A patient and close friend of mine has been coaching me on what his eyes see on the Auryn photo gallery. He is a Professor of Geology at a local university and the head of two different worldwide geological associations-a total brainiac. He lectures worldwide representing his alma mater, Stanford University, as well as the Smithsonian. His advice was for me to keep an eye on all of that bluish bornite (63% Cu) and the reddish-brown cuprite (88% Cu). Of course, he liked all of that SHINY YELLOW STUFF also. Copper is now trading at over $10,000 per metric tonne.
When you have two different metals contributing to the economics of your deposit, you need to talk in terms of “gold equivalent” if gold is your dominant economic metal. At today’s prices, each 1% of copper contributes 1.74 grams per tonne of “gold equivalent“ to the value. A recent intersection in the Antonino Adit assayed out at “X” amount of gpt gold and 5.3% copper. The copper contributes 9.2 gpt “gold equivalents” in this case. Keep in mind, the average grade of gold being mined in an underground fashion is 7 gpt worldwide.
Having two different metals contributing toward the economics of a deposit is obviously beneficial. But it also vastly increases the universe of potential suitors as well as potential investors. I personally think that legitimate copper discoveries are going to be snapped up by the big boys once confirmed. Mining is different than a lot of businesses, a major needs to constantly replace that which it produces on a monthly or annual basis. When the price of copper is on a roll, majors crank up production as best they can and the MR/MR on their balance sheets can go fast. Replacing MR/MR is not just a good idea, it’s EXISTENTIAL. Nobody’s going to invest in a copper major with nothing in the pipeline at a time when new discoveries are pretty much nonexistent. With the producers’ average grade falling out of bed, the price of copper has to take off in order to meet the upcoming demand surge. There are not a whole lot of “substitutes” for copper in most applications. All of these countries and corporations committing to these “zero emission standards” are going to have to line up sources of copper somewhere.
These mesothermal veins definitely appear to be “GOLD/COPPER” veins versus “COPPER/GOLD” veins. Besides the “battery metals”, the metal that everybody is focusing in on now is COPPER. All of these “decarbonization”, “zero carbon emissions”, electric vehicles (EVs), “electrification of the planet”, solar and wind power concerns are not going anywhere. The fossil fuels are out and electricity’s in. It’s interesting how the environmentalists that might have a beef with mining, have no problem whatsoever with copper mining. So, copper is going to be providing a “hedge”.
In the copper world, the biggest factor out there worldwide is the lack of new copper discoveries. A couple of years ago, the average grade of copper being produced worldwide was 1.6% Cu. Today, it is below 1%. It might take a major 20 years to mine out the SUPERGENE ENRICHMENT ZONE and make a ton of money in the process but eventually that’s going to be gone and they’re going to be going after much deeper hypogene ore of a much-lesser grade.
On the Auryn scenario, everybody talks about the mesothermal veins and lots of high-grade gold. They’re going to make a fortune on the “meso’s” but I don’t sense that they will ever be for sale. What I’m wondering about is what has all of these high grades of both copper and gold found in the Antonino Adit done to the interest level in the Pegaso Nero. Have these findings “derisked” the Pegaso Nero from the point of view of a major miner. From a “mining district” point of view, the Pegaso Nero is still the elephant in the room and the potential value of this elephant has done nothing but gone up with all of these high-grade copper showings in the Antonino Adit as well as the price of copper breaking out.
Auryn’s geoscientists as well as those of any interested major miner have been climbing a “learning curve” as to what underlies the mesothermal veins. The grades of BOTH the gold and the copper are somewhat extraordinary at the ADL. Those metal-bearing hydrothermal fluids and gases came out of an underlying magma chamber. Magma chambers are humongous and can extend for many miles. Oftentimes, the relict magma chambers and area above its roof/carapace are developed as “porphyry copper deposits” or sometimes “IOCG” deposits or even stratabound copper deposits.
It’s going to be fun watching this play out. There are so many different ways it could go. For some reason, I can’t visualize Maurizio parting with the mesothermal veins until after he ramped up production significantly until it eventually plateaued out. There’s just too much low-hanging fruit out there to be plucked.
If the cash flow from the veins ends up being way beyond expectations, I suppose Maurizio could opt to at least initiate some action on the Pegaso Nero and/or LDM. If I’m not mistaken, the last time we heard anything about the Pegaso Nero was at the “informational meeting” in Las Vegas about 5 years ago. At that time, Maurizio had Freeport McMoRann’s permission to name that as a party of interest under an NDA agreement. There were 2 majors “even larger than Freeport” that were kicking the tires back then also. If nothing else, at least some success on the meso’s might provide Maurizio some bargaining leverage on any strategic alliance entered into on the Pegaso Nero.
As an aside: I don’t know if it is just my choice of friends in the geological sector or if all of you run into this, but these guys have a different sense of humor and they’re very proud of their profession. One of my buddies pops into the clinic door constantly and yells down the hallway, “hay doc how are the porphyries or how are the meso’s?“ He often wears this hat that says “OH SCHIST!” I don’t think that 2% of the public know that “schist” is a metamorphic rock that is composed of parallel plates of minerals that can be peeled off layer by layer.
Another buddy, another geo, has a T-shirt that says “HAVE A GNEISS DAY”. A ”gneiss” is another type of metamorphic rock that is like a “schist” but it forms under very high pressures and temperatures. It has alternating layers of DIFFERENT mineral assemblages. Is it just my friends or are they all this way?
