold Production (troy ounces)
Source: LBS estimates
Close Proximity to
Existing Mining
Infrastructure
2. Metanor is well endowed with excellent exploration potential proximal to existing
infrastructure. The Company’s focus has also been to source new resources to maintain/increase
the mine life of its operations. As of December 31st, 2008, Metanor reported a
measured/indicated/inferred resource of ~1.0 million ounces across its four key projects (Exhibit
3). We believe the drilling programs completed in 2009 have been adding accretive ounces to the
future mine plan and should fuel future production growth. Metanor has demonstrated excellent
exploration success, most notably with the recent extensions of the:
? Barry (open pit) deposit - Follow-up drilling in 2009 was initiated in order to test areas with
high gold potential defined during the last stripping and channelling program (580 g/t Au over 1
m; 4.38 g/t Au over 41.89 m including a section grading 9.10 g/t Au over 7.79 m; 6.33 g/t Au
over 17.50m). The drilling program has extended: the Main Zone and the Center Zone (located
between Zone 43 and the West Zone).
? Hewfran Property – A drilling program was completed on the Hewfran property (~400 meters
away from the Bachelor Mine) and the results indicate that the West zone is continuous from
surface to 180 m below surface where the resources have been evaluated in 2005. This zone
was originally defined in drilling over a horizontal distance of approximately 300 m (between
the depths of 180 m and 330 m). Highlights of the drill program included: 3.72 g/t Au over 4.20
m; 3.10 g/t Au over 6.0 m (both holes at a vertical depth of 45 m); 3.01 g/t Au over 4.20m
(vertical depth of 70 m); 5.13 g/t Au over 5.15 m (vertical depth of 170 m). This discovery
validated the company’s new exploration model, which in turn opened up historically underexplored
areas around the Bachelor mine.
Metanor Resources Inc.
4
Ovais Habib
Mining Analyst
416-865-5967
habibo@lb-securities.ca February 3, 2010
Exhibit 3: Metanor’s Reserves and Resources
Property Resource Category Tonnes Grade (g/t) Contained Gold (oz)
Bachelor Lake Measured & Indicated
Inferred
841,591
426,148
7.79
6.52
210,857
89,366
Hewfran Indicated
Inferred
110,100
206,900
6.47
5.66
22,900
37,656
Barry Indicated
Inferred
385,000
966,000
4.23
4.07
52,300
126,600
Dubuisson Indicated
Inferred
166,076
3,245,222
4.82
4.15
26,150
432,995
Total Measured & Indicated
Total Inferred
312,207
686,617
Total Targeted Area Surrounding Bachelor Lake Mine 8,900,000 5.3 1,500,000
Source: Company Reports
Only Mill in the Radius
of ~100 km
Additional upside exists with ~1.5 million ounces of historical resources (8.9 Mt grading 5.3
g/t Au) surrounding the Bachelor Mill (only mill in a ~100 km radius; Exhibit 4). Due to the
close proximity of Bachelor Mill, any economical ounces proven up or acquired would be less costly
to produce as compared with a Greenfield’s discovery.
Exhibit 4: ~1.5 Moz. of Historical Resources Surrounding the Bachelor Mill
Source: Company Reports
Metanor Resources Inc.
5
Ovais Habib
Mining Analyst
416-865-5967
habibo@lb-securities.ca February 3, 2010
Experienced
Management Team
3. Our confidence lies in the solid operation team in place to ensure that Metanor’s
operations attain profitability. The Company’s first two years of operation were quite challenging
as the Company devoted significant efforts to attain gold production through the acquisition of the
Bachelor Lake Mine (underground) and Mill in 2006. Having foresight to acknowledge that the
underground mine required significant capital to rehabilitate, the Management looked for strategic
alternatives to reduce the initial capital costs. Subsequently, the Company acquired the Barry
Property (open pit) to feed the mill and commence generating cash flows. Gold bars were produced
within 1-½ years of acquiring the mill, however, cash costs remain high due to transportation (Barry
~116 km from the Bachelor Mill). To reduce transportation costs as well as overall costs, the
Company plans to systematically reduce the ore being fed to the Bachelor Mill from the Barry (open
pit) and increase production through the extraction of higher-grade ore from the Bachelor
(underground), expected to come on line by the end of 2010.
Fully Permitted in Promining
Province of
Quebec
4. Metanor’s mining and processing operations are in the ramp-up phase with no further
permits required. Amid increasingly stringent permitting regimes worldwide, the decided advantage
of existing mining permits at Bachelor Lake cannot be overstated.
Quebec: Best Overall
Mining Policy in the
World
5. Metanor is aggressively developing its property portfolio in the pro-mining Province of
Quebec. Quebec’s status as a mining-friendly jurisdiction was validated in 2008 and 2009, with the
Fraser Institute concluding that the province had the best overall mining policy and mineral potential
of the 71 jurisdictions included in the annual survey. The most notable policy of the Québec
government is that they provide numerous tax incentives and a very attractive mining duties regime
for companies that explore or operate in Québec. Companies can receive up to 46% tax refund for
all expenses incurred while exploring for mineral deposits or expanding existing ones.
Near-Term Catalysts 6. Near-term/recurring catalysts for the price of Metanor shares include: 1) Assay results
pending from the 2009 drilling program, as well as results from the 20,000 meter drill program on
three projects (Bachelor Lake/Hewfran, Nelligan, and Barry) expected to commence in mid-2010. 2)
Progress reports on: a) ramping up of operating capacity at the Bachelor Mill from ~800 t/d to
~1,200 t/d b) the underground development at Bachelor Lake/Hewfran.
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