The following Litigation disclosure was recorded as a directors warranty in connection with outstanding litigation. This was set out in the appendices of the Sandstorm agreement, filed on the public domain SEDAR site. The expiry date for decision could be delayed, acording to SEDAR. This could have been a contributory cause of a shareholder exodus. since this is a current issue, Mr Coffin should have known about the imminent conclusion of this claim.... ? and the potential for uncertainty. On the positive side, the disclosure does seem to ring fence the extent of litigations claims in relation to the 2009 accident.

It should not surprise a director that the market is confused, when direcors sign a committment to make a mine operation, at a cost of $35.4m, according to their own feasibility study, but they sign a contract to receive only $20m, when the contract included a GUARANTEE to repay $20m in six years. The directors have not explained that why they are certain to receive an additional $15.4m and at what cost, in order to achieve production. This sourcing of funding is a basic financing issue and the failure to inform the market may give the impression that the directors are running the company "on a wing and a prayer". Perhaps a more direct question to Mr Coffin is called for, which he seems to have sidestepped?

Source : SEDAR

SANDSTORM AGREEMENT
SCHEDULE "D" DISCLOSED LITIGATION
QUEBEC SUPERIOR COURT FILE 615-17-000467-109
PARTIES :-
ENTREPRENUUR MINIER MONTALI INC V RESSOURCES METANOR INC
CLAIM - £2,130,767.12 DAMAGES
FILED IN COURT 22 OCTOBER 2010
EXPIRY DATE TO ENSCRIBE THE CASE - 31 JANUARY 2011

From a limited review of GNH, it appears that they are in the exploration only stage, although they may have some projects with favourable prospects. I was shocked to see that GNH had 27m warrants and options outstanding, against 106m issued shares. it appears that fund raising was an opportunity for a promoter to distribute risk free warrants in addition to cash fees. It is not clear who Joe Dewek is - he does not appear to be part of GNH management? Fund raising for exploration projects

With regard to Metanor, the most attractive form of fund raising for its Bachelor Lake mine would be a gold loan at normal commercial loan rates. Alexis achieved this recently in relation to its Snow lake project ~ $60m.

Bachelor Lake is a comparable, or possibly a more advanced project than Alexis, since it has a permitted mine and working mill, which will generate revenues within a year of funding being provided. Therefore, lenders will have a predictable stream of revenue in order to repay loan capital and interest. The most likely scenario will be a mix of a gold loan and equity, in order to benefit the lender with ordinary share leverage. Metanor has indicated that this is the funding that they will be seeking for Bachelor - the only question is whether they will secure it on terms comparable to Alexis.

Metanor appears to be dripping low value PP's in order advance both its projects and therefore to be in a position to offer an attractive investment to a gold loan lender.

Merry Christmas to all.

I suggest that this is not the time to consider bailing out. Firstly, this weeks PP was a final tranche of the October 2010 PP. It may have been best if the company had received that PP as one payment, as it appears that this is an additional PP, above what has already been announced. A significant part of fund rasing has gone to brokers - e.g 7% for "introduction" of investors. According to accounts, managements cash pay does not seem to be excessive. The company does not generate much revenue, after costs, from gold sales. Therefore, most cash raised is being directed towards drilling / upgrading of assets.

The reasons for holding at this stage, include, but are not limited to:-

1. According to the 43-101 report, the Barry gold ounces would have been higher if the management's calculation basis were to have been used. However, the SGS calculation model excluded ounces that may produce a large increase in Barry's reserves during the course of the 25,000m drill campaign. This started on 14 October 2010 and therefore some drill results should be available soon. I hope that managment targets early drills at locations which would confirm ounces left out of the 43-101.

2. The 14 December press release reported that the Bachelor drill contractors has switched shaft sinking equipment from "rehabilitation" to "sinking" mode and the first blast at the shaft bottom is planned before year end. This seems to indicate that managment may have a gold loan for Bachelor near completion. Otherwise, they would be unlikely to commit to shaft sinking costs, without knowledge of where funding is to be sourced. If a preferred gold loan were to be the form of funding achieved, then this is likely to have a very positive sp effect.

3. Also in the 14 December press release, it was reported that 1,000m of drilling at the "Diagnos" located high quality ore find has been started and that results should be released before the year end. If this high quality surface resource structure proves to have potential, then, being only 3km from the mill and sitated on either side of the mill acces road, this could add to the viablity of achieving a bonus to the underground Bachelor 43-101 resource.

