The Mining Play

Auryn/Medinah - 2022 - 1st Half General Discussion

In short, if we pay MDMN company debts NOW, as opposed to when the price of our shares presumably go UP (upon some good announcement), then that will equate to us giving up more of our equity in payment (i.e. further dilution). Better to wait until our equity goes up. I’m thinking MC will do the right thing despite what we say here, because HE (and his family) are also MDMN shareholders.

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I think that we have the prior bad acts of a member of Medinah’s past management to thank for the difficulty associated with Medinah simply allocating and distributing their 16.1 million AUMC shares. Finra is an SRO or “Self Regulatory Organization”. Their mandate is: “to safeguard the investing public against fraud and bad practices”. The SEC is a governmental agency with the mandate to “maintain fair, orderly and efficient markets”.

Neither of these entities is very enamored with corporate issuers that are not fully reporting with the SEC. The mindset of some employees is that a corporation needs to earn protection by becoming fully reporting. They want a prospectus out there carefully listing out all that could possibly go wrong with an investment.

Congress noted that for development stage corporate issuers, becoming fully reporting with the SEC is cost prohibitive to young corporations. A carve out was designed for an entity like “OTCMarkets” to provide an option like the OTCPinks where the corporate issuers need to provide adequate disclosure (form 211) to prospective investors but not to the degree where compliance with things like Sarbanes Oxley 404 is mandatory.

Many at Finra and the SEC are not 100% on board with that concept. Finra’s biggest concern is the “pump and dump” in which unscrupulous promoters tell nontruths about corporations in order to induce buying. Typically, corrupt corporate insiders will be selling into that buying at price levels that are not sustainable.

I think that Auryn and Medinah management have hinted at it a couple of times when they stated that it would be a heck of a lot easier for Medinah to do its allocation and distribution of their AUMC shares IF AUMC WAS FULLY REPORTING TO THE SEC. From Finra’s and the SEC’s point of view, this would provide INVESTOR PROTECTION to the purchasers of those AUMC shares sold by the Medinah shareholders in the market. People at Finra probably see it as their duty to not approve any allocation and distribution of Medinah’s AUMC shares until those shares are fully reporting with the SEC.

Maurizio wants to build a large mining corporation. Being fully reporting to the SEC is a no-brainer but he probably wants to do it AFTER going into production and becoming cash flow positive. Most “up listings” from the OTCPinks “current” status necessitate becoming fully reporting with the SEC.

Right now, we Medinah and Auryn shareholders, as well as the management teams, are kind of in a limbo status. Prior to the allocation and distribution of those 16.1 million AUMC shares, the last thing either management team wants to do is to be OVERLY PROMOTIONAL in the eyes of Finra or the SEC. Even the mildest suggestions of a pump and dump going on could be damaging.
If I were counseling either management team, I would tell management to put a lid on anything of a promotional nature. I would warn them that they still have duties to make disclosures of “material facts” BUT DO IT IN A NONPROMOTIONAL MANNER. I suspect that management’s answer to this dilemma is what gave rise to the “gallery” portion of the Auryn website. The truth is right there in front of trained eyes, but it is not overly promotional.

If I were serving as a corporate counsel, my biggest concern would have to do with releasing assay grades. What would happen if the assays came out really hot at first and then suddenly cooled down? If the market got overheated and then cooled off would this not look like an intentional pump and dump? My read is that management is currently hamstrung. The proverbial “cone of silence” (ask your Dad) is in the down position by necessity. I’d patiently wait and let the cash flow numbers tell the story in a fashion that could not be misinterpreted as being overly promotional.

So, where does that leave fatigued investors? Where is the truth as to how things are really going behind the scenes or underneath that “cone of silence”? I think the best option is to go to the Auryn website “photo gallery”. Somebody put in an awful lot of work in providing that information to us.

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By the way; Thank you to all friends and family that are serving and have served in our military who wore the uniform representing the United States armed forces. I thank you. It deserves more than I can put forth.
C.s.

