I’ve paid my dues. Over 10 years and 50k in loses. No more Kool-Aid for me. But thanks to lwlg I have made that all back and the first 50k in gains will be tax free when I decide to sell thanks to mdmn loses. What will you do with your loses? Or are you going to wait it out another 10 years? lol I will continue to keep both mdmn and aumc on my watchlist. If I think there is an opportunity to make some money here I will buy back in. But it will take more than some pretty pictures, short videos, and the usual cheerleaders to do so…
I don’t know about anyone else, but my time for kool aid drinking stopped a long time ago, and I’m not sure who’s doing the pumping here.
Regardless, I’m glad you made your losses back. I haven’t recovered all of mine, but I’ve done ok in the markets and have no complaints. I would have checked out your stock pick, but I must not have been reading the forum at that time. I only just started back here more regularly in the past two or three weeks.
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Big volume coming in on Aumc 220,000 traded so far Ask $1.05
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The magnitude of the gift Maurizio will have given a LOT of people will be almost immeasurable, if you include the satisfaction they will realize when they inform all the friends/family/others who they brought into this deal that their shares of ownership are now worth something.
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I know I didn’t look at it, probably because I never saw anything about it. What and how much DD did you post on it? Which thread was it posted on? There is an Other (Non-Mining) Stocks thread where it may have garnered some attention. I see where it reached a high of $17.24 last June! Congrats on making a profitable play there. We all like making profitable plays that are interesting, look promising based on available DD and are posted to the appropriate forum. For most of us interested in gold and silver miners, or are waiting on the ADL to pan out (pun intended lol), we post primarily on Other Mining Stocks. Have you made any posts to the other available threads? So far as tax loss season goes, it appears there will be ready buyers to catch your 50K loses in MDMN when you decide to sell them. I won’t be one of them as I was “fully invested” in this space years ago. I’ve done quite well from following leads posted by those taking time to post on some of the other threads that were started on the forum. Keeping MDMN and AUMC on your watchlist is not a difficult decision to make.
Hi Mangelsen,
FOR NOW, AT LEAST, RECOGNIZE THE EXISTENCE OF A PATHWAY TO SOME POTENTIALLY SIGNIFICANT EARNINGS DUE TO A COMBINATION OF CIRCUMSTANCES WITH NO GUARANTEES WHATSOEVER.
(DISCLAIMER: Please don’t make any buy/sell decisions based on this response to “Mangelsen’s” question)
Your question is a good one in regards to what it would take to break even if you’re currently down 90% on your Medinah investment. If somebody is down 90%, then, by definition, they’d need a 10-bagger from here on out to break even. Based on AUMC being at $.80, that would mean an $8 AUMC price and a $0.035 Medinah price since they currently trade a $0.0035. Putting a VALUE on AUMC (100% owner of the ADL Mining District) would necessitate valuing approximately 11 mesothermal veins plus Auryn’s other mineral assets including porphyries, mantos, stratabound copper deposits, skarns, breccias, stockworks, etc. Valuing mineral assets is inherently difficult prior to their being in a position to spin out earnings. Then things get a lot easier. Of all of those various assets, let’s focus in on the easiest one to ascribe a value to. That would be the Don Luis1 Vein (“DL1”) formerly known as the “Fortuna Centro Vein”.
Stocks tend to trade at a “multiple” of a corporations Earnings Per Share (EPS). With the industry average “multiple” of EPS being 30.21, Auryn would have to earn 26 cents per share to deserve an $8 share price IF THE DL1 VEIN WAS THEIR ONLY ASSET WHICH IS FAR FROM THE TRUTH. Since there are 70 million shares outstanding, this means they would have to earn $18.5 million per year to effect a 10-bagger AGAIN if you ascribed zero value to ALL OF THE VARIOUS OTHER ASSETS. With the price of gold at $1,865 and if the all-in sustaining cost (AISC) to produce an ounce of gold at the DL1 vein is $800 per ounce, then they’re clearing a little over $1,000 per ounce. Thus, they would need to produce about 18,000 ounces per year to effect that 10-bagger if the various assumptions hold up and again, you ascribe zero value to ALL OF THE VARIOUS OTHER ASSETS. Based on 260 working days per year this boils down to 70 ounces per day. If you’ve got, let’s say, 4 working faces in production at the DL1 Vein based on a single shift, each working face would need to produce 17.5 ounces of gold per day in order to deserve that “10-bagger”.
