Auryn/Medinah - 2021 - 2nd Half General Discussion

Here are some pictures to put a visual to those massive dreams this site has.


This might be how it looks in the mine shaft now. The is how the new loader will look when going balls to the wall… You need to do a lot of drilling and blasting to feed this hungry beast. But still small potatoes to some underground mining where large ore truck spiral down ramps hundred of feet to bring ore back to the surface. * This is how you pursue the ore body when you can’t dig the open pit any more do to safety concerns. You go underground.
image
With any type of mining, one has to find a spot to put the material. Harder on top a mountain.

Thanks for your response. Another wide gap between you and Baldy is the AISC estimate. He’s at $1,200 and you are at $700. He thinks 11x EPS is generous, you are using 20x.

It’s head scratching how two very intelligent individuals in this arena are so far apart when it comes to dilution, AISC, EPS just to name a few.

I put my estimates somewhere in between.

I like that Kevin is bullish and thinks $14pps is attainable. By your 40:$40:4 rule of thumb, and assumed no major dilution necessary to get there, $14pps is achievable.

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Thanks CS. One day there will be pictures like that to show for the Alto, but for now we can dream of the day. I don’t think we have any new comers here yet, but for anyone forgetting where things are at on the mountain I have a couple of overviews, The first one is where the new tunnel entrance is located. Note the red position marker in the lower right hand corner noting North.

Below is a view that is marked in the foreground showing the location of the Caren Veins Adits entrances. Again the red orientation arrow points North. There are a lot of areas awaiting production.

How many veins did BB say there were between the Caren Adits and the Fortuna?

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Hi JimmyP,

In mining, a lot of the costs are FIXED and based on a PER TONNE MINED or PER TONNE PROCESSED basis. Labor is one of the largest costs. I like to think of costs in terms of cost per “blast cycle”. In an underground project, each blast cycle involves the miners drilling a dozen or so holes into the working face of the adit, stuffing the holes with dynamite or ANFO and blowing it up. They then let the dust settle and scoop up the ore and deliver it to Auryn’s on site crusher and then deliver the crushed ore to ENAMI where it is processed. At the Fortuna project, each blast cycle produces about 50.4 tonnes of ore. WHETHER THAT ORE GRADES OUT AT THE NORMAL 6 OR 7 GPT ORE IN MOST UNDERGROUND OPERATIONS OR 45 GPT ORE LIKE AT THE DON LUIS 1 VEIN, THE MINERS WILL BE PAID THE SAME AND ENAMI WILL BE PAID THE SAME. Actually, ENAMI charges less per tonne processed when you send them high grade ore. This is because they will pay you copper, moly and silver “byproduct credits” if the ore grades are over 25 gpt gold.

When you’re talking about the economics of a mining operation, you can talk in terms of what you’re paid per tonne of ore processed and the costs per tonne of ore extracted or you can break it down into what you’re paid per ounce of gold produced (about $1,800 per ounce) and what it cost to produce an ounce of gold. When you’re dealing with extremely high-grade ore like that present at the DL 1 Vein, the relatively fixed costs per tonne get spread out over a lot more ounces than in the case of the operation next door mining 6 or 7 gpt ore. Thus, the cost on a PER OUNCE basis is extremely low compared to the mine next door. There is an inverse relationship between the grade mined and the cost “per ounce” mined. Last year, the average “All In Sustaining Cost” (AISC) worldwide to mine an ounce of ore was $907. An average ore grade of 45 gpt gold is EXTREMELY high. On a per ounce basis, the cost to produce that ounce of gold is going to be EXTREMELY low when compared to operations dealing with ore grades of 6 or 7 gpt gold. The guys next door are still probably making a lot of money at $1,800 gold but an operation mining 45 gpt gold will blow it out of the water from an economics point of view. My gut feeling is that once Auryn starts hitting on all cylinders, their costs will be well below that $700 figure. If that comes to fruition, then multiply the number of ounces produced per year by $1,000 to get an estimate of potential profits.

As far as your question about the proper EPS multiple to use for an operation like Auryn’s, the new producers able to grow their production by a couple of hundred per cent in a hurry won’t trade by multiples of EPS. Smart investors will factor in the “PEG” ratio. This is the EPS ratio divided by the projected 5-year growth in production. The lower the “PEG” ratio, the better an investment represents. If a major miner is trading at 20-times earnings and has a projected 5-year growth rate of 20% then its PEG ratio will be a somewhat neutral! If a new producer is trading at 20 times earnings and it has the ability to increase the number of working faces it produces 10-fold (900%) in 5 years, then its PEG ratio would be 20 divided by 900 or .022. What’s the better buy? A PEG ratio is much more accurate than an EPS ratio. I intentionally put my 20 times earnings ratio knowing it was grossly conservative.