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Thanks for the perspective. So, it seems to me that even if the latest assays are really good there may be reluctance to publish them for fear of running afoul of the regulators. Hmmm …

From the April Update

We anticipate our mining teams to spend most of Q2 preparing the mine for exploitation at the current level and sub-levels. Minor production will occur during this process. Results will be reported accordingly. Once fully prepared, exploitation begins.

I wonder if they have started any production? I guess we’ll find out in July update

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The April update DoneDeal posted; “says alot, with out saying a lot.”
To prep a exploration mine shaft to production levels demands A LOT.
Many shareholders here are not miners, most have never visited a mine, much less know the workings of one.
But you know your own business, or ones you might have made your money in.
Now be honest and ask yourself how easy-fast-costly it was or would have been to expand that business? Yea! Would never have been as easy, or fast as your investors would have wanted to be, would it?
No difference here. Exploration to Production is a big jump in equipment.
And with this changing world of shortages, one can only guess what might derail your plans just around the corner.
Anything with a “made in China” label on it comes to mind. Which covers a lot of mining equipment and supplies.
With Chinas largest industrial areas in lockdown, shutdown mode, add the time it will take to get back in production and its shipping back up, we could be looking at months-years short comings.
Just as with your own business scenario, , Auryn - Medinah is looking at a steep hill to climb. Good Luck To Us All. C.s.

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Completely agreed! Thus, my initial post after the release. If AURYN accomplishes what was outlined in the last update over the remainder of this calendar year, it is a BIG win! It’s just not realistic to think otherwise.

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Hi CS and Wiz,

Thanks for the great posts. I see the future of the ADL Mining District through a slightly different lens than you guys might. I wholeheartedly agree that things take a lot longer in this industry than many might suspect. There’s no doubt about it. However, I’m not sure if many of us appreciate the significance of what happened recently when the Antonino Adit intersected the DL1 Vein within the extremely well-ventilated “old workings”. I like to keep my focus on the likely ECONOMICS of this mining operation. This parameter is the one closest related to the success of an investment here.

The ECONOMICS of this operation are what they are, and the potential ECONOMICS are complex but very compelling. A lot of this has to do with the grades mined by SMFL at the deepest part of their operations at “Level 2”. We all know about the 64 gpt gold grade AVERAGE over 30 years but the reality is that these historical grades were improving with depth all of the way down to “Level 2”, which was as low as they mined. SMFL’s most recent work done at Level 2 graded higher than that average grade of 64 gpt. This is the hallmark of a mesothermal vein system i.e. increasing grades and widths with depth.

These stellar historical grades were recently corroborated by the 16 samples Auryn took at the intersection of Shaft A and Level 2. THIS WAS A HUGE EVENT FROM AN ECONOMIC POTENTIAL POINT OF VIEW AS IT CORROBORATED MUCH OLDER WORK. Recall also that there was no contribution from copper to the historical grades of 64 gpt gold averaged by SMFL in between Level 2 and the surface. You might think of the Antonino Adit as the new “Level 3” which is about 10 to 15-meters below the deepest level of SMFL’s exploitation efforts at “Level 2” which is about 70-meters below the plateau surface.

Now, at this new Level 3 known as the Antonino Adit, all of a sudden, there is evidence of supergene enrichment (the blue material found in the Antonino Adit), all over the place immediately below Level 2 within the Antonino Adit. The ECONOMICS of this DL1 Vein operation are going to be heavily tied to the grades found historically at Level 2 AND BELOW LEVEL 2 where the new developments are being revealed. They’re also going to be heavily tied to the ability to ramp up production via simultaneously mining two working faces at each level, starting at Level 3, as well as mining different levels of the mine at the same time. This is where the access to the ventilation system within the “old workings” comes in. The operation also needed a “haulage adit” to bring mined ore to the surface. Until the recent completion of the Antonino Adit (now a “haulage adit”) and the intersection of the Antonino Adit with the DL1 Vein and the gaining of access to the ventilation system within the “old workings”, these potential ECONOMICS were a distant pipe dream. Now they’re within grasp.

