As I said, I agree if the grades hold up the profit margins model still looks very impressive for a modest tonnage operation. I have tried to consider pessimistic assumptions aside from grade and really it remains robust in terms of cash flow. The question remains whether the DL2 can keep up decent grades, maybe > 50 or 60 gpt, over distance to depth and as the move farther out the vein. I think it is possible but not certain. The narrow veins caused a concentration factor obviously. If you spread out the same mineralization across a 5m vein the grade would be 10x lower and that would be nearly ‘normal’ for an underground mine.
My only claim is that the operation does not scale easily in terms of tonnage. IMO it will become easier to add new veins with their own approaches than it will be to have 8 or 12 faces serviced by Antonino. How many can they do? 4 or 6 maybe with Antonino? That is alot of trips for that poor scoop. They could put another approach like Antonino elsewhere perhaps. But they have no existing workings there. So why not start up the Caren instead where you have a starting point? Just questions for the future.
Also the dilution factor seems like it raises the question of counter factors like some small bit of processing / enhancing before trucking.
Approach tunnels, faces, processing etc. these are all things Auryn has already mentioned in the past. I only pointed out a simple mechanical explanation that Auryn had clearly already been considering. It would be obvious to them. That’s why they brought up the idea of multiple faces a long time ago. I have just pointed out there is just a limit of how many you can support with one Antonino. So I just think it will be a smallish tonnage operation for some time to come until they can develop further.
So → here’s to another 10 or 20 years in AURYN / MDMN
EASYMILLION: “Same grades at 1840 meters across the entire ADL?”
Good catch, Easy - THIS has me sitting on the front 2 inches of my chair!
And don’t forget the additional assays coming from DL2 - “soon”, maybe in February(?) due to current time requirements for assay processing.
Cornhusker brings up interesting points as to production possibilities/limitations. But, something tells me MC is on top of all this - would he advance so much personal funds for this investment without first having thought through all this? It would definitely be interesting to get his perspective on these (what I would term) logistical issues.
Finally a breakthrough for the ADL!!
IMO, a significant price moving event will be the AUMC share distribution to Mdmn shareholders.
There have been pps games for years with this stock.
Maybe wrong here but anxious to see how many Mdmn shares are really out there and should be exposed upon Aumc distribution
Solid, grounded, detailed and informed post. I believe the BB’s would rather not post about the engineering/realities of chasing a small vein underground b/c mining multiple faces and spewing cash flow is always a bit more sexy. Unfortutnately, there hasn’t been much “innovation” in underground mining with the exception of some mechanization. Even well funded operators are forced to working within the geological constraints of the deposit.
As it relates to guessing the on all is sustaining cost (AISC) during the eventual exploitation stage, I would be shocked if they are anything less than $1200-$1300 per ounce, specificaly to CH’s points above. Without scale, which is not realistic in the this specific project, its nearly impossible to bring down your cost (regardless of grade because you have to blast and dilute). The best funded, best run miners are challenged to bring costs under $1000oz.
20,0000 tonnes a year assuming no interruptions at a dilutive grade of 20gpt (being generous), and $1200 AISC is stil a decent small mine:
12,500 ounces annually- net profit of $700oz at today’s prices = $8,750,000 in annual cashflow.
Nothing to sneeze at and there is clearly upside if/when gold ralliles. The problem, without an reserve, mine plan, or block model to use 1) they will need to be very good and lucky to follow the vein all the way through and 2) the market won’t assign much value b/c the extent of the veins/resource/mine life is unknown.
If Maurizio is planning on organically expanding the project through ultimate cash flows this can be very favorable from a dilution standpoint. I’m not sure how you can justify today valuation of AUMC (~$40M) even when assuming they are in production…5x cash flow is pretty generouus if the mine life is unknown.
Its not worth trying to value the other projects which could have huge or zero upside b/c there hasn’t been nearly enough work to make a determination. Maurizio may decide to take some of the cashflow to advance those assets. No idea
I’ve posted quite a bit on BRICS on the “FWIW - Focus on Global Economy” although no one here seems interested. There’s a lot that’s going on in the currency wars between the IMF, CBs & countries aligning to replace the reserve currencies in place at the IMF. You may well be correct about the AISC. POG may be a game changer, so I thought I’d throw this out here since I’m limited to only two posts on the thread where it may be more relevant. I did grab this off the internet, but don’t know where to give credit, however I did come up with the title. POG is effecting the other producing mining stocks I have in my portfolio that I have actively been accumulating.
