Update on Metanor Recourses Inc. (TSX-V: MTO)

North America's Newest Unhedged Gold Producer, Debt Free, Fully Financed, Tremendous Exploration Potential, Outstanding Management

       There have been a number of developments on the Jr. gold exploration company featured in our last forecast report, Metanor Resources Inc. (TSX Venture Exchange: MTO chart news)(US listing: MEAOF). In our 2008 forecast we discussed how mining production is stressed to bring sufficient gold to market and the companies engaged with this responsibility have exceptional upside exposure to rising gold prices, thus offering Metanor Resources Inc. for consideration as a candidate for investment portfolios as Metanor becomes a gold producer utilizing their 100% owned Bachelor Lake Gold Mill in the prolific Abitibi Mining District of Quebec. Below is an update as Metanor is wrapping up batch testing, has already poured its first gold bars, and will soon dawn the official status as "gold producer".

Upside Valuation/Summary: The current market cap of MTO.V is well below the replacement value of their infrastructure alone, ignoring the ~1M oz gold resource, significant exploration potential and substantial revenue projections.  Jay Taylor, mining expert, has made MTO.V his top pick in 2008 saying "This is a story of production, exploration, and building ounces". For those not familiar with the Metanor Resources,  the time to pay attention is now as Metanor's new 1,200 (upgradeable capacity) tonne/day mill is now being scaled into full production. Production in 2008/09 should conservatively come in at 30K - 35K oz gold and ramp up from there to 65k oz in 2009/10. The mill is configured to produce dore bars of gold, with a small component of silver. MTO.V has ~1,000,000 oz of Gold (NI-43-101 measured and indicated) available from their three properties and the ongoing exploration drill program at their Barry deposit is just one of many venues to expand the resource base that is exceeding expectations. Metanor Resources' gold milling facility and infrastructure has a replacement value of ~$140M and sits geographically as the only mill located within 200 km in a gold rich district that possesses additional resources exceeding 1.5M oz. Metanor is also amassing properties within this area, near their Bachelor Lake Gold Mine & Mill, and will play a central role mining the resources in this region for decades. Their forward projected EPS will likely be very significant as a debt free unhedged gold producer and the current market cap relative to expected revenues is disproportionate (analyst report pegs $3+ per share price and no need for dilution). With approximately 73M shares outstanding and currently trading under CDN$1/share, the present valuation of MTO.V provides exceptional opportunity for investors. Over 50% of Metanor's outstanding shares are held by institutional interests, amongst them Dynamic Mutual Funds (managed by Goodman & Co.).

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It is not often a new gold mine comes online in a stable jurisdiction, especially offering as much near term operational value and future potential as Metanor. Once the shares that are currently available in its current trading range are absorbed it is likely the stock price of MTO.V will rise significantly. There is just too much going for Metanor and its future prospects, the window of opportunity being made available by shares at the current price level (while still available) are considered by those in-the-know as extremely undervalued with tremendous near-term upside potential. There should be no further share dilution or any bank financing in Metanor's future - the math of a 1,200TPD (65K oz gold per annum) operation dictates there should be no lack of funds available to grow and reward shareholders accordingly.

Metanor's Barry Deposit - The beginning of a new area mining camp
   
     The market has yet to fully understand the significance of what Metanor is sitting on (and around) at the Barry Deposit. The Barry deposit is like opening Pandora’s box and has the potential for a 25+ year mine life as the work brings forth results that their geologist believes exists to be proven.
 
     Metanor owns two drills rigs that have been going full out for past several months and has drilled thousands of holes.  Currently several hundred

drill core samples are in the process of being assayed . The immediate exploration plan of action, currently underway, at the Barry deposit is to extend the pit from surface to somewhere about 50m depth - to securitize the mine for the next 10+ years. There is also significant longer-term exploration at Barry on multiple targets as the property is approximately 15km in length and the zone they are currently working is associated with IP anomalies that extend across the entire property.
 
     When MTO.V acquired the Barry deposit  it was represented/interpreted to be a flat zone deposit, when in fact it is now better understood that everything is sub vertical with huge upside resource potential. The original interpretation was likely from a section that was a shifted fault, something suspected by the MTO.V’s geologist, Andre Tremblay, something he knew from experience from a lengthy career in the Abitibi region and on his recommendation Metanor purchased the Barry deposit.
 
    Andre Tremblay is the Director of Exploration for Metanor, he holds a bachelor's degree in geological engineering and a masters' degree in earth sciences (structure) from the Universite du Quebec in Chicoutimi. He's acted as a director of exploration and/or various senior geologist positions with companies (as Ressources minieres Coleraine, GeoNova Explorations, Gestion S.R.C. Inc., Groupe Minier O, Mines Camchib, Campbell Resources Inc.) and is one of the most respect authorities in the Abitibi region. In an interview with Madison Avenue Research Group mining research analyst, July 1, 2008, Andre Tremblay had a very optimistic and encouraging opinion of what was being accomplished; “I am very very positive we will double and maybe triple the resources fairly easily now ... every time we can define some kind of geometric volume like that we double the zone. It is going to be easy because 20m depth is not very hard (offering ~1/2M tonnes) – if we go to 200m we have 5 million tonnes.”
 