Notice the relationship between GRADES and PROFITS. High grades give you low costs when dealing on a “per ounce” basis. When dealing with $1,800 gold low costs give you higher profit margins and higher earnings per share (EPS). The higher growth rates belonging to a brand-new producer able to go from 1 to perhaps 6 working faces rapidly, will command a much higher EPS multiple than the norm. Let’s say maybe 40 or 50-times but only for a while until the growth inevitably plateaus out. Being able to multiply a much higher MULTIPLE of EPS times a much higher EPS because of low costs on a “per ounce” basis allows for significant potential share price enhancement.

Below is an article on PEG ratios:

What’s Considered a Good PEG Ratio?

J.B. MAVERICK

Reviewed by

AMY DRURY

Updated Aug 12, 2021

The price/earnings to growth ratio, or PEG ratio, is a stock valuation measure that investors and analysts can use to get a broad assessment of a company’s performance and evaluate investment risk. In theory, a PEG ratio value of 1 represents a perfect correlation between the company’s market value and its projected earnings growth. PEG ratios higher than 1 are generally considered unfavorable, suggesting a stock is overvalued. Conversely, ratios lower than 1 are considered better, indicating a stock is undervalued.

PEG Ratio vs. P/E Ratio

The price-to-earnings (P/E) ratio gives analysts a good fundamental indication of what investors are currently paying for a stock in relation to the company’s earnings. One weakness of the P/E ratio, however, is that its calculation does not take into account the future expected growth of a company. The PEG ratio represents a fuller—and hopefully—more accurate valuation measure than the standard P/E ratio.

The PEG ratio builds upon the P/E ratio by factoring growth into the equation. Factoring in future growth adds an important element to stock valuation since equity investments represent a financial interest in a company’s future earnings.

Calculating PEG Ratios

To calculate a stock’s PEG ratio you must first figure out its P/E ratio. The P/E ratio is calculated by dividing the per-share market value by its per-share earnings. From here, the formula for the PEG ratio is simple:

\begin{aligned} &\text{PEG}=\frac{\text{P/E}}{\text{EGR}}\ &\textbf{where:}\ &\text{EGR = Earnings growth rate over five years}\ \end{aligned}​PEG=EGRP/E​ where: EGR = Earnings growth rate over five years​

The PEG calculation can be done using a projected annual growth rate for a longer period of time than five years, but growth projections tend to become less accurate the further out they extend.

An Example

If you’re choosing between two stocks from companies in the same industry, then you may want to look at their PEG ratios to make your decision. For example, the stock of Company Y may trade for a price that’s 15 times its earnings, while Company Z’s stock may trade for 18 times its earnings. If you simply look at the P/E ratio, then Company Y may seem like the more appealing option.

However, Company Y has a projected five-year earnings growth rate of 12% per year while Company Z’s earnings have a projected growth rate of 19% per year for the same period. Here’s what their PEG ratio calculations would look like:

\begin{aligned} &\text{Company Y PEG = 15/12% = 1.25}\ &\text{Company Z PEG = 18/19% = 0.95}\ \end{aligned}​Company Y PEG = 15/12% = 1.25Company Z PEG = 18/19% = 0.95​

This shows that when we take possible growth into account, Company Z could be the better option because it’s actually trading for a discount compared to its value.

Other Factors to Consider

The PEG ratio doesn’t take into account other factors that can help determine a company’s value. For example, the PEG doesn’t look at the amount of cash a company keeps on its balance sheet, which could add value if it’s a large amount.

Other factors analysts consider when evaluating stocks include the price-to-book ratio (P/B) ratio. This can help them determine if a stock is genuinely undervalued or if the growth estimates used to calculate the PEG ratio are simply inaccurate. To calculate the P/B ratio, divide the stock’s price per share by its book value per share.

The Bottom Line

Getting an accurate PEG ratio depends highly on what factors are used in the calculations. Investors may find that PEG ratios are inaccurate if they use historical growth rates, especially if future ones may deviate from the past. In order to make sure the calculations remain distinct, the terms “forward” and “trailing” PEG are often used.

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In my humble opinion this valuation analysis is highly flawed.

First: miners reach a somewhat lofty PE of 20x when they have a delineated mine life. If the life of the mine (as measures by a mine plan or established reserves) is only five years, they won’t be gettiing a PE of 20 for pretty obvious reasons. MDMN has no mine plan nor reserves so establishing any sort of valuation multiple is simply guess work.