If the grades are a little less than half of what SMFL averaged over 30 years (64 gpt) or let’s say 31 gpt which is 1 ounce per tonne, then each working face would need to produce 17.5 tonnes of ore daily. The Antonino Adit measures 3.5 meters by 3.5 meters or 12.25 square meters. The blast holes are 2 meters deep, thus each “blast cycle” releases 24.5 cubic meters of ore. With a density/specific gravity of 3.25 tonnes per cubic meter for that ore, each blast cycle at each working face would release about 80 tonnes of ore or over 3-times what you’d need to justify a 10-bagger from current levels IF THE ASSUMPTIONS HOLD UP BUT AGAIN ASCRIBING ZERO VALUE TO THE OTHER 10 MAIN VEINS AND THE VARIOUS OTHER MINING ASSETS. Of the 80 tonnes released per blast, let’s say that only half gets shipped and the rest is tossed to the side as worthless “gangue”. Then these 4 working faces, by themselves, could still produce 1 and a half times what would be needed to produce a 10-bagger.
Let’s review the assumptions: average grade of 31 gpt gold, 4 working faces, 260 working days per year, each working face 50% mineralized and an average density/specific gravity of 3.25 tonnes per cubic meter. I’m going to assume that since the average grade exceeds the 25 gpt floor to qualify the ore as “direct shipping ore” in which Enami pays “byproduct credits” for the copper, silver and moly present, this will offset the fact that the “recovery rate” is less than 100% (usually in the mid-90’s). so, let’s let these factors cancel each other out.
OTHER CONTRIBUTING FACTORS
Production DOUBLES if you add another shift to those 4 working faces. Of course, the camp would have to be upgraded and don’t forget any COVID issues regarding spacing. Production goes up if you work more than 260 days per year. Production goes up if you mechanize things and put in a “jumbo” blast hole driller but you need to pay for it. Production goes up if you add more working faces. Profits go up if the POG goes up and they will go down if the POG goes down. THE IMPORTANT CONSIDERATION: All of this pertains to JUST THE DL1 VEIN. THE CRITICAL QUESTION TO ANSWER THEREFORE IS WHAT PERCENTAGE OF THE OVERALL VALUE OF THE ENTIRE ADL MINING DISTRICT DOES THE DL1 VEIN REPRESENT. Might 10 to 15% be a fair guess? There are about 10 other main veins that admittedly would need a lot of work done to catch up to the DL1 Vein’s current status. The Caren Mine already has its production adit in place i.e. the Larissa Adit. The grades over there are commensurate with those at the DL1 Vein. These mesothermal veins tend to be very high-grade and very large. They widen with depth and they tend to extend very deeply which speaks to “projected mine life”. Now you need to zoom out and put a value on the porphyries, skarns, mantos, breccias, stockworks, 9 OR 10 other main veins, etc. For the non-mesothermal vein assets, I would wait until a JV is done and let the terms of the JV give you a rough estimate of value.
The numbers can get scary BUT DON’T GET AHEAD OF YOURSELF WITH THE NUMBERS. Do, however, for now, just recognize a CLEAR PATHWAY to being able to break even under these circumstances. There is a ton of work to be done and there will no doubt be delays all over the place. Wait for the numbers to come out and then fill in the blanks of the equation outlined above. All you want for now is the EQUATION. The key to these seemingly silly numbers is THE 70 MILLION SHARES OUTSTANDING. That’s miniscule when compared to other junior producers. With an O/S number that tiny, a MODERATE amount of earnings produces a VERY LARGE “EPS”. The “EPS multiple” is what it is i.e. about 30. The 30.21 figure is from the most recent study done which was at the Stern School of Business at NYU.