    Mr. Tremblay believes there is a mining camp of significance to be developed in the area stemming from work at the Barry property. The interesting activity at Barry is generating much attention in the neighbourhood and Metanor’s Barry property (and now committed satellite properties) is growing bigger as Metanor makes deals with neighbours – ensuring future growth.
 
    Looking further down the road; even though Metanor is currently working Barry from surface to 50m – shallow depth for open pit, the mining of the zone at depth (yet untested) should go at least to 1000m as in the Abitibi region there are numerous mines that up to 4000m – 5000m that are still intersecting mineralized zones.
 
    Visible - free gold: Metanor is finding visible/free gold throughout the Barry deposit that is unlike anything their geologist has seen in his 30+ year career in the region. From the initial 40,000 tonnes passed through the gold mill so far has yield ~5.3g/t, one more gram than was expected from the analysis of drilling going into the mining effort. The 5.3g/t would likely have been even better (closer to 6g/t) as MTO has since improved recovery.

Image 2: MTO.V's Batchelor Lake Gold Mill - 1,200 TPD capacity, currently operating at 725 TPD in batch testing phase

Metanor Resources Inc. (TSX-V: MTO) is a new, debt free, unhedged, gold producer* in mining friendly Quebec. Metanor's 100% owned 1,200 (upgradeable capacity) TPD mill in Desmaraisville (Val d’Or) is now being scaled into full production. Production in 2008/09 should conservatively come in at 25K - 35Koz of gold and ramp up from there to 65k oz in 2009/10. Ore extract is coming from their 100% open pit operation on their Barry gold deposit (located approximately 100 km southeast of the mill). The Barry property boasts a highly efficient ore-to-waste ratio of only 1:1.

The mill has already poured in excess of 7,000 oz gold in batch testing phase. Positive cash flow from production is currently being be used for new acquisitions in the area and to expand the resource base at the Barry Deposit and further develop the enormous potential at the Bachelor Lake Gold Mine which produced over 131,000 oz of gold during the 1980's, it currently has resources of 300,000 oz Au and is open in all directions at depth with plans to upgrade to 1,000,000 oz.
 
According to Metanor's President, Ghislain Morin, current depth of the shaft at the Bachelor Lake Gold Mine is 1,700 feet, the shaft will be sunk an additional 600 feet to a depth of 2,300 feet and a 20,000 meter drill program is expected to add an additional 700,000 ounces of resources. Mr. Morin has many years of mining experience with an expertise in both underground development and shaft sinking. Prior to joining Metanor Resources, Mr. Morin built mills for several area miners including Cambior (now owned by Breakwater), Aur Resources and BHP Billiton. The two main veins at the Bachelor Lake Gold Mine run parallel and are 75 feet apart at an 80 degree angle. Metanor expects to drop shaft an additional 700 feet in the near future and the potential is in place to identify 1.5 million ounces going forward. Area miners such as Aur Resources (now Teck Cominco), Agnico-Eagle and Sigma are currently mining at depths of between 5,000 and 8,000 feet. The gold grade at the Bachelor Lake property increases at depth and the strike is open in all directions at the 2,300 foot mark.
 
The intrinsic value of MTO.V is an outstanding opportunity for investors getting involved now and certainly justifies a significant upside share price adjustment. Their gold milling facility has a replacement value of $140M+ and sits geographically as the only mill located within 200 km in a gold rich district that possesses resources exceeding 1.5M oz. MTO has a readily expandable resource base (current combined total is ~1M oz Au); 300,000 ounces on the Bachelor Lake Property, 450,000 on the Dubuisson Property, 100,000 (historic) ounces on the Hewfran Property, and ~200,000 oz on the presently ever expanding resource of the Barry deposit which they are currently mining and continue exploring. Metanor has recently acquired gold properties (63 adjacent claims) contiguous to Bachelor Lake which hosts the once producing (until 1967) Coniagas Mine.

* Metanor Resources Inc. is still in "batch testing" phase - official "producer status" to be dawned after batch testing phase is completed - expected by end of Summer 2008.

Image 3: Exceptional Management Metanor's President & COO, Mr. Ghislain Morin (right) & Mr. Serge Roy, Chairman CEO (left) holding first gold bar poured in early 2008. Since batch testing start up, in 5 months time, they have increased the production TPD by 40%, improved recovery rates to in excess of 95%, poured in excess of 7,000 ounces of gold, maintained strict cost control and ensured a successful trouble free stat-up - a rare feat for any new gold milling facility.