Second: assuming 45pgt over any extended period of time is absolutely nuts. I guess this will be the highest grading mine in the world? I have no doubt BB might actually believe this but using a sparse grab sample metric to extrapolate anything beyond anamolies is just irresponsible.

Last: while I would agree that higher grades typically reduce the ASIC this really isn’t applicable to a pseudo artisinal mining operation with a handful of men and a couple trucks. There’s nothing mechanized here and claiming that a dig and blast strategy will a) produce consistently “through the roof” high grades and b) at a lowest decile cost (comparable to Kirklland Lake) is just wrong. Add in all of the issues with tolling agreements and you just can’t get a $700oz ASIC.

You certainly don’t have to believe me, spend some time evaluating similar scale operations to understand how outlandish some of these claims really are.

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From Baldys post: *Last: while I would agree that higher grades typically reduce the ASIC this really isn’t applicable to a pseudo artisinal mining operation with a handful of men and a couple trucks. There’s nothing mechanized here and claiming that a dig and blast strategy will a) produce consistently “through the roof” high grades and b) at a lowest decile cost (comparable to Kirklland Lake) is just wrong. Add in all of the issues with tolling agreements and you just can’t get a $700oz ASIC.

You certainly don’t have to believe me, spend some time evaluating similar scale operations to understand how outlandish some of these claims really are.

You’ve hit the nail on the head with that paragraph. This is a exploratory mine as of now. And will be for _ _ _ _ ? you take a guess at it. Next year? A couple years? 5? 10? 15? You have to look at it all realistically. They hardly have a place to dump tailings or store more then a weeks worth of ore. And a switch back one lane road down the mountain isn’t going anywhere fast.
I love to dream of the projective perspectives B. B.talks of. Maybe someday.
But put it in perspective “now”. Think about someone trying to open a gravel pit up in your town. From start to where they would be profitable would be 2-5 years. A mouse of a mine. And that is just a pull back the top soil and dig type of mining.
This is a whole different animal…
The only boys that could pull this off in as short time that many dream of,
is the Chinese!, In their own country!
Hay, my hat goes out to our guys, drilling, blasting, and digging out. They are doing GREAT for what “they have”. But mining just doesn’t scale up fast.
Big mines, take time
iu-2
12053_12053_921_Palcich_1047c.gif

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Coldsnow, I’m of course interested in what you have to say, as we like to consider all points of view, even those of skeptics. Valuable either way - we need it to remain grounded.

But what I’m seeing here is we will be mining prolific VEINS. We will not be digging up hundreds of thousands of yards of ore bearing disseminated gold. And from where I’m standing (a layman), it seems things could get very economic very quick.

Take the situation to the EXTREME for a moment. If we had an adit which contained a vein chock FULL of gold, say 10 feet wide by 10 feet tall, 100% gold. All we would have to do is conduct one blast per week, let’s say, and then carry the gold straight to the mill to be cashed in every day until we need another blast. It seems like that process would generate a load of money, no?

So what we have at the ADL is of course MUCH, MUCH less than that, but you get my drift. Blast and then carry off. A few guys to blast, and a few more guys to scoop and then carry it off - then add a geo or two to figure out where to blast next. The only question being HOW MUCH in grade and how little in the way of extra, non-valuable material that we waste time on.

I’m under NO illusion that we can simply press a button and get the kind of grade and production we’ve been throwing around here. In my limited experience, even 10 grams per ton seems to be VERY high. But, I look at the historic grades of >45 grams per ton mined at the ADL (and cited by the more knowledgeable investors here) and the thoughts opinions of Perez, Howe, Sillitoe, et al, and I find myself having to at least CONSIDER just how prolific the ADL could be. The ADL was not continuously mined by artisanal miners for 30-something years for nothing.

I invested a little in Novo Resources. They have a mill (bought and paid for), and I have to say only GOD knows the huge challenge it will be for them to get to 100,000 ounces. They’ll be happy to continue getting just under 2 grams per ton from their ore. Of course, they are dealing with coarse gold in Western Australia, like watermelon seeds spread throughout - so they have to run an awful lot of ore through the mill to get the 2 grams per ton. Just to put things in perspective.

But, it seems to me the ADL is a different animal - a LOT of gold in VERY narrow spots (veins with visible gold) - easier to get access to - and the mesothermal sources of these veins could be the SAME thing, all in one spot, easy to get to, but one heck of a LOT more prolific.

Am I wrong here?

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Nobody on this board knows because there simply isn’t enough data. But the laws of mining, grades, logistics, etc are empirical and throwing out 100k oz production scenarios would instantly discredit any individual in a “normal situation.” Unfortunately on message boards the greed to make money supersedes rational analysis and hobby geos actually have a voice.

