This post continues the series on Open Pit Gold miners begun here, continuing here, here, here, here and here now profiling another gold miner in which I have a good fraction of my portfolio invested.
Metanor is a Quebec gold mill / mine reopener that is beginning production with its open-pit Barry Deposit. Quebec is about as mining friendly and politically low-risk as any location in the world. The Barry pit was originally expected to be mined for a year or so to produce cash-flow to support the reopening of the underground Bachelor Lake mine. Last summer Metanor announced better than expected drill results for the Barry Deposit which should extend its mine life, but no NI43-101 report has been released. Thus, on a conditional basis I'm including Metanor in this series.
World of Wallstreet has covered Metanor in the past (see here and here and has been extensively covered by Gold Stock Stragist web site, click here). FWIW, Metanor has been a Jay Taylor top pick on and off-again for the last year or so.
Metanor announced commercial production on 1-Oct-2008 and has announced precious-little since except a flow-through private placement to increase its exploration. In November they announced some promising but not definitive exploration results. The interview with the CFO (click here) covers a lot of exciting potential in terms of exploration adjacent to the mill, mill expansion and Barry exploration results. This did not take the form of an official release and was probably missed by many potential investors.
The table below (updated with yesterday's closing prices and using $800 for the 2010 gold price) gives my valuation of Metanor relative to the other miners covered in the series. Metanor looks clearly undervalued on a price to annual / oz and price to operating cash flow basis, but is even with the pack (or a little behind) on a price to oz in the ground basis. Its a little small (at 55K oz/year in 2010), but I believe there is a path for it to "grow up" by increasing its mill capacity and feeding the mill with an increasing amount of ore from the many nearby exploration targets.
As I mentioned, the only news coming out of Metanor since November has been the announcement of dilutive stock options and a dilutive private placement (and the hiring of a new CFO). The stock price went into the pits (with all the gold juniors) in November, climbed back into the $C.40s and has been languishing there (see below). A bunch of warrants expired out of the money in December 2008. They may have been holding the price down, but, with the private placement may have taken their place holding down the stock price. Metanor had not broken out like many of its peers listed in the table above, up until yesterday. The chart clearly shows a rapid increase in volume followed by a break out 20% up move in the stock price. That looks pretty bullish to me.
I am very comfortable with my Metanor position. It looks like an easy double to me from Metanore merely executing their plan and at least $800 gold holding. It should be a multibagger with either exploration upside, current and higher price of gold or an overall higher revaluation of gold miners. Where, besides producing gold mine Juniors can you find a 2010 estimated 2.0 price to operating cash flow ratio at lower than current commodity prices? I'd really like to know so I can diversify out of gold miners, but until I find valuations close to what I see with these gold miners, I am going to stick with them (at least as long as the gold fundamentals and price action remain bullish).
Of course, everyone should do their own due-diligence and make their own investment decisions. All of the above material comes from my own amateurish reading of the company websites and related financial documents. As you know, I am a software engineer, not a financial advisor.