On Jan. 03, 2011, MDMN hit a high of .19. At the end of calendar year 2010 there were 698 million shares OS (reported). That equates to a fleeting market cap of $132 million.
FYI…this was a painful walk down memory lane.
3 Likes
Lots of good discussion; we’re actually advancing the discussion instead of turning to insults. That’s refreshing. Some thoughts:
- Geology and geochemistry is extremely complicated. When comparing deposit to deposit be careful because there are a gazillion factors out there that you just can’t extrapolate from one deposit to another. Intra-deposit comparisons are much more trustworthy. SMFL was exploiting the Fortuna Centro Vein (now the Don Luis 1 Vein or DL 1). Their efforts were made up near surface. Auryn is working both within that previous mine and at about 150 meters “down dip” below that level within the very same vein. Comparisons and expectations are going to be a lot more trustworthy within the same structure.
- SMFL made money IN THAT VERY SAME STRUCTURE at a time when the POG was $35. Sure, costs are up but not that much.
- SMFL had no access to IP/IR studies, to hyperspectral satellite surveys, to exhaustive trenching programs, etc. They saw an outcropping of ore and they simply chased it where it went.
- They didn’t fly Dick Sillitoe over from London to get his impressions on whether the veins were epithermal or mesothermal or to do an analysis on the district and regional levels. Recall how Maurizio went next door to the North and tied down the Colliguay Mining District/Empressa Caballo Mine.
- Porphyries, breccias and epi-and mesothermal vein deposits tend to occur in clusters within volcanic arcs within subduction zones. In Chile, the most famous subduction zone on the planet runs from north to south parallel to the coastline. It’s called a volcanic “arc” because the earth isn’t flat; it has a curvature to its surface.
- In that annual list of “The World’s Top 10 Gold Mines By Grade”, the fact that the DL 1 Vein doesn’t appear doesn’t mean that the grades reported from it are somehow not credible. If you look at the fine print, those mega-mines are all well-established and they have blocked out MR/MR. The rankings are made by the grades of the proven and probable reserves at those mines. The DL 1 Vein has no MR/MR yet.
- If the mine were for sale, which it is not, Maurizio would have to dilute the share structure, and sell shares at what he would judge to be ridiculously cheap levels compared to the PPS level attainable by simply putting the mine into production.
- If you know the vein structure well, you can make an absolute ton of money by going into production without paying tens of millions of dollars for a fancy 43-101 F-1 Technical report.
- A good example has to do with the recent comment by Luis De Ls Terra from San Sebastian University. He is intimately familiar with the El Penon mega-mine of Yamana Gold up in the Atacama Desert. He suggested that Auryn could have a similar situation at their mesothermal veins. I’ve got to be careful here because my former college roommate and fraternity brother ordered a lot of the drilling on that deposit. They drilled and paid for 3 MILLION METERS OF DRILLING at that deposit. Yamana is a wonderful company but they now have just shy 1 billion shares O/S, a $4 share price and a $4 billion market cap. They have one of the most beautiful NI 43-101 compliant F-1 Technical Reports I’ve ever seen. They blocked out “X” amount of ounces of MR/MR and they know the anatomy of every gopher hole on the deposit. But they’re still producing “Y” amount of ore from their underground veins and they also have a small open pit area. That’s one way to do it IF YOU NEED TO SPEND THAT MUCH MONEY TO ATTRACT A MAJOR. (Actually, Meridian Gold did a lot of the drilling and they did succeed in attracting a major.)
- Maurizio is taking a different tact. He’s going straight into making money instead of inducing mega-dilution to fund drill programs when the PPS is lousy compared to where he knows it is about to be. There’s plenty of time later on to drill out the property if he changes his mind. Enami loans out money for drill programs with incredibly cheap terms.