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Long-time MDMN holder and lurker here.

I bought a bit more yesterday vis Schwab and had a couple of orders still open as of this morning, which were filled immediately upon market open. I then tried to place a couple more and it looks like the 15c2-11 change has caught up with MDMN on Schwab at least and they’re only allowing transactions to close a position.

I’m guessing this will mean a precipitous drop in price as the demand side evaporates.

Any word on the status of coming into compliance with reporting requirements?

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You’ve repeatedly asked me how we get to $20M profit near term. We all understand your point that 45gpt is not sustainable on a huge scalable figure. And that AISC will increase when mining lower grade ore in the future.

But if we are talking about the high grade that will be produced initially, is it outrageous to think that we can produce 20,000 Oz from high grade at $1,000/oz profit next year if we are working off a couple faces at 40tpd each? You said there’s no mechanization and $700 Oz AISC is absurd, but BB is pointing to the fact that mechanization will not be needed initially.and AISC is much lower when dealing with high grade ore. So we are getting down to the root of the disputed theories here. And btw, I think both of you guys are brilliant in your own way and appreciate both of your inputs on the matter. I’m much more optimistic about the possibilities than you, that’s all. And I’m trying to narrow down exactly where your and BB disconnect is.

You are disputing the likelihood that there is 20,000 Oz of high grade that can be mined artistinally as you keep saying it’s irresponsible to site grab samples and extrapolate. Well it’s not just mere grab samples, it’s corroborating that with the characteristics of mesothermail vein systems and Auryn’s public acknowledgement that grades are actually increasing as it goes deeper. Regardless, let’s focus on nearterm…

If we can produce 20,000 Oz next year by the blast and scoop methodology at grades averaging 45gpt, $20M profit is very realistic. Maybe I’m way off, can you and BB focus on why that is or is not possible. We all get that scaling future production requires an infusion of money, but if we can yield $10M-$20M off the high grade, we can invest that into mechanization and scale future years profits even higher. We don’t think that’s crazy, and apparently MC doesn’t either.

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Numbers don’t lie - and investors are well-advised to RUN NUMBERS to prove their theories and then proceed. I don’t think a person is required to be a GEO in order to invest in the mining/exploration sector.

I was reading an article about Sprott recently, and saw the following quote:

“Sprott said he focuses solely on the deposit and how big it could be. Though he has no education in geology, he said he has devised his own valuation method, which involves looking at a few variables to determine the potential size of a deposit.

“I want to turn it into numbers, like, okay, what could this thing earn? he said. You know, you multiply the strike by the depth by the width by 2.7 specific gravity times the ounces — it’s just four or five things you’ve got to multiply, five things.

“People close to him said he studies junior mining companies and can recall the details of his investments better than most fund managers.

“The guy gets up at ungodly hours, he might get up at 2 a.m. studying, said Conor O’Brien, a former capital markets manager who joined Sprott in May to help with the investment blitz. Neither one of us are geologists, we’re just financial people that can do mathematics, as opposed to the geology. We more kind of conceptualize, and dream and kind of multiply.”

Schwab won’t allow MDMN buys, just sells.

Order Messages

  1. Your order cannot be accepted. This security MDMN is accepting closing transactions only. (DO911)
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1h

Schwab won’t allow MDMN buys, just sells.

Order Messages

  1. Your order cannot be accepted. This security MDMN is accepting closing transactions only. (DO911)

**unleash the dividends…

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Despite claims that MDMN is doing the “smart” thing by not spending the money to stay current, I think most investors who can’t buy would argue otherwise. The risk that the stock goes down, considerably, for technical vs fundamental reason is real and should be totally unacceptable to shareholders. One could argue that it doesn’t matter because the dividend won’t change but those who have to sell shares for liquidity reasons won’t take much solace. I guess it could offer a good opportunity for arbitrage if the stock goes low enough, for those who can actually buy.

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Got an email from TD Ameritrade saying that they have adjusted the date for restricting the securities to on or after September 3 after that date you can only liquidate. After the amendment officially goes into effect September 28th it may be more difficult to liquidate this security. Hope the company takes care of this issue before then or even better give us our Aumc shares.