The “MINING AND METALS INDUSTRY” averages an EPS multiple of 30.21. A VERY LARGE EPS, in turn, produces a very strong share price. The key is the 70 million shares O/S (the denominator in the EPS equation) versus the guys across the fence line with perhaps 670 million shares outstanding which is still growing as they sell dirt cheap shares to drill out a property in order to gain the attention of a major via blocking out MR/MR. The real magic in the Auryn situation is the COMBINATION OF: HIGH-GRADE NEAR SURFACE EARLY PRODUCTION OPPORTUNITIES, NO NEED TO IMPRESS A MAJOR AND SPEND A FORTUNE TO DRILL OUT THE PROPERTY BECAUSE IT’S NOT FOR SALE, AND THE MINISCULE SHARES O/S COUNT. Add to that a zero “cost of capital” and the fact that extremely high-grade ore is associated with extremely low costs on a “per ounce” produced basis. This is because of the fixed nature of many mining costs and the ability to spread those fixed costs over more ounces.
There is another SHARE STRUCTURE issue besides the number of shares O/S. Of that miniscule, 70 million shares outstanding count, management owns over 60% of them in a “Restricted/Control” shares format. Many of the other shares are owned by people that, as you say, need a 10-bagger just to break even. Medinah’s 16 million shares are also currently restricted even though the Medinah shares themselves are extremely liquid. The share price of Medinah is simply tethered to that 200-to-1 eventual conversion/allocation ratio. The official “float” of readily sellable AUMC shares is 3.9 million. That’s insane. What do you think is going to happen if the mining world figures out that Auryn has the potential to become an earnings machine? Ironically, it’s this lack of a “float” that currently keeps people out of the AUMC market because of the wide “spreads” between the bid and the ask. How’s that for a Catch-22? You can’t buy a good position without chasing the share price up. Believe me, I’ve tried. Now, contrast a share structure like Medinah’s with everybody way under water with a corporation in which everybody is sitting on a triple and just waiting for a reason to hit the sell button. My hunch is that the share price of Medinah or AUMC could move up significantly right from the get go once a clear signal is sent that there is a special set of circumstances at play here. NOBODY ON THE PLANET HAS EVER HEARD OF THIS DEAL DESPITE THE FACT THAT MANY OF US FORUM PARTICIPANTS HAVE WRAPPED OUR LIFE AROUND IT.
What I tell my mining investor colleagues to do is to constantly list out the milestones needed to be achieved from this day forward. If you’re in a mood to deploy cash, make the company earn it. Identify the RISKS from this day forward. If you see a major RISK in need of being mitigated and you’re in a mood to commit funds, wait until it is mitigated. This is called the DERISKING PROCESS. My sense is that it will be the EPS that ends up turning the heads as well as the generosity of cash dividends. The other thing I always stress especially with my kids that all have decent positions that aren’t completed yet, is to CONSTANTLY BE LOOKING BACK OVER YOUR SHOULDER AT WHAT HAS BEEN ACCOMPLISHED IN THE LAST “X” AMOUNT OF MONTHS. These guys just tend to get things done, period. It’s never as quickly as we would have wished but go back a year and list out what has been accomplished in that year. Most junior explorers that I’ve worked with in the past spend 80% of their time trying to raise money as they dilute the share structure to death. That’s just the norm. There’s a reason why there’s only 70 million O/S. We have zero problems accessing capital, we have ZERO “cost of capital” and we still own 100% of all of the assets. How the H— did that happen?
One source of frustration for many that have been active in mining investments is the apparent lack of promotion by management. There has been ZERO audience development using the standard promotional activities. But if you think about it, the average junior explorer is highly motivated to crank up the promotion. This is because the share price is the “currency” used to pay for the drilling out of a project in order to block out MR/MR in order to attract a major. A higher share price minimizes the dilution induced by the need to constantly sell shares in order to get noticed. The incentive to toot the horn isn’t there for Auryn (quite yet) like it is with other junior explorers that don’t have a “Sugar Daddy” and that don’t have early production opportunities that can crank up the EPS figure rapidly. I think that we investors are trading a prompt payout for a much larger payout that comes a bit later under these circumstances.