The way I see it, over the recent 12 months of drifting the Antonino Adit, AURYN HAS BEEN “MINING” PLENTY BUT JUST NOT “SHIPPING” A WHOLE LOT. I don’t know what percentage of the ore removed during the drifting of the Antonino Adit will eventually be shipped or possibly processed on site. This is NOT the DL1 Vein ore that we know a lot about. During the drifting of this adit, the miners advanced 350-meters during about 240 workdays. They averaged about 1.45-meters per 9-hour workday or about 0.16-meters per hour. (5-day work weeks with about 5 weeks off due to the wheel-loader breaking down in November.)

This was real “mining”. The difference from here on out is that we’re going to be working down the long axis of a KNOWN (and recently corroborated) high-grade vein instead of cutting across small, mineralized structures that we had no idea even existed. It’s going to be the same “mining cycle” consisting of blasting involving drilling bore holes, stuffing them with explosives, blasting the rock, letting the dust settle and mucking/scooping up the ore and delivering it to the crusher. All of that equipment is already in place. The historical “mining” rate for this +/- 7 man crew working 9-hour days with the equipment they have in place is a KNOWN. This KNOWN factors in all of the different variables present at this mining operation.

Soon it will be two crews instead of one. The workday will include three 8-hour shifts instead of one 9-hour shift. Nine-hour workdays will give rise to 24-hour workdays, an increase of 2.66-fold. I think it would be pretty safe to multiply that previous mining rate by 2.66 just based on an added crew. This performance level is still in the KNOWN category. Assuming an adit working face of 3.5 meters width and 4-meters in height and a 2-meter bore hole for the explosives as well as a specific gravity for the ore of 3.1 Tonnes/cubic meter, one blast was freeing up 43 Tonnes of ore per 9-hour shift with one crew. If you multiply that by 2.66 then you’d come up with 115 Tonnes per 24-hour workday JUST WITH THE EXISTING EQUIPMENT but with an added crew. That’s about as far as we can go with the KNOWNS for now i.e. 115 Tonnes of rock being delivered to the crusher per 24-hour workday. LET’S LET THIS BE OUR “BASE CASE”, NO FRILLS SCENARIO i.e. 115 TONNES PER DAY SENT TO THE CRUSHER. Note that improvements to the camp would be needed to add and house another crew.

EVEN THE NO FRILLS “BASE CASE” MATH CAN GET A LITTLE CRAZY BUT THERE WAS NO “BASE CASE” MATH UNTIL THE RECENT INTERSECTION OF THE DL1, THE GAINING OF ACCESS TO THE VENTILATION SYSTEM WITHIN THE “OLD WORKINGS” AND THE COMPLETION OF THE “HAULAGE ADIT”

In addition to the above assumptions, assume that each 20-tonne truck being deployed can make a minimum of 3 round trips to the mill per day. Each round trip should take about 5 to 6 hours permitting 4 round trips per day but for the sake of conservatism let’s round that down to 3 round trips per day. This would represent 60-Tonnes per day “shipped” (PER TRUCK IN USE) and 115 Tonnes per day “mined” and delivered to the crusher. This means that the mountain of ore sitting under the upwardly inclined conveyor belt coming off of the crusher WILL BE GROWING ON A DAILY BASIS. IN ORDER TO KEEP THAT MOUNTAIN OF ORE FROM OCCUPYING TOO MUCH SPACE ON THE PLATEAU, MORE TRUCKS ARE GOING TO NEED TO BE DEPLOYED IN ORDER TO KEEP THE SIZE OF THE MOUNTAIN THE SAME. Assuming an average grade of 31 gpt “gold equivalent” (1 OPT), an AISC of $900 per ounce and a POG of $1,900 then this represents $60,000 profits per day PER TRUCK THAT CAN DO 3 ROUND TRIPS PER DAY. Remember that this is the BASE CASE scenario using inefficient jack leg drills and only the equipment presently in place.

