Metanor steps into the future
 
2013-01-11

Make a wrong turn while driving along the streets of one of
Canada's great mining towns and you may feel you've gone
through a portal into the past.
 
Just off of the bustling main drag of Val d'Or an enclave
of log homes that once housed workers at the historic
Lamaque mine emerges. Homes kept tidy by the modern families
living in them and beneath the shadow of Lamaque's still
impressive head frame.
 
Driving out of town the history lesson continues as the
sister mine to Lamaque, the massive Sigma open pits
unfurls across the horizon.
 
Leaving a town with so much history is a fitting departure
point for a site visit to Metanor Resource's (MTO-V)
Bachelor Lake Mine - a mine whose own rich history is
plays a part in its present configuration.
 
The first shaft was sunk into the ground at Bachelor
40 years ago and since then the project hosted multiple
openings, closings and in a far more tragic vein, the
death of three miners who drowned in an underground
flood back in 2009.
 
With commercial production around the corner, however,
Metanor is set to emerge from a past of starts and
stops and step into a future that could see it as
a key player in this lesser known region that is
a 2 hour drive northeast of Val d'Or.
 
"We're humming along underneath the radar," Metanor's
vice president and director Ron Perry says. "We never
gave up. We just kept on going and now we're getting
ready to cross the chasm."
 
Now that the mine is fully staffed and fully permitted,
Metanor expects to achieve a steady state mill in
mid-February. If it succeeds, Perry says the achievement
will push the company into cash flow positive territory
by the middle of that month.
 
Getting to this point, however, wouldn't have happened if
management at Metanor didn't make a radical break from
the historic view of how Bachelor should be mined.
 
This most recent incarnation of the mine is leaner and
more modest as management chose to steer clear of past
mistakes that were encountered when previous owners
tried to go big.
 
"You have to adjust the approach to the size of the mine,
" Metanor's chief geologist Alain Blais says.
"You don't try to make the mine fit the size of your dreams."
 
When Sturgeon River Mines sank the first shaft here in
the 1970s and its subsidiary Bachelor Lake Gold Mines
(BLGM) deepened the shaft down to Level 12 in the 1980s,
the idea was to get as much ore out of the ground as
possible. Unfortunately not enough of it was mineralized
and that meant the operation didn't last long.
 
Bachelor Lake Gold Mines managed to pull 869,432 tonnes
out of the ground with a head grade of 4.66 grams per tonne
for 130,341 oz. of gold before shuttering in 1989 - just a
few years after it opened.
 
The main problem with the original mine was dilution, a
problem compounded by the fact that mining was being done
by a contractor who was paid by the tonne, killing any
motivation to follow the mineralized zones closely.
 
"There was only one geologist at the site, the rest were
contractors," Perry says. "We've seen with our own eyes
the mine widths they were using. It was out of order with
the deposit. It was twice as wide as it should have been
and dilution was over 100% in many places."
 
"It's a geologists mine," Blais adds. "The geologist is
the compass and he tells the miners where to go."
 
So while today's mill has the capacity of 1,200 tonnes per
day Metanor has scaled it back with a plan of milling at
800 tonnes per day instead.
 
"The key," Blais says, "is to find the right pace to mining.
At the planned rate the exploration team will have four years
to find more ore."
 
The long term goal is to get Bachelor going, generate cash
and extend the life of mine to 7 to 10 years at a steady pace,
asserting both the asset and the company as a key player in
the region.
 
Thus far, Metanor has been executing on its plan, though not
with encountering some obstacles.
 
In November the mine produced 1,715 oz. of gold, which beat
the previous month's total of 1,251 oz. and since the end of
July Bachelor has been responsible for 6,157 oz of gold, and
while the total was short of the company's expectations the
causes for the lag - delays in permitting and a lack of labour -
have now been resolved.
 
Metanor received its mining permits at the end of July last
year and recently finished building a 625 metre escape-way
passageway to the surface. The second passageway clears the
last regulatory hurdle and allows it to move on to the next
phase which is production activities in the stopes.
 
As for the labor situation, that was helped out by the closing
of Richmont Mines (RIC-T) nearby Francoeur Mine.
 
"We've hired a dozen miners from Francoeur so now we are fully
staffed and can catch up on those delays," Perry says. "If we
get to 500 to 600 tonnes per day in the first quarter we'll
be doing good, but we needed the faces to get there. The mill
is not the bottleneck, the mill guys are saying bring us the
ore, and now the underground guys are saying 'we will bury you
with it!'"
 
Well known but under explored
 
Metanor controls 106 sq. km of ground in the Abitibi Greenstone
Belt, 225-km northeast of Val d'Or.
 
And while the rocks around Val d'Or have obviously been well
explored over the year, surprisingly, the rocks here have not.
 
"This is like the Cadillac fault 100-years ago in the sense that
there is little geological understanding," Blais says. "We've
barely started to scratch the surface here."
 
So why hasn't it been explored more?
 