- This industry had a major transformation about ten years ago. Investors got tired of management redeploying the profits into yet more drill programs designed to block out more MR/MR. When you do an analysis of mining corporation takeovers, you’ll notice that the acquirer does not pay that much money for ounces of MR/MR in the ground. Why spend today’s profits on defining that which you aren’t going to mine for 20 years? Today’s investors want cash dividends. When profits grow they want PROGRESSIVELY LARGER CASH DIVIDENDS. Early gold producers can rapidly scale up production and profits at a rate that the majors can’t match. It’s as simple as adding new working faces, adding new shifts, increased mechanization, etc. Periodically a new truck or a new wheel loader is going to be added in an incremental fashion. Yesterday management added a new 100 KVa generator. To me, that seems to be a move indicating the intent to scale up matters.
- I think we need to read the tea leaves by studying the moves of management. They know a lot more than we do. Kevin is doing a good job in closing that gap by his recent tweeting. Chile is a long way away. It sure is refreshing to see photos or videos corroborating the updates. Showing concern for anxious shareholders is a wonderful concept.
- In regards to “All-In Sustaining Costs” (AISC) as a function of GRADES, a lot of mining costs are FIXED. Whether you’re mining 5 gpt gold or 45 gpt gold, certain costs remain steady. If you deem the grades we’re seeing as being astronomically high, then you should expect the AISC to be astronomically low on a “per ounce” basis. PROFITABILITY PER OUNCE is based on what you’re paid per ounce of gold and what it cost to mine and process that ounce of gold. PROFITABILITY IN TOTAL IS A FUNCTION OF THE NUMBER OF OUNCES PRODUCED MULTIPLIED BY THE PROFIT PER OUNCE. Recall that it is GRADE that determines the number of ounces in that truckload of ore. That’s why in mining, the saying is that “GRADE IS EVERYTHING”, and it really is. REMEMBER THAT MAURIZIO HAS ALREADY CHOSEN TO BYPASS THE EXTREMELY EXPENSIVE BLOCKING OUT OF MR/MR. What percentage of the average mining company’s AISC is composed of drill programs designed to block out MR/MR? It’s a lot, drilling is super expensive. With Maurizio advancing the funds needed to go into production, there is no “COST OF CAPITAL” diluting away our shareholdings. From an AISC point of view, this is a bare bones operation. Kevin refers to it as “bootstrapping” our way into production. You don’t have management members taking down huge salaries like we see in the mining industry. You’ve got a guy that owns 65% of the action cutting all of the checks. You can’t get much more “all-in” than that. Even Enami gets in on the act with high grade deposits measuring over 25 gpt gold. They refer to this as “DIRECT SHIPPING ORE”. Enami will pay a miner for the byproduct copper and silver (in Auryn’s case) within the ore. The lower grade deposits under 25 gpt ore do not get this lowering of costs.
- Between the GRADES, Maurizio cutting the checks on a no interest basis i.e. no cost of capital and no diverting of profits into drill programs, and no inflated management salaries, Auryn’s AISC to produce an ounce of gold is going to be very low and the resultant PROFITABILITY very high.
- It would be reckless to suggest that the first cash dividend should be by “X” date. We should be confident, however, that once that first one comes out, the second one might not be far behind and will probably be slightly higher.
- The really good news is that we’re now at a point at which further speculation will not be as necessary. Soon we’ll be able to study results based on the average profitability of a truckload of ore and how many truckloads per day or month are being shipped. A pro forma statement by management of the projections related to increasing working faces or shifts would be very helpful. Then we can take pencil to paper and worry about things like anticipated production growth profiles, EPS, multiples of EPS used in this sector (30.21), PEG ratios which are much more accurate than EPS, etc.
