Hi Carlos,
In regard to your question: “Does anyone have an idea of the width of the vein? It would be nice to know how many tonnes of ore are being blasted per round and how many tonnes of ore per vertical metre.”
I’ve been waiting for somebody to help you out on your request for information, but it appears that a reply is not coming. At this point in time, I’d pencil out a DL1 Vein average width of between perhaps 0.8 meters and 1.5 meters at this level of the structure i.e. 80-meters below the plateau surface. The two most recent photos posted on the Q-2, 2022 portion of the Auryn website’s “gallery” are from the area of the recent intersection of the Antonino Adit and the DL1 structure. These suggest a pretty healthy looking “mining width”.
Management has already told us that both the width and grades are improving with depth. What you and I really want to know is what might be the average width of the vein over, let’s say, the next 10 years of production as they work their way downwards through the structure. Or more importantly than that, what is the average width of the ZONE OF MINERALIZED ORE associated with that vein.
In high-sulfidation style veins, the mineralization tends to exceed the width of the vein due to acids rendering the vein borders/selvages more porous thereby allowing metal-bearing hydrothermal fluids to permeate the nearby granodiorite wall rock. As the Antonino Adit approached the DL1 Vein we witnessed widespread zones of mineralization not confined to vein structures. These metal-bearing fluids can be entrapped in much wider structures like “breccias” and areas of permeable rock like limestone and dolostone. Being a “Cretaceous’ aged deposit, the ADL features massive amounts of limestone.
The working face of the adit has been measuring about 3.5 meters by 3.5-meters but the last quarterly update hinted at widening the adits a bit for added “maneuverability”. I’m now penciling in an adit width of 4 meters and a height of 4 meters. This represents a working face of about 16 square meters. The blast hole depths are averaging about 2 meters using jack leg drills.
Under these assumptions, each blast cycle releases about 32 cubic meters of rock (4X4X2 meters). Assuming a specific gravity/density of 3.1 Tonnes per cubic meter, this represents about 100 Metric Tonnes of rock released per blast. EACH BLAST CYCLE RELEASES A GREAT DEAL OF ROCK. (NOTE: I got the 3.5-meter figure from one of the videos that was tweeted. It showed the big wheel loader rambling down the adit and coming upon the working face after one of the blasts. It scooped up some ore in the middle of the working face and you could see the space on each side of the bucket. It was about 20-inches or so or 0.5-meters. That bucket is 2.56 meters wide. Determining the width of a mining adit is kind of an art form. You need it wide enough to get the equipment in and out without scraping the lateral walls but not too much wider than the width of that which you are mining in order to minimize “dilution” of the grade. It also has to do with whether or not the hangingwall and footwalls carry mineralized ore or not.
Next, you have to estimate what percentage of that 16 square meter working face is going to be mineralized ore. The question is how much “sorting” is done at surface to isolate and discard the apparently sterile ore/granodiorite from the mineralized ore. The trucks are going to be filled with what’s left after any “sorting” process, if there is one. What complicates matters is that the gold exploited by Auryn’s predecessors at SMFL was extremely fine and disseminated and invisible to the naked eye.
If a 4-meter-wide working face is mining a vein with a 1-meter width, then one-fourth of that 100 metric Tonnes would be “vein ore” if the hanging wall and foot wall didn’t carry any grades at all. This would leave you with about 25 Tonnes of “vein ore” per blast under this assumption. If we are indeed within a supergene enrichment zone or a brecciated zone in which the mineralization is going to be more widespread, like we saw in the Antonino Adit, then you need to adjust upwards the average width of “mineralized ore”. SUGGESTION: Wait for the actual information to be rolled out. Trust me, there’s obviously nobody else following this deal at this time except for this TMP forum’s participants. You guys “own” the inside track on this particular deal. Any prospective investors that have made their way to this investment forum and read some of the lies being spewed out have obviously headed for the hills by now.
I’d hold off on estimating an average “representative” grade until we get some channel sampling results from the newly exposed DL1 Vein and/or production results. PRODUCTION RESULTS top everything because they factor in all of the different variables at play. This goes for historical PRODUCTION RESULTS too. We’ll be shipping on the same road, playing with the same ore and any idiosyncrasies it might have, encountering the same weather issues, etc. as our predecessors did. Auryn will just be a heck of a lot more efficient than their predecessors who discarded 5.2 gpt gold into their dumps and tailings piles.
Carlos, you also asked about the number of tonnes of ore per vertical meter of vein. We know that the length of the DL1 Vein is at least 1.7 Km. If you multiply that by 1 meter of width and 1 meter of depth, you’d get 1,700 cubic meters of vein ore per 1 meter of depth of the DL1. Multiplying this by 3.1 Tonnes/cubic meter you’d get about 5,200 tonnes of vein material per 1 meter of depth. We know that the DL1 Vein outcrops on the southern downslope off of the plateau at 700 meters below the plateau surface. If you multiply that 5,200 Tonnes/per meter of depth figure by 700 meters you’d get a vein “tonnage” of about 3.6 million tonnes. NOTE: This assumes that the width of the mineralized ore only averages 1-meter.