VALUATION OF THE OTHER MESOTHERMAL VEINS
The first thing I did here is to name the other mesothermal veins so that I could keep them straight. I’m assuming that the DL1 (“Don Luis1”) Vein is indeed the vein they intercepted on September 29,2021. The other veins are: 1) the June 23 vein, 2) the Aug. 12 Vein, 3) the Don Enrique Vein, 4) the Leopoldo Antonino Vein, 5) the “new vein north”, 6) the “new vein south”, 7) “massive Vein 1” 8) “massive Vein 2”, 9) the Merlin 1 Vein at the Caren Mine, 10) the Merlin 3 transverse Vein, and 11) the Fortuna Este Vein. To my knowledge, veins #7 and #8 have not been intersected yet in the Antonino Adit but they were over 2 meters wide at surface and one sampled over 10 gpt at surface.
There is a lot of VALUE here but it is tough to formally define at the moment. They will no doubt add enormously to the mine life. I’ve been treating them as a “package” of mesothermal veins. The value of this “package” of veins will no doubt blow the value of the DL1 Vein out of the water but for now I’m basically assuming that the value of this “package” will be north of 3-fold that of the DL1 Vein. I think that’s being ultra-conservative. Through time, I would imagine that perhaps working faces number 8 through perhaps number 28 will come from this package. This is kind of how El Penon was developed through time by Meridian and Yamana. I have no clue as to the timing of such a build-out.
As we learn more about the DL1 we’ll be able to gauge its effect on the value of the “package”. For example, if the DL1 widens nicely with depth and increases its grade with depth then this “package” will gain value in the eyes of the mining community. As far as the Merlin 1 Vein/Caren Mine, we do know quite a bit about it. The similarities to the DL1 are noteworthy. This will probably be the second major vein to be developed being that the Larrissa Adit is already in place. For now, I’d look at this “package” as SCALABILITY and OPTIONALITY enhancers. Management will no doubt go after the fattest and richest veins the soonest. THERE ARE PLENTY OF OPTIONS AVAILABLE FOR MANAGEMENT TO GO AFTER AND PLENTY OF POTENTIAL WORKING FACES AVAILABLE TO INCREASE THE “SCALE” OF PRODUCTION. Recall that Level 1 and Level 2 of the “Old Fortuna Mine” already have their own independent access adit and that the recent samplings from the intersection of Shaft 1 and Level 2 had some off the chart results. I’m going to assume that Level 2 is going to need some widening.
CONSIDER BUILDING A SIMPLE MATRIX IN ORDER TO PROVIDE AN “AT A GLANCE” LEARNING OPPORTUNITY
What I did is built a matrix with the 11 or so mesothermal veins listed across the top of the horizontal/”X” axis. The vertical/”Y” axis denotes the depth below surface. My vertical axis components for now are “0 meters” which covers the surface trenching results at the various veins, then 60, 120 and 180 meters of depth. The 180 meters of depth row lists the findings at the Antonino Adit. In each box, I list the width of the structure and the average grades found. The top row is pretty well filled in with trenching results. The DL1 column is pretty well filled in with the historical production grade average of 64 gpt gold where the width was about 0.4 meters. I’m very anxious to fill in the width and grade data in the DL1 column at the 180-meter (Antonino Adit) level. Management has already told us that “ALL INDICATIONS TO DATE ARE THAT THE STRUCTURES ARE WIDENING WITH DEPTH AND GETTING RICHER WITH DEPTH”. We already suspected this after Sillitoe confirmed that we are dealing with a somewhat rare mesothermal vein system.
