Metanor Resources (MTO.V) has released an updated resource estimate for the Barry gold project, the first resource update in six years. Despite having mined some portions of the project to use the ore as feedstock for the Bachelor Lake mill, Metanor was able to increase the total resources from 780,000 ounces of gold to 1.35 million ounces. That being said, the average grade is quite a bit lower now, as the indicated resource has a total grade of 0.98 g/t (which was 1.29 g/t in 2010) whilst the inferred resource has an average grade of 1.02 g/t (down from 1.65 g/t in the previous resource estimate).
In other words, Metanor needed to add 123% more tonnes for a 73% increase of the total amount of gold in there, indicating the additional resources had an average grade of well below 1 g/t (using a cutoff grade of 0.5 g/t). An open pit resource at a grade of 1 g/t isn’t bad, but it might be difficult to profitably ship ore from Barry to the Bachelor Lake mill, and using a cutoff grade of 1 g/t (which boosts the average grade to 1.7 g/t for 760,000 ounces of gold) might be a more conservative approach here.
That being said, it does look like Metanor has been focusing on a high-grade zone at Barry, where it outlined an in-pit resource of almost 350,000 ounces of gold at just over 2 g/t, and it’s very likely Metanor will prioritize this zone for potential future development as the economics of trucking the ore to Bachelor Lake will be better.
We are waiting for Metanor to file the NI43-101 technical report on the resource update and will be able to provide you with a more in-depth review of the new Barry resource after reading the report.