Tuesday, February 14, 2017

Metanor - 4Q 2016 Excellent Results

In my first article on Metanor Resources I stated:

"...I expect decent results delivered by the company in 4Q 2016 (revenue higher by 23%, compared to 3Q 2016 and lower operating costs)"

A few days ago the company published its 4Q 2016 results. As expected - the results were really good. Revenue went up by 25.4%, compared to 3Q 2016 and operating costs went significantly down. Let me summarize the main measures:

source: Simple Digressions and Metanor

Note: the company's fiscal year ends on June 30

As the table shows, in 2H 2016 Metanor was profitable. Due to higher gold prices and lower costs, the company delivered a gross profit of C$4.5M and net income of C$1.8M. It is a radical improvement, compared to previous years.

Further, in 2H 2016 Metanor delivered free cash flow of C$1.2M (defined as cash flow from operations less capital expenditures), of which C$1.3M was delivered in 4Q 2016 (it means that the company burnt small cash in 3Q 2016). Generally, most of the profits were made in 4Q 2016, for example:

  • 4Q 2016 gross profit: C$3.3M ($1.2M in 3Q 2016)
  • 4Q 2016 operating profit: C$2.1M (-0.1M in 3Q 2016)
  • 4Q 2016 net income: C$2.0M (-0.2M 9n 3Q 2016)
  • 4Q 2016 cash flow from operations, excluding working capital issues: C$4.6M (C$1.9M in 3Q 2016)
To remind my readers - currently Metanor operates only one mine, called Bachelor and located in the province of Quebec, Canada. The table below shows operating cost per ton of ore milled:

source: Simple Digressions

According to the company, during the fiscal year 2017 (ending on June 30, 2017) Metanor should deliver 28 - 33 thousand ounces of gold coming from Bachelor. However, the problem is (I mentioned it in my first article) that Metanor has not delivered the updated resource estimate on Bachelor yet. Therefore it is very hard to make any assumptions on the future of the deposit.

Apart from Bachelor, the company has another project in its pipeline, called Barry and also located in Quebec, Canada. Most recently Metanor published the PEA on that property. According to that study, Barry should deliver 193.5 thousand ounces of gold over a production period of 9 years.

When the resource estimate on Bachelor is out I will try to combine all information available and present my opinion on the company.

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