A review of the historical annual lows of gold since 2001 reveal timing favors investors in the first two months of the year:
Year – Annual Low – Annual High for the year
2001 – April 02 – September 17
2002 – January 04 – December 27
2003 – April 07 – December 31
2004 – May 10 – December 02
2005 – February 08 – December 12
2006 – January 05 – May 12
2007 – January 10 – November 08
2008 – October 24 – March 17
2009 – January 15 – December 02
2010 – February 05 – November 09
2011 – January 29 – September 05
2012 – May 30 – October 04
The low price for Gold occurred between January and May in every year but one, and in January or February the low occurred seven out of 12 years.
Investors looking for exposure to Gold via shares of miners would do well to consider new Gold producer Metanor Resources Inc. With Metanor now entering steady-state gold production and cash flow positive status, this should result in improved market awareness and appreciation for the Company as it executes on its plan; the reality of the infrastructure and resource value, cash flow growth, and clear ability to add ounces should translate to share price appreciation. Metanor's infrastructure is valued (estimated replacement value) at ~CDN$200 million. The intrinsic value of Metanor’s known resources (~1.6 million oz gold in all categories on all its properties) and infrastructure are several times the company’s current market capitalization.
Metanor has had several news releases of significance over the several weeks indicating it is steadily increasing Gold production at its newly refurbished 1200TPD capacity Bachelor Mine & Mill, in Quebec. This week Metanor announced had poured a record Gold bar of 868 ounces, representing only one weeks production and a sizeable rise in the rate of production over what it had accomplished in January 2013. In January Metanor produced 2,236 oz of Gold, compared to 1,718 oz in December demonstrating a 30% month-on-month improvement, we believe February results too will show a similar increase.
The consecutive rises in Gold production is part of an ongoing ramp-up toward Metanor's targeted 5000 oz Gold per month (60,000 oz per annum) run rate which is expected to be accomplished this 2013 utilizing 2/3 capacity of its 1200 TPD mill.
We anticipate shares of Metanor Resources to rise as the reality of the accomplishments underway are appreciated by the market. In the last month Metanor was identified in an analyst report with upside market valuation by investment dealer Secutor Capital Management. The analyst initiated coverage with significant upside re-rating based on several factors. A full PDF copy of the analyst’s report is available at the following URL http://sectornewswire.com/
Metanor is leveraged to the price of gold, able to sell 80% of its Bachelor Mine sourced gold at spot prices with the balance sold to Sandstorm as per gold participation agreement. Fully permitted, fully capitalized, and sufficiently staffed with professional mining personnel able to handle the ramp-up. Operational highlights of this new low cost gold producer include;
- Low geopolitical risk.
- Low hydro-electric costs, not affected by oil prices.
- Grades upwards of 26 g/t gold with an average grade of 7.38 g/t gold (fully diluted using long hole).
- Targeting 60,000 oz per year production at 800TPD, >96% recoveries.
- Estimated cash cost of ~US$464/oz gold (2011 pre-feasibility by Stantec).
-Identified zones should lead to resource growth and extension of mine life closer to 10+ years; Industrial Alliance analyst calculated (non 43-101) 700,000 oz achievable based on deep hole intercepts and extrapolation of data.
With two projects of significance that together, many believe will take Metanor Resources to near mid-tier producer status (between 150,000 oz - 200,000 oz Gold per annum) within a few years. The time to pay attention is now while Metanor is trading at a fraction of its infrastructure value (close to book value) and closing in on its gold production target. With anticipated strong cash flow growth, large organic resource growth potential, and sitting geographically as the only mill located within 200 km in a gold rich district, Metanor with ~237.7M shares outstanding (~268.9M fully diluted; we note most warrants are deep out-of-the-money and will expire unexercised, Metanor has employed excellent dilution control over the last year) provides an ideal vehicle for investors seeking exposure to precious metals.
A comprehensive overview of Metanor may be found at http://miningmarketwatch.net/
Commentary herein is for information purposes and is not a solicitation to buy or sell any of the securities mentioned.