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Assuming 45 gpt is just that. An assumption. How long did it take to get the 40 or so tonnes that they shipped to ENAMI. I suspect that this was all hand cobbed to improve the grade. i doubt very much that it was run of mine ore. To assume that there will be faces grading 45 gpt is just wishful thinking. IMHO

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Hi DoneDeal,

For Medinah, it’s a two-part process to get back into the good graces of both Nevada’s Secretary of State’s office and re-establishing compliance with the the OTCPinks “Alternative Reporting Standards”. I spoke with the OTCMarkets yesterday and there are 6,300 corporations that this new rule affects. A lot of development stage issuers that are not yet cash flow positive have chosen to “go dark” in order to save money and thereby prevent DILUTION because the sale of shares to pay off accounting bills is pretty much their only option. The OTCMarkets is financially motivated to get these corporations back paying fees to them. The SEC and FINRA make the laws but in this case the OTCMarkets is the party to declare a Medinah-like company “in compliance” with their various information disclosure requirements.

Medinah doesn’t have to provide audited financials. They have to provide an attorney letter and unaudited financials to get back into compliance. Medinah already completed the first step which was to get back in the “Active” status with the Nevada Secretary of State. This was accomplished recently. I think that common sense would dictate that they wouldn’t have done that if they didn’t figure on filing the financials and attorney letter with the OTCMarkets. The missing financials (about 10 quarters worth) still need to be uploaded onto the OTCMarkets website and the attorney letter also. I was told to keep an eye on the “DISCLOSURE” heading under the OTCMarkets Medinah webpage.

Recall that Medinah has a second source of incentive to become compliant with the OTCMarkets. As you probably remember, the “Baumann group” recently tried to take over Medinah via a custodian maneuver. Medinah apparently retained a lawyer that told the hearings officials that Medinah is not an assetless shell in need of a custodian. The hearing officials were told that Medinah was going through the steps necessary to re-establish compliance with the OTCPinks “Alternative Reporting Standards”. The motion was vacated.

From my view, it looks like there are four different timing issues. First, there is the September 28 deadline in which market makers will be forbidden to provide quotes for OTCPink issuers that aren’t filing their information disclosures. They can still make markets but only on the “gray sheets” which doesn’t have very good visibility of the highest bids and lowest offers. Second, there is the date on which Medinah’s financials are uploaded onto the OTCMarket website under “Disclosure”. Third, is when an investor or shareholder’s broker/dealer will stop taking buy orders for Medinah stock. Fourth is the date when the AUMC shares held in Medinah’s treasury will be distributed. Medinah management has made it clear that the plan is to allow development results to result in an appreciation of the share price of AUMC so that less AUMC (or AMNP) shares need to be sold in order to satisfy Medinah’s remaining debt obligations.

No matter what happens regarding these various timing parameters, any investors wishing to invest in the ADL Mining District will have the opportunity to buy AUMC shares. This might result in the price of AUMC pulling away from Medinah’s PPS if people have trouble buying Medinah. I imagine there would be some elasticity involved if Medinah were to suddenly become compliant. The advancing share price of AUMC might “pull” the share price of Medinah back into more of an equilibrium status. Who knows?

I think the TMP forum participants might want to get organized and inform other participants of which broker/dealers are allowing their clients to buy Medinah up until the September 28 deadline just in case Medinah doesn’t become compliant prior to that date. The September 28 deadline is about 5 weeks away right now.

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This China made truck they bought a while back is advertised by China,
as being rated for 40 ton? Wink Wink. Their big loader they bought could load truck with 5–6 scoops. One good blasting can get you about a third of a bucket load. They could drill, blast, clear smoke, flake the ceiling for loose rock, pull back rock(clean up)with little skidder, and repeat about 3 to 5 times a shift. If your balls to the wall.
Then::::
How long does it take to get 40 tons off the mountain to the ENAMI smelter?
Depends how big of ÖÖ the driver has. This is the china made 40 ton truck . Its most likely a manual. It can be loaded with 40 ton??
But I bet they don’t put that much on it for that roller coster drive down that switch back road.
And that" has always been the fiendish joke Mother Nature played on mankind when it comes to precious metals. She put it in some precarious places to get at. Like on top a mountain

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ETrade - you can only SELL MDMN shares after tomorrow (you will no longer be able to BUY them), Friday, August 27, 2021. This is what ETrade e-mailed to all of its customers a couple weeks back:

After Friday, August 27, 2021, ETRADE customers will no longer be able to buy Impacted OTC Securities through ETRADE. ETRADE will restrict new buy orders in Impacted OTC Securities prior to the regulatory enforcement date, as it may become more difficult to liquidate such securities after the compliance deadline. While ETRADE will accept closing orders to liquidate positions in these securities after the amendment goes into effect on September 28, 2021, it may be more difficult to sell these securities, as quoting and market liquidity may be very limited.

Post on IHUB

Just received an email from Raul. They are now working on being compliant with the regulatory requirements.Should be ready by September 28th.

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