- In the much more common epithermal vein deposit in which veins don’t widen with depth, “GRADE IS EVERYTHING”. In a mesothermal deposit in which grades and widths tend to widen with depth and the depths seem to go on forever you need to add a corollary. “GRADE IS EVERYTHING AND WIDTH IS GRADE” with the accent on the “IS”. Why is this? In a low sulphidation mesothermal vein system like this one, the gold, copper and silver tend to stay within the vein itself. If a vein at surface measures about 0.4 meters in width which translates into 45 gpt gold as in the 9 Tonne (the previous version stating 9,000 tonnes was a mistake) sample sent to Enami, then what would the grade of the ore be if that vein dilated out to a width of 4-times that figure or, let’s say, 1.6 meters? In the blast rubble, wouldn’t you have a whole lot more gold present? In this example, the grade of the ore in the vein isn’t 45 gpt, the grade of the gold in the blast rubble sent to Enami is 45 gpt-gold. That 45 gpt-gold figure is that of Enami, not management. The same goes with the production grade figures from the Old Fortuna Mine mined by SMFL that came in at about 64 gpt-gold. Those are Enami figures. There is not a direct linear relationship between GRADE and WIDTH so don’t expect a huge increase above already stellar grades. In “HIGH SULPHIDATION” vein deposits, the high acid content allows the gold ore to cross the vein-host rock boundary. Most vein deposits located in volcanic arcs like this one are low sulphidation deposits above a centralized porphyry structure and high sulphidation deposits lateral to the porphyry. Chile features a lot of high sulphidation deposits. The first clue is whether or not you have “jarosite” at surface which we do have some of.
6 Likes
Thanks CHG. I referenced Klondex for that exact reason. When I say there’s no way this thing can average 40gpt+ over any duration it’s simply based on the odds of this being the highest grading, producing mine in the world. Maybe it is? The odds aren’t there though and nobody can really come up with an equally convincing argument that I’m wrong. Using 70 year old historical data based on artinsenal mining isn’t just wild speculation, it’s nuts. Nobody is claiming that there ain’t a lot of gold in them hills but, as CHG pointed out, we’re talking about 2000 tonnes over decades!!! Were they averaging 60gpt or were they conducting a hyper-high-grade operatoin as artisenal miners tend to do? Either way, one has to make way too many assumptions to make a detrimination to grade at any sort of scale. Were the 9 tonnes sent to Enami more representative of grades to be expected? Maybe, but I can guarantee you they were picking out the good stuff before sending it off to Enami as well. It’s not difficult to do with 9 tonnes. 900 tonnes is a different story and one that I’d be curious to see play out over the next year. My guess: if an investor asked Maurizio if he expects to be grading 30pgt+ material on a consistent basis he’d say: “not likely”
As BB points out there are no reserves currently caluclated. He’s also correct that not doing any drilling to establish reserves, simply blasting and mining, is a very cost effective strategy. Especially in a cash strapped situation. However, it’s not ideal, as without reserves you’re never going to get competitive financing. Sooo, if investors are looking for this to evolve from a rinky dink miner to one that could actually justify multiple 100’s of million of market cap there NEEDS to be something beyond Maurizio throwing some personal funds at the project. At least if you plan to generate capital gains in your lifetime. Based on my opinions of grade and the current infrastructure, they shouldn’t have a problem paying back the loan but production growth will be limited.
Mining is insanely challenging. There are always negative ramifications of throwing too much or too little $$ when getting started.
If it were 9,000 tonnes averaging 45 gpt you may be on to something.
Question for you…if these veins are so rich and wide…why did Auryn say this in July
“At the beginning of the quarter, AURYN
anticipated intersecting the vein within a couple of weeks, including 10-15 meters more
of tunneling. This was not the case. It took almost the entire quarter to intersect the
vein. Several days were missed for weather and equipment related issues, and miners
encountered extremely hard rock most of the way. In total the tunnel is 125 meters.
On June 23, 2021, AURYN intercepted the Don Luis vein”
And then tell us they are still hoping to have hit the DL six months later? I’m not saying they didn’t encounter mineralization along the way but they’ve been hunting for this elephant since April when they said the following (Q1 update)
“Intersection with the Don Luis vein body is expected to take another 10-15 meters and is likely to be accomplished within a week.”
I agree that it has been “boring”. 
I believe the high was never $0.18. It was $0.1727 & $0.171 on 2 occasions.