Price of a Barrel of Oil – Petrodollar vs POG
In August 1971, when the Bretton Woods agreement was abandoned, crude oil was priced at $3.56 a barrel and the market price for gold was $42.85. Converting this into ounces of gold per barrel gives us a value of 0.0831 ounces. Today, the gold price of oil is 0.0417 ounces per barrel, roughly half. In other words, using gold Glazyev can demonstrate that the true cost to OPEC+ of dollarisation has been to halve the value of their export revenues since the Bretton Woods agreement was suspended. By accepting a new trade settlement medium tied to gold, this US enforced erosion of oil values will cease. And to compensate for the loss of oil’s value from the ending of Bretton Woods, the gold price in dollars would have to be double that of today at over $3,800…
Now is a good time to be getting in “well drilled” speculative stocks IMO. AUMC is NOT in that traditional category and is in a category of it’s own. So, I remain awaiting more information before I take it out of the sock drawer.
MDMN may well gain some liquidity and become a trading stock on news, but I’m not a day trader. I’m just not interested in that when my money is spent on more reliable stocks that you seem to prefer. I suspect others may well jump aboard that daytrading train, but only with a very noticeable increase in volume and sustainable, frequent news.
Thanks for your imput Baldy, as I think your latest post is quite realistic at this point. Things may change, however, if the MDMN distribution awaits a price target of several cents. That would ideally take the few available AUMC shares in the float to climb substantially higher first. The strategy that can accomplish this is results of the continued progress and cash flow being made. 3,000,000 shares can become quite volatile on news, and if sustained, will drive the MDMN price per share much higher. I’d like to see MDMN climb 10X or more before any distribution takes place.
EZ
Tunnel is 3m wide by 3m high. This is not huge, but it is big enough to move a lot of ore out of quickly with the right equipment vs how they are doing it now. And WAY faster than your calculations assume.
Your model has the wrong scoop. The one they have has 1.1 m3 volume and is much faster back and forth in the tunnels.
My understanding is that the rock between the veins is not sterile but low grade. Also they are not including the “halo” in their measurement of width, as far as I understand. There is an area around the vein that is mineralized, just not to the same extent.
There are other options that will be exercised as they scale.
Keep multiple scoops in tunnel at different faces and levels.
Use small trucks going back and forth down the tunnel and load them in the gallery.
IMO, they will do both. 8-12 faces with the right equipment at a scale far larger than you initially were thinking is possible. And they will find other targets. They are just scratching the surface of what is available right now. Add to that, they will drill at some point for a porphyry with a lot more knowledge of the district obtained from their underground exploration.
Granted, this isn’t all happening tomorrow. But all they have been waiting on is hitting the high-grade to de-risk MC’s $$$. MC risked his own capital to-date. Now that the high-grade is hit, it starts to be self-funding and the velocity of project will increase.
Also, I don’t think it is out of the question that we see some outside investment to accelerate even more if it makes sense for the current shareholders.
Imagine each face having these pieces of equipment. They all will fit in a 3x3m tunnel to get to where they need to go. Scale won’t be the problem if the grades hold. One bonanza area pays for all that.
If it’s not too sensitive to ask, what were LP’s legal consequences for his crimes? JJ’s, too, for that matter. I had this in my ‘sock drawer’ for a long time during that whole scenario. I figured it was a goner. I’m so happy to hear that LP finally faced justice, but I don’t know where to look for the info. Thanks
Yeah, with a 70,000,000 share structure, wouldn’t that translate to about .125 per share (before other business expenses)?
[8,750,000/70,000,000 = .125]
Take your MDMN shares and multiply by .005 to get your Auryn shares after conversion (an approximation we’ve discussed) - and then multiply that by .125. That’s a heckuva start. And we didn’t have depend on all kinds of extortionate financing either.
According to BB, MRMR will not be necessary for Auryn; a rare benefit for junior miners.
From BB’s post: “Those other juniors need to raise tens of millions of dollars by selling shares in order to drill out the property and generate some MR/MR in order to attract a major miner with the dollars and technical expertise to put it into production. At the negotiating table, the junior will get its hat handed to him. Why? It’s because the major knows that if the junior doesn’t rapidly bite on a low ball offer then it must continue to sell shares and undergo further dilution just to service its monthly burn rate. The junior has no cash flow.”
No mine has to pursue a MR/MR. But if you want to receive any sort of value, have a mine plan, avoid finding and then finding and then finding again a third time an elusive vein, most legitimate mining companies map out a resource so that they can attract reasonable financing, a workable valuation based on mine life, and a roadmap on exploiting the defined resource/reserve. If MDMN hadn’t already been diluted into oblivion then avoiding the MR could have been advantageous. At this point, its really not a choice b/c the capital structure doesn’t offer the opportunity to proceed the “normal” way through dilution. The net result is a very small scale, albeit commendable, effort to advance this project. But the years of delays with another year before exploitation are some of the many downsides of taking this different path.
Another year? I like the Shareholders Update reference that they will be preparing the mine for exploitation through the end of next quarter. But that’s only if the timeline they propose isn’t stretched out longer due to more unforeseen issues …
“Our mining team will spend the remainder of this quarter and the next 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 on multiple levels will begin.”
Yeah, that sounds like a forward-looking statement, but it could still be accurate.
he has a lot invested in this