KEEP YOUR FOCUS ON THE SIZE OF THE MOUNTAIN OF CRUSHED ORE AND THE NUMBER OF TRUCKS, EACH ADDING $60,000 TO THE DAILY PROFITS, NEEDED TO KEEP THAT MOUNTAIN THE SAME SIZE

During the drifting of the Antonino Adit, there was, of course, only one total working face being mined at a time by one crew. After an end of shift blast, nothing could get done until the dust settled and the ventilation system did its thing. Because of the ventilation improvements associated with intersecting the “old workings”, multiple working faces can now be simultaneously mined, with the blast residue, equipment exhaust and other toxic gases being successfully removed. The miners can stay productive during the dust settling phase. Why? Because not only did they hit the KNOWN, well-mineralized DL1 Vein, they also tapped into the network of ventilation raises, ventilation chimneys to surface and the emergency exits that were already in place. Soon they can SAFELY work on multiple working faces at multiple levels simultaneously. SERNAGEOMIN will tell the engineers the threshold levels of toxic gases that need to be constantly monitored for.

HOW TO GROW THE SIZE OF THAT MOUNTAIN OF CRUSHED ORE AGGRESSIVELY AS WELL AS THE NEED FOR MORE TRUCKS (EACH CLEARING $60,000 PER DAY IN PROFITS) TO KEEP THE MOUNTAIN THE SAME SIZE

During the drifting of the Antonino Adit, there was no need for a fully-mechanized “jumbo drill rig”. It would have been sitting idle most of the day. I would guess that you’d need to be working perhaps 6 or so working faces simultaneously in order to justify the deployment of a jumbo. I can only imagine the time savings involved in drilling out a working face with a jumbo as opposed to using hand-held jack leg drills under the BASE CASE scenario. Management is going to be highly incentivized to grow that mountain of ore (and the number of trucks needed to keep the size in check) as aggressively as they can. “MECHANIZATION” is going to be the key.

The transition will be from mining ore of unknown values at a snail’s pace during the drifting of the Antonino Adit, to mining high-grade ore at a brisk pace. Auryn now has a “haulage adit” to get the ore out of the belly of the mountain and to a crusher. It’s the Antonino Adit. The portal (opening) of the adit has been strategically located at the commencement of the North Road heading down the hill.

I’d argue that there is indeed a lot of work left to do but that a lot of the heavy lifting from a risk point of view, got mitigated when they intersected the DL1 Vein. Now, things are going to get a lot more mechanical and what is going to appear on the table is LEVERAGE. Advances in MECHANIZATION that never made economic sense in the past suddenly will. On-site “beneficiation” measures like dirt cheap high-G force gravity separators can be deployed to increase the grade of the ore being shipped. These never made economic sense in the past but they sure might in the near term.

I agree that with the supply chain issues in the world, the procurement of equipment is going to need a longer lead time. What I prefer to concentrate on is the BASE CASE scenario we have in place now without adding equipment. How much money can be made with two crews and the ability to work 24h hour days on multiple faces simultaneously? The numbers can be staggering. Equally staggering is the ability to ramp up production due to the cash flow. Auryn’s brand new 20-tonne truck cost $100,000. Under the above scenario, management could double that $60,000 per day profit by adding ONE new truck that would cost 1.66 days of profit. THAT’S LEVERAGE.

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I would tend to agree Hulk. Anyone claiming that releasing assay results could ever be misinterpreted as “promotional” has a whole lotta learning to do when it comes to publicly trading mining co’s. The entire reason why this ore is sent to a THIRD Party to conduct assays and report the grades is to avoid the risk of “promotion”, selectively highlighting certain holes or ore over others, etc, etc…

In fact, if a company was looking to grow into a fully reporting, legitimate enterprise one could easily make the argument that withholding assays would be a violation in the disclosure of material events. Sometimes the easiest answer is the simplest one. For whatever reason (good or bad) there are no assays to release. If the assays were light and not disclosed this would be even more concerning but (speculation) Maurizio may have made the decision that this was non-material as the grades/assays were not representative of the DL Vein. Who knows?

Wouldn’t the earlier claim (misguided) of finding the DL Vein be considered (false) promotion if one applies the same reasoning? Somewhat confounding logic.

The lack of assays along with the decision to NOT truck the “high grade” stockpiled ore are definitely points that investors should press to be addressed in the next update unless they are in the camp preferring a “cone of silence” because a photo gallery is suffice.

