Hi EZ,
As I interpret it, the question you asked several days ago is whether or not that 15.8 gpt gold grade with 5.3% Cu (about 24 gpt “gold equivalent) is REPRESENTATIVE of the ore that has been or is about to be mined out of the DL1 Vein. Upcoming Auryn assays and Auryn production reports should tell the story. The reality is that the average “gold equivalent“ grade for the first decade or so of production is going to be a lot higher than the average grade over the mine’s life.
Luis de la Tierra told us to use Meridian/Yamana’s El Penon Mine (arguably a “World Class Deposit”) as a template for the ADL’s future production operations. The average grade there started out at 14 gpt gold. Now, 24 years later, the average grade is 4 gpt and they’re still making money. I’m a little biased (actually a lot), but I think that the evidence available to date suggests that the “gold equivalent” grades at the DL1 Vein will blow the doors off of the El Penon grades. If I had to make my case, it would go something like this.
BASED ON HISTORICAL RESULTS, WHAT GRADE OF “GOLD EQUIVALENT” IS LIKELY TO BE MINED IN THE FIRST SEVERAL YEARS OF PRODUCTION AT THE DL1 VEIN?
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The most statistically significant data point we have would have to be the 64 gpt gold average grade that SMFL (artisanal miners) achieved from 1940 to 1970 at the DL1 Vein. The average silver grade came in at 51 gpt silver and they also had 0.2% Cu. Thirty years is a very long period of time to average that high of a gold grade and this was achieved under artisanal mining conditions. These numbers come from ENAMI and their predecessor “Caja de Credito Minera” or “CCM”. The tailings piles and dumps remaining to this day average 5.25 gpt gold which illustrates how inefficient the mining process was back then. This would put the head grade closer to 70 gpt gold. When SMFL added a crude 4-cell flotation system, they were able to get the grade up to an average of 92 gpt gold.
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It should be noted that there was no SHINY YELLOW STUFF (SYS), that may or may not be ”visible gold”, present in these older workings from SMFL as per ACA Howe. In the Antonino Adit, the SYS is all over the place but keep in mind that it might be gold, or pyrite and/or chalcopyrite that can all present in a similar fashion. OBSERVATION: The copper grades have gone up enormously from the ore near surface (0.2%) that SMFL was mining. Why might this be? It’s no doubt associated with SUPERGENE ENRICHMENT (SGE) of ore, now hanging out at the level of the VARIOUS LEVELS of the old/”paleo-“water table” over the last 91 million years. These SGE zones can be vertically extensive to the tune of hundreds of meters. Why are they so vertically extensive? It’s because over the course of the 91 million years of ore genesis involved at the ADL, the water table has varied in its location. How do you know if the SGE process has been at work? What happens is the predominant form of copper i.e. chalcopyrite which is 34% copper, gets “replaced” by higher octane forms of copper like “bornite”, which is 63% Cu, “covellite”, which is 66% Cu, and “chalcocite” which is 80% Cu. These 64 gpt grades seem too high, are they reliable? The best test might be to go to the spot that marks where SMFL ended their exploitation efforts and see what the grades are where they left off. This would be at the intersection of Shaft A and Level 2. What did Auryn’s recent sampling of that shaft (over its 24-meter vertical extent) reveal? See point #7 below. (The numbers were huge.) The 64 gpt gold only (not “gold equivalent”) grades are very reliable. The “CCM” bank that bankrolled SMFL’s operations was constantly on site and their geoscientists, especially two geoscientists named Weisberg and Jeraldo, sampled the heck out of the old DL1 Vein operations and came up with similar numbers.
