Metanor-Resources-Gold-bar

A gold bar stamped with Metanor's trading symbol. (Image: Metanor Resources)

Gold breaks below the $1140 mark (last at $1133) as good economic news out of the US causes further selling in the yellow metal. A quieter Friday but a look at a few of the mining releases out today with some additional comments.

Metanor Resources - (MTO:TSXV) - Metanor has released fourth quarter production results (note they have a different year end than most companies) this morning. In the quarter production came in at 10,277 ounces of gold at 5.666 grams per tonne.

A solid quarter for Metanor and with a decent Canadian dollar gold price they might be able to make a small profit when financials come out.

One of the things I find investors don't account for as much as they should when looking at producers is looking at the local currency and how this will affect the bottom line.

Gold is trading at $1133 USD this morning but in is $1469 per ounce Canadian and actually up 4.80% on the year in the last year. In terms of the US dollar gold is down 12.99% in the last year.

$MTO 5 year chart

The MTO chart looks like many of it's peers in the gold space.

Metanor is doing plenty of resource drilling (>60,000m) and around the Bachelor mine this year.

Shareholders have ultimately been hurt by the gold stream agreement with Sandstorm. Sandstorm can purchase 20% of the life of mine gold produced at Bachelor for $500 USD.

With a market cap of $19.6 million MTO does provide a very leveraged bet on gold for speculators.

Read: Metanor produces 10,277 oz Au in Q4

Red Eagle Mining - (RD:TSXV) - Red Eagle Mining has closed a $19.35 million financing at 27 cents per share. Proceeds will be used for the construction of the San Ramon gold mine in Colombia.

Liberty Metals and Mining will purchase 18.93 million shares in the financing to maintain it's 19.9% interest in Red Eagle.

A new investor STRACON GyM (SGyM), part of the Grana y Montero Group will purchase 33,539,360 shares for $7-million (U.S.) and become a 19.9% equity holder in Red Eagle as well.

Important news for Red Eagle shareholders here as STRACON GyM has also been awarded mine construction and the operations contract for San Ramon. STRACON GyM will have a vested interest along side shareholders on making sure the mine is on time and budget.

"We are pleased to have engaged SGyM as mining contractor for the San Ramon mine. SGyM is very familiar with the region through their similar joint venture style alliance with Rio Alto Mining and specifically their underground works with Buenaventura," commented Bob Bell, chief operating officer, Red Eagle Mining. "We have engaged the best possible partners with SGyM for the construction and operation of the mine and Lycopodium for the construction of the process plant.

RD chart 2015

Red Eagle stock has held fairly steady this year even though milestones have been completed and San Ramon is now fully financed and permitted.

A 2014 feasibility study showed an IRR of 53% at $1300 gold.

A common occurrence is for gold stocks to be fairly quiet in regards to share price during the construction phase and then receive a re-rating from the market when production starts.

First production at San Ramon is expected mid to late 2016.

Read: $19,000,000 Financing Completed

Related: Major milestone reached for Red Eagle Mining and Colombia’s gold sector

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This is not investment advice. All facts are to be checked and verified by reader. As always please do your own due diligence.