The Jan 10 price, if adjusted to pre-split would actually be $0.19 ! Approx 712Msh.
Mar 9 price 932Msh.
Cheers,
Rod
1 Like
Only problem is this is likely 600-800 million shares too low, plus the preferred. I wish people understood how damaging the preferred shares were to common stockholders and how self-serving they were to the issuers. Also at that time those number were not being reported correctly, imo, i.e. the falsifying of signatures and selling scheme had already started.
5 Likes
Someone took out the Ask this morning on Aumc. Bid .84 Ask 1.00
Volume for the day 56,345
4 Likes
MDMN attorney letter 10/18
https://www.otcmarkets.com/otcapi/company/financial-report/307040/content
1 Like
I was doing a little El Penon research just to see what could be learned.
Of note:
EP is a large underground vein gold/silver system. It had some early open pit production but not for quite some time. It looks to contain quite a bit more silver than the ADL. At least up till now the silver grades at the ADL have been very low. But the ADL clearly has copper and moly content that I do not think exist at EP. The veins at EP are known to go down over 350m with current exploration continuing to extend the veins down dip.
EP is described primarily as a large epithermal system that is deeper than a normal system. I have seen one reference to “possibly mesothermal”. Perhaps the categorization is not completely clear and they blend over at this point.
EP in the early 2000s produced over 400,000 gold equivalent ounces per year. But they purposefully cut back production as they chose to mine more of the narrower veins which slows production. So they have gone from something like 4000 tpd to around 2000 tpd in production.
I was specifically curious about what “narrow” means. And I found this very useful Yamana site visit presentation from 2017:
https://minedocs.com/17/El_Penon_Presentation_SiteVisit_05302017.pdf
Slide 19 and 22 specifically address what “narrow” is at the time and how they were addressing economically mining “narrow” veins. At the time they had started to mine down to 1.1m but seem to have plans to get down to 0.5m width veins. There is discussion of equipment and so on.
Their mining grades are around 6 to 8 gpt Au with individual samples including 50, 100, or even 200 gpt. That sounds familiar.
Overall, especially in terms of economically mining fairly narrow veins of good but not extreme grade, I found that presentation and discussion pretty useful and encouraging that there is a known model for success here that seems to approach at least the preliminary data the ADL gold system. So for me the encouragement is less from a direct deposit to deposit geological comparison than from a technical mining approach comparison. As a caution though, anything much below 1m and especially 0.5m vein width is definitely a volume production issue unless grades are extreme world class. And that is what I was trying to figure out.
Yamana has mined over 5M Oz Au from El Penon and the expected mine life is still 10+ years. One might stash in the back of the mind that there is now at least a thread of connection between Auryn and Universidad de San Sebastian and thus indirectly to El Penon / Yamana and some actual engineering knowledge of how to have success with a system like this.
7 Likes
Yes, and this seems to validate what Prof. Luis de la Torre said:
"I have the firm belief that once La Fortuna de Lampa project goes into production, and a correct evaluation of the entire project is achieved, it will be a mining operation with very similar characteristics of El Peñon."
3 Likes
Hi CHG and Mr B,
I too have been studying that document for a while. What I like about Luis de la Tierra’s comment: “I have the firm belief that once La Fortuna de Lampa project goes into production, and a correct evaluation of the entire project is achieved, it will be a mining operation with very similar characteristics of El Peñon.” is how he’s referring to the ”mining operation” as having similar characteristics to that of El Penon. It’s almost like it’s a given that we’ve got a viable mine. As far as the “characteristics” of the deposit itself, the El Penon is making money as they produce 5 gpt gold and the gold equivalent of 2 more gpt AU via their silver production. So, you can definitely make money producing 7 gpt Au in today’s Chile.
