As the gold price went down again over the past few days, some of the junior companies really got slammed. After reaching a high of C$0.27 just two weeks ago, Metanor Resources (MTO.V) is currently trading at just C$0.17 for a total market cap of C$45M which is low for a company which is producing at a rate of more than 50,000 ounces of gold per year (40,000 attributable to Metanor) at a cash cost of $766/oz. The effective all-in sustaining cash cost will very likely be around $1000/oz which means that the company will generate approximately $10M in free cash flow this year. As the company continues to find more mineralization at depth, the Bachelor Lake mine life will very likely be extended by several years.
Confederation Minerals (CFM.V) owns 50% of the Newman Todd project in Ontario’s Red Lake mining district, which has the potential to be a very large gold project, as there’s a strike length of approximately 2.2 kilometers of which 1.8km has been drilled to date. Confederation drilled in excess of 42,000 meters on the property, and it’s important to note that in the 2011 drill program every single hole has hit mineralization. This mineralization has been confirmed till a depth of 800 meters and remains open at depth, indicating the Newman Todd project could really be a company-maker should Confederation Minerals find more money to drill it out.
Disclosure: The author holds a long position in both companies. Metanor Resources is a new sponsor of the website. Please see our disclaimer for current positions.