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The gold that SMFL was mining over that 30-year span was extremely “fine” and not visible to the naked eye (ACA Howe report). It was so fine that they used a “minus 200 Tyler mesh size” to process it. The 64 gpt gold grade tells us that there was a LOT OF GOLD present but it was in tiny little invisible to the human eye specks. The average size was .02 to .15 mm (ACA Howe). The question that begs to be asked is this: Can we assume that this 64 gpt invisible gold extends to depth and we can add to that number the gold present that is “visible gold”? My answer would be to wait for a “representative” sampling involving a large suite of assays but I don’t think you can add them up arithmetically. Larger particles of gold might tend to coalesce with other larger samples of gold and form a “colloid” and drop out of solution on the spot due to their density. Tiny particles might have a tendency to stay afloat and advance further upwards in the vertical column of rocks. Eventually these once scalding-hot hydrothermal mixtures of fluids and gases, even if they’re only tiny specks of gold, are going to cool near the surface and deposit their metallic contents on site. One of the favorite sites is within the interstices/caves within a silicate known as “quartz” which loves to provide a “trap” to allow dissolved gold to cool and precipitate out of solution on the spot.
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Auryn sent in a 9-tonne sample from the old Fortuna Mine/DL1 Vein as a “test production run” which averaged 45 gpt gold. These “tests” have provided Enami’s lab with the data to design the most efficient extraction protocol. Auryn has no “beneficiation” equipment on site. However, visual sorting may have been done and only the apparently more mineralized ore may have been shipped. I seriously doubt this because this would have thrown off the metallurgical results as to determining the most efficient way to treat the ore that is about to be shipped. This sample came from unconsolidated ore in which no blasting was needed. I would assume this was from a fault structure.
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An Auryn press release noted that a 54-tonne sample was mined which sampled out at “over 2 ounces” average gold content. This represents “over 62 gpt” gold. A picture of this stockpiled ore was shown on the website with Director Italo Volante pictured behind it. As of Jan. 7, 2022, it does not appear that this had been shipped yet. No copper or silver numbers were given.
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Auryn made an intersection in the Antonino Adit which sampled out at 15.8 gpt gold and 5.3% copper. The copper contribution comes in at 9 gpt gold equivalent. Thus, this represents about 24.8 gpt “gold equivalent”. I did not factor in the silver contribution. Kevin brought up the point that after securing and shipping this ore, management opted to bypass further production from this site and continue forward to hopefully intersect the DL1 Vein. I take this to mean that management was not impressed with the reported numbers. The point should be made that a young producer is obviously going to commence serious production from the fattest and richest veins first. They may or may not ever return to a site like this. Although wonderful grades by most standards, I would not think of them as being “representative” of the ore Auryn will be shipping to Enami or processing on site.
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A 48-tonne sample was processed by Enami which came back at 15 gpt gold and 3% copper. This sample came from the “splays/ramifications” presumed to be coming off of the DL1 Vein. The check for over $36,000 for this 3-truckload shipment is due in Jan. of 2022. 3% copper adds about 5 gpt “gold equivalent” so this sample comes in at about 20 gpt “gold equivalent” plus the silver. Again, this is not very impressive by the DL1 Vein’s standards. The question begging to be asked is why do the grades from the DL1 Vein proper seem to be so much higher than those from the “splays”.
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16 samples were taken from the intersection of Shaft A and Level 2 of the Fortuna Mine/DL1 Vein. This is, unfortunately for SMFL, the spot where they ceased operations heading in a NNW direction. 11 came in at over 20 gpt gold, three at over 100 gpt gold and one at 1,220 gpt gold. If you take the arithmetic average of all 16 samples it comes in at an average of 116 gpt gold. If you toss out the 1,220 as a fluke sample, then the average becomes 40.6 gpt gold. Thus, the realistic “average” at this particular site, would be somewhere in between 40 and 116 gpt gold. But again, if all other factors are equal, then this might present as a likely production site. These samples are from the DL1 Vein proper and not the “splays”. I think we can appreciate why management is so intent on intersecting the DL1 Vein proper.
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On July 6, 2021 management put out a press release citing that “All indications are that BOTH the grades and the widths of the veins were increasing with depth.” This is the hallmark of a “mesothermal vein system”.