In Maurizio’s defense, mining is insanely difficult at the moment due to a shortage of manpower and supplies (with dramatically inflated costs). If you go through the last quarterly earnings for gold and more specifically silver mining co’s, the majority of them are hemorrhaging money because what they produce is going sideways while their cost of production is up 20-30%. And this is for the operators that have already spent the time and money for scale with defined reserves. Its considerably more difficult for the blast> scoop> toll players. Coldsnow clearly gets it.

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I agree with your complete agreement. FWIW

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I think the prudent way to handle the assays is to collect the data from the best-looking intersections within the Antonino Adit (based on grade and width), sample the heck out of the recently-intersected DL1 Vein, decide the attack plan and then release the grades of the areas chosen to exploit.

If they hit a super high-grade intersection in the Antonino Adit i.e. the “haulage adit”, but had no intent whatsoever to put it into production for maybe 20 years, then they’d better not announce super-high grades within a mere “haulage adit”. The logical presumption by the investing public would be that they were going to produce from that super high-grade ore source. Until you have all of the options on the table in front of you, nobody knows what is “material information”.

Management has been very clear in regard to the purpose of the Antonino Adit. Its primary purposes were to intersect the high-grade DL1 Vein and thereby gain access to the ventilation system already in place within the “old workings” of what used to be known as the “Fortuna Mine”. There are 6 shafts in place and 5 “chimneys/ventilation raises”. There is also a vast network of already mined out empty stopes. If you study the most recent video on Auryn’s twitter page, you can hear the wind whistling through these “old workings”. You can also see the old timbers from the “old workings” within the first 4 seconds of the 33-second video.
In past quarterly updates, management made it clear that they could not scale up production until they gained access to that ventilation system. They also made it clear that following the intersection of the DL1 Vein, the plan was to “immediately” produce from multiple working faces.

In the mineralized structures intersected within the Antonino/”haulage adit”, there is no pre-existing ventilation system that would support simultaneously producing from multiple working faces at differing levels. Even if there were ultra-high grades in one of those early intersections, the chances of it being able to de-rail the original game plan would be de minimis and you can’t do both simultaneously.

Maurizio has lofty ambitions, back when the game plan was to commence production at the Caren Mine/Larrissa Adit, management announced that it was possible to simultaneously produce from 6 levels above the Larrissa Adit and 7 levels below the Larrissa Adit. SERNAGEOMIN came back and said, OK, but we’re going to mandate that you put in three 140-meter tall “ventilation raises/chimneys”. Since this was cost prohibitive at the time, management went to Plan B which was to de-water and de-mud the “old workings” at the Fortuna Mine/DL1 Vein and to restore a bunch of the old timbers. At the “informational meeting” in Las Vegas, Maurizio made it clear that the plan was to “rapidly become a mid-sized gold producer”.

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…one Quarter at a time…

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From last year’s April 21 Notification:

AURYN has a temporary permit for exploration and exploitation. Under this permit AURYN shipped 9 tons of ore at 45 g/t Au to Enami for processing. We expect the definitive permit to be issued next week.

AURYN’s objective for Q1 was to achieve a mining rate of 40 tons per day. However, this was not possible without completing the tunnel. With the tunnel being completed shortly, AURYN will hit the 40 tons per day target this quarter.
April 2021 – Shareholder Update | AURYN Mining Corporation

What does our current exploitation permit allow specific to the Fortuna and what can it feasibly be updated/upgraded to for maximum rapid profitability? Have there been any announcements regarding permits and mining plans applied for?

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Anyone going to Pdac conference next week? Maybe someone can ask Easymillion and BE questions.

A great question would be can we expect assays this coming update and have we started any production

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Thank you Jvj! I’m trying to zoom in on the booth. Picture is blurry. Can anyone make out what it says on the backdrop?

What is the significance of Filo Mining being on Auryns twitter page?

Looks like it’s gone now

I still can’t believe they have not released any assay results. I would assume they are holding back deliberately. The labs DO NOT take this long to release assay results for miners.

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And it gets worse by the day as inflation rages.

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