Now we’re back to the estimated “representative” grade for the ore. “SMFL” shipped to Enami, ore with an average grade of 64 gpt gold. This is Enami’s figure. If Auryn can ship (not mine) an average grade of half of what its predecessor miners shipped (half of 64 gpt without any copper credits), then this would represent about 1 ounce per Tonne which is 31.1 gpt. (NOTE: SMFL did not have any equipment on site to concentrate/”beneficiate” the ore they mined. They used a primitive “trapiche” system to crush the ore. This is basically a donkey pulling a mill stone. When they did employ a crude flotation system to capture the sulfides, they were able to get the average grade up to 92 gpt gold.)
This 3.6 million tonnes of ore in this vein would represent about 3.6 million ounces of gold present in this one vein at 1 OPT. I THINK THAT NUMBER IS TOO HIGH BUT HUMOR ME FOR A MOMENT. At this point in time, I would boil that 3.6 million ounce figure down to “there’s no doubt that there’s at least 1 million ounces present” and be happy with that. WARNING: These “in situ” estimations should only be used as VERY CRUDE estimates for screening purposes only. Somebody was nice enough to post an interview with Eric Sprott on this forum recently. He expressed his disappointment that most mining investors can’t even calculate the volume of a vein in terms of cubic meters and then multiply that by the specific gravity/density of the ore (in terms of Tonnes per cubic meter) in order to crudely estimate the number of ounces of contained gold.
Auryn’s P. Geoscientist, Luciano Bocanegra, did a preliminary resource estimate a while back and came up with 664,000 ounces of gold equivalent within the top 200 meters of 2 of the 6 main veins at the ADL i.e. the DL1 and the Merlin 1. His software is a lot more sophisticated than Eric Sprott’s back of the envelope methodology.
What can we learn from these two numbers? I’ve learned that there is no way on God’s green earth that the mesothermal veins at the ADL carry less than 1-2 million ounces of gold equivalent. Is that good enough? For now, it is for me. Do I want Maurizio to spend perhaps 20 million AUMC shares and several years to find out the definitive number of ounces present via a drill program? No Way. I want that 70 million outstanding share figure to stay right where it is. I don’t particularly care if the precise number is 1.867 million ounces or 2.632 million ounces. Is this project ECONOMICALLY FEASIBLE? Of course, it is. I’m confident that the AISC is going to be somewhere in between $750 and $950, especially with no “cost of capital”. I feel they’ll be able to clear at least $1,000 per ounce.
Do I need to know the exact Internal Rate of Return (IRR) for this project right now? No, I’ll calculate that soon enough myself. Keep in mind that management has already promised us an MR/MR estimation in the not-too-distant future. But don’t they have to do a full-scale feasibility study in order to make a preliminary estimate of MR/MR? No way, not in vein deposits. Each drill hole of any drill program is only going to give you one intersection into the vein. Auryn doesn’t need to drill ultra-expensive deep drill holes to see how deep the vein goes. The IP/IR already told us that it has GEOLOGICAL CONTINUITY down to at least 500-meters. The outcropping of the DL1 at 700 meters below the plateau confirms continuity down to 700 meters. However, in open pittable porphyry, VMS, or IOCG deposits, you absolutely need drill results. If you’re trying to sell the deposit or attract a major to enter into a strategic alliance like a JV, you might be forced into drilling out the deposit. For an underground vein mine that is already financed into production, preserve your share structure for now and later if you want to raise money at $10 per share then go for it, not now. At this point in time, we want SCREENING type information. We have the luxury of holding off on securing information like MR/MR. Ringing the cash register sooner than later trumps MR/MR especially if you don’t need a major to help out.
Investors aren’t stupid. If you’ve got a cash cow that will obviously be in production for several decades, they’re not going to be demanding formal MR/MR or formal determinations of “mine life”. They’ll vastly prefer the tight share structure and the higher EPS that accompanies it. DON’T CONFLATE THE LACK OF OPTIONS FOR THE OWNER OF AN OPEN PIT DEPOSIT WITH THE OWNER OF AN UNDERGROUND VEIN PROJECT THAT IS ALREADY FUNDED INTO PRODUCTION.
Let’s go back to that 25 Tonnes of vein ore per blast cycle. How many blast cycles can Auryn pull off per day once the exploitation phase is firmly established? I’m not going to venture a guess as to WHEN that might be. For the sake of argument, let’s assume 2 shifts per day each with one blast cycle per shift. Let’s further assume 3 working faces being simultaneously mined. This would result in 6 blast cycles per day. When multiplied by 25 Tonnes of mineralized ore per blast cycle this represents 150 tonnes per day of mineralized ore AFTER THEY’RE UP AND RUNNING. At an average grade of 1 OPT “gold equivalent” (31.1 gpt “gold equivalent”) for the mineralized ore and ZERO OPT for the nonmineralized ore, this represents 150 ounces of gold per day.