In summary, if events go well for the company over the next few months, irrespective of the level of the gold price, then the risk / reward at the present sp, is in favour of reward in the near term. Also, if the financiang and drill results are positive, then managment could become to be regarded as "performers" contrary to the recent market perception.

Statements required from the management team.

Bachelor Lake:- Such a statement should be to the point in respect of Bachelor – has the management team been able to negotiate a gold loan at par with the Alexis terms. Bachelor does not have issues with low grade or infrastructure permitting, however, any gold loan may have to factor in a compensation cost in relation to a potential claim regarding the 2009 mine fatalities. If the uncertainty issue is resolved then the sooner a gold loan is negotiated, the sooner the company will be in a position to make a contribution to its operating costs, rather than have to rely on PP’s t the horizon.

Barry: Careful reading of the 43-101 report makes interesting reading regarding an argument between SGS QP’s (Yann Camus & Claude Duplessis) and Metanor’s Andre Tremblay. The relevant issues are covered in the following section of the 43-101 (my underlining):-

Source: SGS Metanor 43-101 dated 4 November 2010.

16.2. Resource Model 2 – Final for public disclosure

16.2.1. Introduction and context of the second model

A more inclusive model of low grade material has been generated from the same drill hole database as model 1.

The first model (model 1) was built in an attempt to meet the geological model provided by the geologist of Metanor. Even with the recombination of zone, low grade material was still not included into the ore zones. Moreover in the new 2010 Barry project concept which calls for a high tonnage low grade with a concentrator on site. It was considered not realistic to have relatively thin zones at 45 degrees angles on five meters benches to be adequate to reflect the resource that would come out of the deposit. The model 2 approach, estimate resources within the mineralized area in an open way with important dilution, however inclusive of all assayed material around the block to estimate.

It is also important to mention important misunderstanding between SGS QP’s (Yann Camus & Claude Duplessis) and Metanor geologist (André Tremblay) about the estimation of resources with a block model versus a traditional sectional model. It was found that the biggest argument was on section 630 where SGS was accused to have less amount of ounces than Metanor’s sectional model, it turn out to be the block model being cut by the latest topography, while the sectional model was not hence not matching Metanor total gold amount on that particular section. This was also affected by the fact block estimation used composites with a search ellipsoid creating higher internal dilution than a sharp section model connecting relatively thin high grade zone.

It appears that locations where Metanor’s calculations showed significantly higher ounces in the drill campaign, were excluded by SGS, since the open cast mining extraction would require a dilution below cut off to extract. Therefore, Metanor should report whether early drilling in the present 25,000 campaign will be targeted in a way to add disproportionately to the 43-101 ounces.

Also in the SGS recommendations, advice was …..

Source: SGS Metanor 43-101 dated 4 November 2010.

18 INTERPRETATION AND CONCLUSIONS

“…….. It is critical for the success of the coming development of the Barry project to have a continuous and well established database system and geological mapping program to be integrated into a GIS…….”

Therefore, it is hoped that a Corebox project model, alluded to by Ron Perry [source: Jay Taylor interview in 2010], could be made available to investors on the web site. In this way, the spatial configuration of reserves will be apparent to non professionals.

The recent Metanor shorting activity is reproduced below, from TSX data:-

Short Positions on 2010/08/15 397,457 31,304

Aug. 18, 2010 (Market News Publishing) --

METANOR RESOURCES INC ("MTO-V;MEAOF-0")

- Short Positions on 2010/08/15 397,457 31,304

Net Total Last Total PriceDate Change Shorted Price Volume Range----------------------------------------------------------------------------

2010/08/15 31,304 397,457 0.48* 2,737,398 0.48 - 0.54

2010/07/31 -367,619 366,153 0.55* 2,599,235 0.54 - 0.61

2010/07/15 335,551 733,772 0.60 2,935,403 0.57 - 0.62

2010/06/30 39,716 398,221 0.62 1,901,463 0.59 - 0.63

2010/06/15 -9,100 358,505 0.58 2,459,330 0.57 - 0.64

2010/05/31 -169,627 367,605 0.60 6,391,948 0.55 - 0.65

2010/05/15 197,376 537,232 0.66* 3,060,359 0.56 - 0.67

2010/04/30 -40,749 339,856 0.58 5,238,780 0.55 - 0.66* - Indicates that the closing price used is the last non-zeroclosing price and is not the closing price on the report date.