The vein widths up near surface were pretty narrow within the DL1 Vein. The average was somewhere around 0.4 meters. You might have noticed that within the Antonino Adit at the 180-meter depth level, management just hit a vein with a width of 1.2-meters. Where they’re working now, near what they feel is the intersection with the DL1 Vein, all of a sudden the “ramifications” that project out from the vein proper are “over 1 meter in width and the mineralization width is well over 2 meters”. Kevin made the comment, “if the ramifications are over 1-meter in width, how the heck wide is the vein itself going to be?”. For me, anything in the neighborhood of from 1 to 1.5 meters will have me doing cartwheels (albeit probably not very good ones). That would allow me to look at the matrix and assume with a greater confidence level that all of those 11 or so veins will probably widen in a similar fashion JUST LIKE THE MESOTHERMALS TYPICALLY DO.
SUMMARY
I think you can recognize that the story developing here has a lot of moving parts. You might be able to appreciate why management would have a tough time telling the story and doing it justice. I sense that when Kevin and Maurizio met in NYC twice in the last month or two, committing to doing a better job in communications was high on the priority list. Since those meetings, you might have noticed that we’re getting a lot of video feed on what’s going on down there. This is much appreciated. I’d highly recommend studying the heck out of the “Gallery” portion of Auryn’s website. The pictures are time-stamped and you can follow developments in a serial fashion. I’m going to push to get more captions included because a lot of people don’t recognize that which they’re seeing. My advice would be to keep in mind that this management team is NOT very promotional. At the Auryn “informational meeting” in LV a few years ago, being a detail freak, I took about 20 pages of notes for fear I might forget something I learned. One of the things I circled was how Maurizio made the statement “the share price will take care of itself in due time”. He also made it very clear that the junior exploration industry is based on speculation and is not for “widows and orphans”. What really blew me away is that he even asked those of us who were going to share our notes with others to include a copy of the “safe harbor” boilerplate statement seen on the bottom of all press releases nowadays.
Any professional geoscientists that have happened along this investment forum are more than welcome to chime in especially on the interpretation of the “Gallery” pictures. Geology is very honest. You can see some shiny yellowish stuff in a rock sample and assume it’s gold. What you might not appreciate is the fact that “pyrite” (fools gold) and chalcopyrite look somewhat similar to gold to the untrained eye. Pyrite has a brassier look to it than gold, it’s brittle and often presents in cubic-looking formations with striations. Gold is yellower and much softer. Chalcopyrite looks like gold but it has what they call a “submetallic luster”. It’s not as shiny. The Professional Geoscientists in the adit cheat. They’ve got a “PIMA” in one pocket that shoots out a certain wavelength of light that bounces back to the “gun” and the type of rock flashes up on the screen of the “gun”. They also have a “streak plate” in their vest pocket. These are made of unglazed porcelain. When you scratch a shiny goldish-looking rock sample on it, gold will leave a yellow line or “streak”. Pyrite will leave a brownish-black “streak”. Chalcopyrite will leave a distinct greenish-black “streak”. In a lot of the Gallery pictures you can clearly make out visible gold, visible copper and visible silver. I mentioned a couple of days ago that a lot of our gold is carried in ugly bands of dark gray to black “ginguro” in the samples that show “banding”.
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Wow Scott, Sorry… I hope you can recuperate some losses in the near future. Welcome to the mining play.
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Couple large trades in the last 10 minutes
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Yes the was a weird period looks like someone all of a sudden stared dumping and someone else bought back into it, 22 mil shares.
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Large blocks of MDMN and AUMC changed hands today.
More than $75,000 in MDMN plus $200,000 in AUMC – this is starting to almost approach, you know, serious money!
What can a market neophyte like me infer from it? Anything?
Answers containing wild speculation explicitly welcomed here.
– madmen
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Nice to see someone drop about $200 grand
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Hi Madmen,
Some thoughts:
- The AUMC “market overhang” looks like it will be de minimis from here on out if good news should appear. The total “float” of AUMC is 3.9 million shares and 3.5 million of that is held by the Cerro shareholders who are way under water. So, a big % of the non-Cerro float just went bye-bye.
