Metanor Resources (MTO.V) is still drilling to find more gold at and around the Bachelor Lake mine in Québec, Canada. The investment in the drill program seems to be paying off as the company has now discovered a very intriguing 6.9 meter long intercept at an average grade of 9.97 g/t gold. It’s quite important to note this interval started just 38 meters down-hole and that’s quite close to surface. Additionally, hole 88 which was released on Thursday discovered 38.4 meters at 6.7 g/t, starting at just 7 meters!
The company has also released its full-year financial statements. Metanor generated C$3.4M in operating cash flow and approximately C$1.9M after deducting the interest expenses. As the ongoing capital expenditures were approximately C$1.9M as well, Metanor was essentially free cash flow neutral on the operating front, but has also spent C$1.8M on exploration, resulting in a net cash outflow that was partly covered by raising more cash in a private placement.
The working capital remains positive but with just C$1M in working capital, Metanor will continue to have to run a very tight ship, although we would expect the situation to improve in the current financial year as the weakening Canadian Dollar should have a positive impact on Metanor’s financial results. That being said, the situation will definitely have to improve if Metanor wants to be able to repay the convertible debentures in August 2017. The company now has 22 months to come up with the cash.
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Disclosure: The author holds a long position in Metanor Resources. Metanor is a sponsor of the website. Please see our disclaimer for current positions.