The article is great at outlining the complexities involved in running a mine. The El Penon features both narrow low to intermediate sulfidation epithermal veins and wider, what appear to be more of a mesothermal variety of veins with much greater widths, grades and depths. They refer to the larger ones as “principal veins” and the narrower ones as “secondary” veins. They noted that the narrower/secondary veins were “related to the principal veins” and actually linked together the principal veins. The larger/principal veins are 2 to 10-meters wide and go to depths of 250 to 450 meters. At surface their “strike” is from 1.5 to 3-Km whereas the secondary vein’s surface “strike is from .6 to 1.2 Km. Our DL1 Vein has a surface strike of 1.7 Km but then it dips under the granodiorite, so who knows how much further it goes. The drawings they showed sure looked a whole lot like the surface trenching diagrams on the Auryn website. The ADL has got 6 to 8 somewhat parallel veins but then you’ve got the Merlin 3 “linking” together two of these.
On page 29 of the paper, you see a drawing they took from a paper Sillitoe delivered in the early 1980’s on “Major Au Deposits”. In the lower left, you see a deposit type labeled, shear zone hosted, greenstone hosted and orogenic. These are the 3 different types of “mesothermal vein deposits”. Note how much lower they go in the rock strata and how fat they look compared to the epithermal veins circled in red. In, Sillitoe’s report to Auryn, he cited that Auryn has one of these “mesothermal vein” types of deposits. ACA Howe suggested the same in their analysis. In reality, the meso’s tend to “telescope” into the epi’s. Recall how the ADL has an outcropping of a vein on its southern downslope off of the plateau down by the valley floor. This is “meso” territory where things like porphyries and skarns hang out.
“Hybrid” vein deposits like El Penon, give the operator the option to go after the fat veins first (sometimes called “high-grading) and make a fortune but then later on when you go after the narrower veins you need to drop down your production projections and keep a close eye on costs. It sounds like they adopted “split blasting” in which you go after the vein material itself with the first round and then the somewhat barren wall rock later. I could sure see Auryn using this mine as a template and learn from Meridian and Yamana Gold. Maurizio seems paranoid about dilution until after the share price reaches what he thinks is fair value. That’s what investors want to hear. Go after the wider, higher-grade veins first, and let the share price react. Th Antonino Adit has identified somewhere around 7 veins to date. They may or may not have intersected the DL 1 Vein on September 29. If they can locate the 2 “massive” veins, what Yamana might label as a “principal vein”, then pick the crèam of the crop and go with it. JUST DON’T DRILL 3 MILLION METERS IN A MASSIVE DRILL PROGRAM RIGHT NOW. Nice profits with only70 million shares O/S delivers a very nice EPS statistic. The industry average multiple is 30.21. Playing “SMALL BALL” can deliver big share prices. Later on, sure the production is going to plateau but then when you go after the narrower veins you do what Yamana did and settle for lesser production but still robust profits. Unfortunately, Yamana now has 1 billion shares outstanding and a $4 share price. Auryn could trade at $4 in a heartbeat. Thank you, CHG, for bringing that article to everybody’s attention, A MUST READ!
6 Likes
Doc, have you been into the nitrous oxide ? 
1 Like
Gold on the move this morning
1 Like
Spoke to soon. Gold drops after Powell says the central bank is on track to taper its monthly bond purchases. Just for him saying that brought Gold back to unchanged after a $30 rise this morning. Wow his words must be god talking
What would be a reasonable guess on the actual number of days or weeks production can take place during the year. Are we completely shutdown through the winter months? Assuming during the spring and summer months that they work only a 5 day workweek.
Thanks for any replies
1 Like
Best case is 50 weeks. Until all the infrastructure is properly built-up (better roads, post-C19 protocols, base camp, . . .) I think 43 to 45 weeks is more realistic. They don’t need to shut down the entire winter, but they did miss several days this winter because of extreme weather.
9 Likes
Thanks Wizard!
2 Likes
Just my opinion but they should start releasing the assays of the trucked material every 100 tonnes or so sent to Enami. They shoud have the first 20 tonne metrics already.
It would be helpful in gaining some momentum in the shares (assuming the grades hold up, which I imagine they will until there is volume).
6 Likes