- Maybe we attracted the attention of a “whale”. Is this her or his opening salvo or did they shoot their entire wad in 10 minutes. Monitor for follow through.
- It’s possible that part of the Medinah selling was directed towards AUMC buying but I doubt it. The ratio has been clinging to that 200-to-1 ratio pretty tightly lately. Now all of a sudden it’s 300-to-1. Auryn’s PPS can “pull” Medinah’s PPS up or Medinah’s PPS can “push” AUMC’s PPS up. I’d bet on the former and not the latter but there will be arbitrage opportunities which might provide liquidity anyways.
- If the AUMC PPS runs like a rabbit then Medinah will follow because of arbitrageurs like me. On the day of the allocation and distribution of AUMC shares the ratio will be EXACTLY 200-to-1.
- I like the idea of the insane tightness of the AUMC share structure spilling over to Medinah in an indirect fashion. All of a sudden 2.8 billion shares is indirectly tight. Hard to figure.
- Somebody may have gotten a heads up on the width of the DL1 Vein at the intersection with the Antonino Adit. If that thing comes in at 2-meters width then about two-thirds of the working face will be the good stuff instead of half as presented earlier in those calculations.
- I’ve often thought that the place to be in a situation like this is at Enami where they calculate the grade of the ore being shipped. “Hay amigo, look at this”.
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Yes, quite strange. I wasn’t watching the trading today. Was it an “arranged” sale and repurchase? Are brokerages allowed to buy from companies in advance of an imminent distribution of shares of a related stock they know they’ll be short on when distribution occurs? Did someone’s estate liquidate? Or maybe something as simple as Medinah getting ready to “go away” after distribution occurs. Here’s the thought I had quite a while ago. 
Whatever is transpiring, I’m inclined to think it is laying the groundwork for something good coming to shareholders.
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Metrics are important, especially if one is diversifying into the companies listed in the S&P 500 or GDM Index funds, rather than the very risky speculative stocks many here seem interested in. I like and have investments in some of the GDM listed funds:
GDM_Index_Composition GDM0319 .pdf (39.0 KB)
However, an old (2016) Motley Fool article has more relevance for what we may be anticipating for AUMC (and MDMN) in the hopefully not to distant future. You may want to follow the highlighted “it’s cah flow per share” link in the article below. Looking forward to a relaxing weekend of pleasant reading and DD.
My favorite metric for gold and silver stocks
It’s cash flow a perfect measurement? Well, no. It doesn’t tell me anything about whether or not a company is profitable, it doesn’t give me any idea of what sort of debt or solvency issues a company might be facing, and it certainly doesn’t tell me anything about future cash flow expectations. These are metrics and findings that I would get by analyzing a full income statement and balance sheet, as well as by listening to commentary from management at least once each quarter. And make no mistake about it, I wouldn’t suggest investors overlook or ignore other important metrics when analyzing gold and silver stocks. But when it comes to the most important metric to me with mining stocks, it’s cash flow per share.
(My Favorite Metric When Analyzing Gold and Silver Stocks | The Motley Fool)
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Easy. The point of my providing that table is simply to show what the actual P/E of the “blue chip” gold and silver producers ACTUALLY is today. Even suggesting that AUMC could be trading at a $800M to $1B valuation on 18koz of annualy production (let along 100koz) is so beyond insane that I decided to simply provide a valuation table as any longer response to BB’s “analysis” would require a trip to the Metaverse.
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Looks like some washed trades. For tax/.account journaling purposes.
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Nice to know Baldy, thanks for the explanation of the relevance that you obviously knew would be of interest. I couldn’t figure that one out for myself! You have excellent research and analytical skills. Also, I forgot the forum doesn’t support the PDF file in my previous post, so here is a snapshot of the stocks in the GDM index you referenced…and yes, I have long positions in all the stocks listed in that highlighted Motley fool article “it’s cash flow per share” link which I hadn’t actually seen before today.
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