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On 1/3/21 Auryn made a PR stating: “Systematic laboratory sample results from the existing mine workings (of SMFL near the surface of the DL1 Vein) indicate consistent and good quality of gold from the main vein, named Don Luis (averaging over 85 g/ton Au)“. This “systematic lab sampling” came from the DL1 Vein proper and not the splays.
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Vein widths are important. Up near surface, the DL1 Vein averaged in between 0.15 and 0.4 meters in width (ACA Howe). The artisanal miners probably working with a pick ax and donkey, could selectively mine only the juiciest looking ore and leave the nonmineralized wall rock alone. The flip side of that argument is that nothing looked that juicy since the gold was invisible. Auryn, on the other hand, needs to take out a full 3 to 4 meters width in order to fit their machinery. The new wheel loader has a 2.56-meter-wide bucket. If that 3 or so meter-wide working face is all mineralized then that’s great and there won’t be much grade dilution associated with any nonmineralized wall rock. If, once intersected, the DL1 Vein is only 1-meter wide then Auryn’s head grade will be “diluted” by the wall rock IF IT IS BARREN wall rock. Keep in mind that the vein is already known to be widening with depth.
I think the key point to be made is that the grades cited above occurred BEFORE a striking change in the WIDTH AND APPEARANCE of the mineralization was witnessed at about the 100-meter penetration depth of the Antonino Adit. All of a sudden, the series of pictures of the working face of the adit prior to a blast was filled with SHINY YELLOW STUFF (SYS) that may or may not be “visual gold”. Historically, the 64 gpt gold produced for 30 years had no visible gold. The gold mined for all of those years was extremely fine in nature and invisible to the naked eye. What we don’t know is if that super-fine gold grading out at 64 gpt gold near surface continues on to depth and is augmented by this new SYS. Wait for the assays. It is important to appreciate that gold, pyrite and chalcopyrite can all take on a similar appearance as SHINY YELLOW STUFF. From a reference point of view, it should be stated that the average gold grade being mined worldwide is about 7 gpt gold in underground workings.
The evidence for extremely high-grade copper, no doubt as part of a SUPERGENE ENRICHMENT (SGE) ZONE, is beyond compelling. That’s why we need to speak in terms of “gold equivalent” grades. The norm in underground gold operations is to have maybe 7 gpt gold accompanied by maybe a 0.1% copper component. As I understand it, Enami does not offer a “by-product credit” for the copper in a scenario like this.
ON THAT SHIPMENT IN WHICH ENAMI CUT A CHECK FOR $36,207 FOR 48 TONNES OF 15 GPT GOLD, 31 GPT SILVER AND 3% COPPER, DID AURYN GET PAID FOR THE 3% COPPER?
Based on a price of gold of $1,800 per ounce, 48 tonnes of 15 gpt gold would have a gross value of 48 tonnes times 15 grams equals 720 grams of gold divided by 31.1 grams per ounce equals 23.15 ounces of gold gross. This would have a gross value of $41,672. If there was no payment for the copper then Enami’s fee would have been $5465 to process the ore. This represents a modest 13% fee.
48 tonnes of 3% copper based on a copper price of $4.40 per pound ($9,856 per Tonne) would be a gross value of $14,192. When added to the gross value of the gold you’d get a combined gross value of $55,864. Under this scenario, Enami’s fee would have been $19,657 out of $55,864 equaling 35%.
Since the press release cited:” On November 30, 2021, AURYN received a pre-liquidation value from ENAMI for the 48 tons shipped. The accepted total was 15 g/t Au, 31g/t Ag, and 3% Cu with an anticipated liquidation value of $36,207 “, then either Enami paid for the copper and their fee was about 35% or they did not pay for the copper and their fee was only 13%. I’m going to guess that a 3% copper grade was robust enough to get paid for. If the copper grade was only 0.1% then I doubt they would have been paid for it. From what I understand, their policy is to pay “by product credits” for any amount of copper as long as the gold grade exceeds 25 gpt gold. With the gold grades having been historically shown at the DL1 Vein proper, my gut is that Auryn will be paid for all copper production. We need to follow through on this as the shipments are made and the results announced.