Metanor Resources – Site Visit

We visited Metanor Resources’ (MTO.V) Bachelor Lake project in Québec in March and are happy with the progress that has been made to date.

The company is currently producing at a relatively stable rate of 3000-3250oz per month, which brings them in the cash flow positive territory. If we apply a monthly production of 3000 ounces and a sale price of $1450/oz on the open market and $500/oz for the gold deliverable for Sandstorm under the 20% streaming agreement, inflowing cash is approximately $3.75M per month. VP Pascal Hamelin told us the monthly costs are approximately $3.2M (broken down in $350k G&A, $2.5M production cost and $350k in sustaining capex and miscellaneous), meaning Metanor is cash flow positive at this moment and should have an annualized net cash flow of $6M. Metanor is highly dependent on the price of gold, so by every $100 gold goes up or down, their bottom line changes drastically.

Being cash flow positive puts Metanor in a strong position to consolidate more assets in the region, as a lot of nearby explorers are running low on cash and might be an attractive addition to the Metanor portfolio. We hope Metanor’s share price will increase now the production seems to be on the right track, as we think the company should be able to do deals by issuing Metanor-shares as currency instead of hard cash.

It’s encouraging Metanor is finally cash flow positive – we’ve been waiting more than three years for this – and are hopeful the company will spend its cash wisely by drilling at Barry to expand the resource estimate there and making smart acquisitions in Québec.

Disclosure: The author holds a long position in Metanor Resources. Please see our disclaimer for current positions.