Interview with Ronald Perry, VP & Treasurer of Metanor Resources Inc. on Feb. 19, 2009
Q. 1 Mining MarketWatch: There have been a couple interesting and encouraging press releases this month, last week was "New Discovery Confirmed" and this week you announced "Increased Capacity at Bachelor Lake" perhaps we could ask you to briefly comment on these.
Ronald Perry, VP & Treasurer Metanor: "Sure, I'll comment on these chronologically - dealing with Hewfran "New Discovery Confirmed" first; as you know the Hewfran property is attached to Bachelor Lake, is accessible through gallery 6 & 8, it was previously owned by AUR Resources (now Teck Cominco) and we have earned 100% of that property since we spent all the required money before December 31. Basically the significance of this release is that the previous owners had proved they have resources from 180m down and now we have proven now that there is gold between the surface and 180m, it is continuous all the way down, we found where it is. More drilling needs to be done however our geologist did quite a few holes to give us an idea of the size and confirming that it does connect - the beauty of it is that it will be accessible by all galleries; now we know that it is there we can just go off our existing shafts and we might even be able to take some ore at the surface to start. That is the Hewfran section, there is also more potential around there as well as on the Bachelor site, there are other showings that we will investigate. So we are proving what we think is hopefully another mining camp. 4km away where Murgor had a property called the Nelligan property, which we have an option on for 70% and we are spending the required money to maintain our option, we did some promising work at the surface. Nelligan seems to be in line with the Bachelor Lake and Hewfran section - so we have a lot of good exploration potential. In the spring, we will be drilling more on Hewfran, more on the Nelligan property, as well as once we get underground we know that Bachelor Lake is open at depth and that the grades get higher - that's just the geology up north in Quebec -- so we are very very pleased with what we are uncovering and the potential all the way around Bachelor I believe is going to come into fruition - the future looks very good."
Q. 2 Mining MarketWatch: Your last release "Increased Capacity at Bachelor Lake", Metanor is now over 800TPD and it was achieved at "minimal cost", what is minimal cost as when we last talked we discussed $5M to 1200TPD.
Ronald Perry, VP & Treasurer Metanor: "It was well under $100K to do what we had done, our upgrades are continual. The number I gave you in our last interview was with the plan to go from 700TPD to 1200TPD in one shot - which would mean maybe a potential shut down, adding the rod mill - which we already have in stock now, a lot more capital intensive work to go straight 1200 then the budget was going to be under $5M, and that number still holds, but Ghislain Morin(President),Serge Roy(CEO), and Claude Imbeault(VP-Operations) are think-on-your-feet cost conscious guys -- they had some ideas, went back to the consultants, and are validating these ideas and altering things on the fly without a complete shut down, we are tweaking and adjusting, it is an ongoing process, we will get it higher, we will be adding equipment and have parts/equipment on order and we feel we will have it up to 1000TPD very quickly. I don't want to put a date on it as we do not want to disappoint, we are a small company trying our best, we are 73 full time employees plus sub contractors doing exploration, development, and production - so people need to have patience with us, we are a small firm but we are growing rapidly and we are getting things done; already in not even a year this is the second upgrade on the mill. Most companies take two years to commission a mill and to get to the recoveries we have (still 95%). We have tweaked it twice and we are in the middle of tweaking it again, we are growing up in stages and it is at very low cost to do this, then once we hit 1000TPD, we will reassess how we go to 1200TPD and there could be potential to get even higher than 1200TPD. We are now building a base and we want to get up there faster - look at where the price of gold is, we did not want to wait to June to do the 1200TPD upgrade, we are at 800TPD and we are going to be moving higher."
Q. 3 Mining MarketWatch: The last release indicated work is underway towards getting underground at Bachelor Lake where the grades are extremely high, how this is going.
Ronald Perry, VP & Treasurer Metanor: "We have got things in motion, we have a feasibility study in motion and we have hired a consulting firm to get us a budget to know how much it will cost to go underground, but we have started preliminary work - we are going to start now because it is a 12 month process, we are doing what we can with the money we have on hand. We are not going to wait, especially with the way the market is today we have to grow and we have to grow fast because we feel that this is going to be excellent opportunity to start peeling off some significant cash flows in the near future."
Q. 4 Mining MarketWatch: The press release mentioned mixing the higher grade Bachelor Lake ore with Barry Deposit ore. Although you do not have a large defined resource at Barry you are indeed hauling out a lot of gold and exploration results indicate there is a lot more. How are things at Barry?
Ronald Perry, VP & Treasurer Metanor: "We originally bought Barry deposit with 35Koz, we grew it up to ~150Koz resources but we are not yet going towards a NI43-101, we are strictly business here because it costs money and we would rather just pull the gold out of the ground. It is an open pit and we can guide where we dig to help stay on grade, also we have the free gold effect - we have a lot of things in our favour. We are stock piling at the mill as there is one month during the spring that we do close the road due to the thaw. If you look at the Barry picture on our web site of the main pit which we are mining, if you put your right hand down - at your finger tips that is where we are blasting going forward, if you stick out your thumb over to the side and higher up we hit 6.12 g/t Au over 37.8 m (36.1 m True Width) - Barry has a lot of potential, is open in all directions and is open at depth, we have to do a lot more drilling -- Diagnos, which uses a statistical tool-CARDS, said the potential strike zone is ~4km."
Q. 5 Mining MarketWatch: Mixing the ores will allow you to control the grade, do you have a goal?
Ronald Perry, VP & Treasurer Metanor: "When we go underground at Bachelor we will be hitting grades that are phenomenal. We are going to be in an excellent position in a year from now, we will be able to prolong the life of the respective mines by mixing ores or for example, we could keep grades up high to fund an potential acquisition - once we start peeling off a lot of cash then the board of directors, which I am a member of, will need to decide what to do with that cash. I am not adverse to declaring dividends. If gold goes to USD$2000 don't be surprised if Metanor's Board of Directors goes that route. We have a lot of production and exploration ahead of us, lots of ounces to get out of the ground -- our cost structure will stay in tact so all these excess profits will go towards cash flow. That's long term, but we are maturing - we have mitigated the exploration risk, the development risk, and the production risk - we have poured to date more than 20,000oz - so we can produce, the mill works."
Q. 6 Mining MarketWatch: That said - it is important from an investor standpoint stocks are a discounting mechanism; stocks are priced now based on what the future holds. Quite frankly when you do hit 1200TPD at say an average grade of 6g/t that should translate to well in excess, would you not agree, of at least 60,0000oz per year?
Ronald Perry, VP & Treasurer Metanor: "Yes - that's the game plan, but we won't put targets as we are a small Company - I think we have executed to date everything we said we would do."
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