Source: TSX

In summary, the following appears to have taken place:-

1. When the shares were $0.66, on May 15, a 197k short was placed and this triggered a fall in the share price to $0.60 then, on 31 May, 169k of the short was covered.


2. On 15 July, an even larger short of 335k shares was placed and this precipitated a further fall to $0.55 by 31 July. At this date, 367k of the shorts were covered.


3. Again, on 15 August, another smaller short of 31k shares was placed, which then left the share price at $0.48.

Clearly, some orchestrated shorting is being organised, with the effect that weak hands are abandoning the ship and allowing the shorts to cover, whilst relentlessly driving the share price down. Also, there appears to be a “hard core” level of about 340k of shorts which are not being cleared. These could be illegal naked shorts, which would have a depressive effect of the Metanor share price (Jim Puplava of Financial Sense has championed the cause of eliminating naked shorts, due to the share dilution and manipulation arising).

This activity bears the hallmarks of a potential bidder, who is trying to establish a position from panicked sellers and also to depress the share price in order to achieve a low entry level for a full bid. It has been suggested that no bid would be made unless a 43-101 was lodged at SEDAR. This is logical since, even a low premium bidder would need to justify this action to their own shareholders. Also, in the absence of a 43-101, a low hostile bid, which may be in process, could be rejected by the sudden release of a favourable 43-101.

If this scenario were to be developing, then directors may be in a dilemma. If they attempt to stem the shorter’s recent action, of depressing the share price from $0.66 to $0.48, by way of a release of the 43-101, with only 2009 drill results available, then a low bid may be delivered and they would be out of ammunition. What to do therefore? ……. If directors were aware of this, then their action by delaying a 43-101 would also be buying time, possibly to deny oxygen to a potentially hostile suitor and to give themselves time in order to promote a friendly more beneficial competing suitor, if that were the only alternative. Also, the delay could be used in order to deliver additional 2010 drill results to Geostat, for inclusion in an updated 43-101, for release when directors consider that the time is right, for the benefit of the general body of shareholders. However, the delay requires careful consideration as continued drilling activity needs funds, which may be difficult to raise, after the recent PP has been spent.

All long holders of Metanor should therefore be perceptive to the possible reasons and tactical advantages of a 43-101 delay, rather than submit to demands of the short term trader(s), who are preying on weak shareholders, to the potential detriment of long term shareholders.

It appears that the 15 August 2010 short was much reduced from the previous two mid month shorts highlighted and therefore there may be a perception by the shorts, that it is becoming too risky to short at these levels at this time.

Raffles

Thank you Royal Blue for forwarding details of your call to a Metanor VP (copied below for reference). It would be of interest to hear from you with regards to which VP you spoke to? I have also copied an earlier post dated 22 June 2010, from Simply on this site.

The response that you were given may have raised more questions than answers, for the following reasons:-

1. According to director Ron Perry, the PP was not a certainty on 22 June 2010.


2. 
   The reply concerning the 43-101 is confusing and it is at odds to other information available. On June 22 2010, director Ron Perry, reported below, to Simply on this site, that he is still hopeful to receive it [the 43-101] before the end of month [June]. More importantly, earlier, in April 2010, I enquired by email to the company, why the 43-101 was reported to be delayed from end of April to end of May 2010. The reply to that email was received from Metanor’s VP geologist, responsible for the 43-101, Mr Andre Tremblay. In that 30 April 2010 email, Mr Tremblay said that the independent firm (Geostat) have all the drill results in respect of the 168 holes for 20,000m on the deposit in December 2009 and results of these hole[s] serve to a resources calculation or 43-101 report. Also on 30^th April 2010, Mr Tremblay also commented “…. We are very close to conclude and results will be very interesting and impressing ……… Please be patient for another 2 weeks….”
   

In conclusion, I do not accept that Metanor are still waiting for a letter in the mail from Geostat, in respect of the drilling campaign up to the end of 2009. It may be correct to say that they are still waiting for the 43-101, but they do not indicate that the delay may be as a result of an upgrade to include 2010 preliminary drill results.

Readers can form there own views, however it appears that Metanor may have raised a relatively low level of funds by way of the 31 July PP, in order to “buy time” and therefore be in a position to present a 43-101 firing on all cylinders. This [upgraded] 43-101 may then be the platform for whatever form of major fund raising / JV that Metanor may require, in order to capitalise economically on Metanor’s assets in the ground.