Part of the reason is that Val d'Or itself possesses such
mineral wealth that it has kept miners active in that specific
 area. Another factor is that historically claims in the Bachelor
Lake region could be kept without any work being done on the
broader area. That left much of the land to go unexplored.
 
And while that may be true of the broader region, at Bachelor
Lake specifically Metanor has a good sense of what is going on.
The key feature on the property is a large intrusion known as
the O'Brien pluton - a granite intrusion that is the source of
gold mineralization in the surrounding rock.
 
The Bachelor Lake gold deposit can be either classified an
orogenic lode gold deposit or an intrusion related gold deposit.
The gold distribution appears to be controlled by both structural
and lithological features with mineralization related to brittle
deformational features, dilatational zones and brittle-ductile
shear zones.
 
In layman's terms what went on here is that the O'Brien intrusion
came up through acidic volcanics where there were pre-existing areas
of weakness in the form of fractures. Later stages of the process
concentrated the gold as the heat and pressure pushed liquid away
from the intrusion and through the fissures with the intruding pluton
continuing to be the motor all of this geological activity.
 
The process repeated until there was an over-saturation in the fissures
nearest to the pluton. At that point the hydraulic fluids were pushed out
further and precipitated out away from the pluton. The process happened
over and over again thus increasing the concentration of gold and forming
the deposit.
 
That deposit is made up of three veins. The Main vein, Vein B and Vein A,
which cuts both the Main and B. The A Vein is not mineralized the whole
way through unlike the other two. Instead mineralization occurs where it
touches the Main and B veins. Currently the main focus of Metanor's
excavation drills is the B Vein.
 
Measured and indicated resources at the deposit currently stand at
841,591 tonnes grading 7.79 grams gold for 210,857 oz. of gold and
inferred resource of 426,148 tonnes grading 6.52 grams for 89,386
grams gold.
 
Perry expects a resource update by the middle of next year, and with
stellar results from last year's drill program, there could be a good increase.
 
Some highlight results from the Main and B Veins last year included
Recent results include 4.08 metres grading 26.36 grams gold, 5.64
metres grading 17.24 grams gold and 6.43 metres grading 17.18 grams gold.
 
Metanor first arrived at Bachelor in 2005. The plan then was to
explore the area while milling ore from its Barry open pit
operation, which lies closer to Val d'Or.
 
While the mill turned for Barry ore for roughly two years, declining
grades combined with trucking costs of $22 per tonne led to the
shuttering of the pit.
 
"We were increasing capacity to balance out the declining grades
but eventually you hit an inflection point and just isn't economic
any more," Perry explains.
 
Still, he says, Barry remains in the company's field of vision.
 
The site currently has indicated resources of 7.7 million tonnes
grading 1.25 grams gold for 309,500 oz. of gold and inferred
resources stand at 10.4 million tonnes grading 1.41 grams gold
for 471,950 oz.
 
Now the original plan has been reversed. Instead of cash flow
from Barry ore funding exploration at Bachelor Lake, cash flow
from Bachelor Lake will fund the development of Barry.
 
"We need to drill off another 200,000 oz. at Barry. That would
take us over the one million oz. mark and we could look at doing
a financing and maybe put a concentrator or a small mill at the
site," he explains.
 
As for development and exploration at Bachelor given that the
funds from Barry didn't materialize as expected, Metanor showed
its resilience and resourcefulness in dealing with the situation.
 
The company struck a deal with gold streaming company Sandstorm Gold
(SSL-V) that saw Sandstorm give Metanor US$20 million in cash in
exchange for 20% of the life of mine production at Bachelor Lake
at a price of US$500 per oz.
 
Those funds helped fund both mine development and exploration.
 
And while Metanor is focused on the final steps towards achieving
commercial production, it isn't neglecting its exploration program.
 
After aggressive drilling in the mineralized area over last spring
and summer, going forward the exploration to-do list includes plans
to extend mineralization at the existing mine at depth, further
exploration of the Hewfran claims to the west of Bachelor Lake,
where there are already indicated resources of 110,100 tonnes grading
6.47 grams and inferred resources of 206,900 tonnes grading 5.66 grams
gold for 60,556 oz. of gold. Recent drill results from Hewfran included
highlights of 7.89 metres grading 10.3 grams gold and 10.11 metres
grading 6.92 grams.
 
After that the plan is to go north and south of Bachelor to drill
test surface showings.
 
And then there is the O'Brien granite itself, which may host a low
grad high tonnage deposit in the future. Past drill results on the
pluton have returned roughly 2 grams over 2 metres, which leads
Perry to opine that there could be block caving potential.
 
Perry becomes noticeably enthusiastic about the prospect. It's
an enthusiasm that is shared by Blais and all the workers spoken
too at the mine. Part of the reason for such enthusiasm is a strong
motivational system that posts underground mining team's results
with corresponding financial rewards on a wall in the miner's locker room.
 
And part of that enthusiasm comes from a team realizing that it
is stepping out of a mine's checkered past and into a hopeful future.