At an “All In Sustaining Cost” of $950 per ounce of gold equivalent produced, this represents $150,000 per day in profits. If you work 260 days per year (5 days per week) this represents $39 million in annual profits. When divided by 70 million shares O/S, you get $0.55 per share earnings. When multiplied by the mining industry’s average “multiple” for 2021 of 30.21, you get an appropriate share price of $16.83 for AUMC BASED ONLY ON THE DL1 VEIN. I’m ascribing ZERO VALUE to the other 5 main veins, the Pegaso Nero, the LDM, and the various skarns, breccias, stockworks, mantos, etc.
Management has made it clear that they intend to put in their own on-site mill and processing facility. They have a tremendous amount of ore stockpiled on site from both the material removed from the drifting of the 350-meter long Antonino Adit as well as pre-existing dumps and stockpiles left over from the predecessor miners. You can look upon this as a second source of income or a means to lower the “All In Sustaining Costs” (AISC) to produce an ounce of gold equivalent. This lessens the need for an Enami-type intermediary. The ore has already been tested and has responded favorably to low-cost gravity separation methodologies utilizing a Sepro/Falconer system. There are, however, capital costs associated with building these facilities. Enami also functions as a very low-cost lender for many smaller miners.
REVIEW OF ASSUMPTIONS
-4-meter by 4-meter working faces
-2-meter-deep blast holes
-SG/density of 3.1 Tonnes per cubic meter
-2 shifts per day each with 1 blast cycle
-3 working faces being simultaneously mined
-AISC of $ 950 per ounce
-price of gold at $1,965 per ounce (copper at $4.66 per pound)
-ZERO mineralization outside of the vein selvage boundaries
-mining industry average “multiple” of EPS at 30.21 (NYU Stern School of Business 2021 survey)
EASY TO REMEMBER ASSUMPTIONS SUBJECT TO CHANGE AT ANY TIME
-1-meter-wide average vein width
-1 opt “gold equivalent” average grade of only the mineralized ore
-100 tonnes per blast cycle left on floor (75% of which is sterile)
TOUGHER TO REMEMBER
-$16.83 as appropriate share priced based on all of the above assumptions
DISCUSSION
WHY EVEN DO THIS EXERCISE AT THIS POINT IN TIME?
THE FORMULA IS MUCH MORE IMPORTANT THAN THE PROJECTED NUMBERS. Those numbers are going to be all over the map. FILL IN THE BLANKS LATER WHEN THE DATA ARRIVES. I don’t know about you, but when there are about a dozen data points to keep in mind, I need to consolidate these as best I can. Otherwise, I find myself having to start from scratch once a new data point surfaces. For example, if the average width of the mineralized ore comes in at 1.2-meters instead of the 1-meter assumption, I can easily add 20% to that $16.83 figure.
As far as timing goes, my gut tells me that the average forum participant subliminally assumes that since the intersection with the DL1 Vein was seemingly interminably delayed, then assume the same thing is going to happen regarding ramping up production. Mother Nature altered the “dip” of the DL1 Vein from 45-degrees at surface to nearly vertical at the intersection point with the Antonino Adit. I’ll be the first to recognize that things go slow in this industry, but I do think that management has proven themselves to be able to handle the matters of a more MECHANICAL nature. The completion of a 350-meter-long “haulage adit” is actually pretty noteworthy.
Pretty soon the routine is going to consist of the workers waking up in the morning, mucking up the ore from the previous shift’s blast, hauling it to the crusher, going back in and drilling the blast holes and then flicking the switch at the end of the shift-kaboom. A couple of statements made by Maurizio really caught my attention. At the informational meeting in Las Vegas a few years ago, he stated that he wanted to become a “mid-sized” gold producer rapidly. Then when the plan was to put the Caren Mine/Larrissa Adit into production he made the comment that the engineers told him that we could simultaneously mine 6 levels above the Larrissa Adit and 7 levels below the adit simultaneously. THE FORMULA IS MUCH MORE IMPORTANT THAN THE PROJECTED NUMBERS.
Like I’ve suggested in the past, KEEP ONE EYE ON THE SHARE STRUCTURE. It is going to do a lot of the heavy lifting on this deal. I imagine that it almost seems sacrilegious to some to even suggest that one small portion of the overall ADL Mining District (the DL1 Vein) could produce earnings that could justify a vastly higher share price than the current one. The TIMING is the most difficult parameter to estimate. That’s why I don’t. Since TIMING is so difficult to evaluate, the best we might be able to do is to visualize a PATHWAY to success and to monitor for incremental progress towards that end.
I defended BE’s right to post his views about MDMN, even though I didn’t agree with the way he attacked 2 other members in particular. But BE’s character was also being attacked by one of them. The intense bickering grew and caused a two-way street collision. 
I’m sooo glad you took the time to come to the same conclusion. 
