Hi Jimmyp,
Sorry I’m so slow in getting back to you. I think that both the artisanal miners and Auryn will have done “hand sorting” prior to crushing. Clearly visually unmineralized rock will probably be discarded prior to crushing. Visually, the wall rock granodiorite looks like a granite countertop. You have that “salt and pepper” appearance with light-colored quartz and plagioclase feldspar and dark-colored hornblende and pyroxene crystals. It’s pretty distinctive. It helps the preliminary sorting process when the vein material is visually different than the wall rock material.
I’d think of the ore as always being in one state of “beneficiation/concentration” or another. After blasting the working face of an adit, you have on the adit floor “run of mine” (“RoM”) ore. As I understand it, that gets brought up to the plateau and is visually sorted as to mineralized versus nonmineralized. The visually-mineralized “sorted ore” gets thrown into one or more crushers until the size mandated by either the purchaser or that mandated by the gravimetric concentration apparatus for highest recovery rate is reached.
The resultant “comminuted ore” runs (or will run) through the chosen gravimetric concentration apparatus and the higher concentration material, found near the periphery of the centrifuge, goes into the high concentration ore pile and the other material into a less-concentrated ore pile. The highly concentrated ore often becomes “direct shipping ore” that is not in need of further purification prior to shipping. The less concentrated ore might need further purification and it could be headed to a “roaster” to oxidize the sulfides, to a “flotation plant” to remove the sulfides, or to a pressure oxidation (POX) facility or to a bio-oxidation (BIOX) facility. In essence, there might be a variety of “SHIPPING GRADES” heading down the hill, depending on what Maurizio opts to do on site and what the INTERNATIONAL MINERALS TRADER (if they become our partners) is equipped to do at their facility.
Recall that the University of San Sebastian is running tests for Auryn on “flotation” systems. Some MINERAL TRADERS have custom blending facilities and they will blend different grades of ore in order to maximize the ECONOMICS.
One of the key parameters for SHIPPING GRADES is what % of the working face of the adit is the EXTREMELY HIGH-GRADE VEIN MATERIAL versus less-mineralized wall rock. I’m pretty sure that the adits of the artisanal miners were narrower than those of Auryn. But the vein width in levels 0,1 and 2 was also narrower than the approximately 0.6 meters seen at level 3. There is a minimum width to the adits used by the artisanal miners because they had to get people and some type of equipment into and out of there.
With Auryn, the adits currently are about 3 to 3.5-meters in width and the same in height. You can see in some of the videos how that Cat 928 G wheel loader was barreling down the adit and you could see some adit width lateral to the bucket width which is 2.55-meters if that is the standard bucket they’re using.
What’s going to be interesting, is how much ore Auryn can remove WITHOUT BLASTING like they did up above in the “old workings” when they removed the 54-tonnes of 85 gpt gold material. If they can get in there and scrape away the vein material with a backhoe type claw, and remove that very high-grade ore and then worry about the wall rock on each side, that would be a good way to do some preliminary “sorting”. I’m guessing the granodiorite wall rock material will need blasting. I think they call this approach “split blasting”.
I feel more comfortable in NOT projecting the average SHIPPING GRADES now because I sense that the actual numbers aren’t too far away especially if they can choose and then install the MOST EFFICIENT gravimetric plant quickly. These aren’t that large and I believe most are portable. While constructing the now completed “gallery”, Auryn stockpiled 80-tonnes of MINERALIZED ORE but they mentioned that it hadn’t been “sorted” yet. So, “sorting” is part of the process for Auryn. With the given dimensions of the “ventilation/safety egress chimney” i.e. 30-meters in length and assuming the same width as that of the adit, there should be about 170 to 200 tonnes of just VEIN MATERIAL plus whatever amount of wall rock that doesn’t get discarded. So, between the gallery and the chimney ore, we’ll soon have somewhere around 20-or-so truckloads of ore (16.7 tonnes per truckload) to play with. That’s enough to get a good read on average SHIPPING GRADES.
I’m not sure if Auryn would ship this ore PRIOR TO gravimetric beneficiation or just wait until the “gravimetric plant” is delivered. If the ore is to be shipped to the “INTERNATIONAL MINERALS TRADER’S” facilities (should they be chosen as the partner), then I would assume that they’d want the ore to be treated first with the gravimetric methodology. The basic ECONOMICS centers around concentrating the ore on-site as best as you can inexpensively so that less worthless gangue that doesn’t earn any income, gets shipped.
Keep in mind that when dealing with these MESOTHERMAL VEINS, BOTH the width and grade will tend to increase with depth. That’s the only “leak” we’ve got out of the Sillitoe report. It said something like “like other mesothermal veins, the grades and widths are becoming more favorable with depth” (paraphrasing). Thus, the INITIAL SHIPPING GRADES might be expected to increase with depth DUE TO IMPROVEMENTS IN EACH OF THOSE 2 FACTORS-IMPROVING GRADE AND WIDTH.
It will be interesting to see, as the “decline spiral” opens up new sub levels for exploitation, how the widths and grades will be affected with depth. I’m hoping they will be sinking the decline spiral and “opening up” the various levels by punching a hole through the DL2 Vein “sheet of plywood” and then report back to us the grades and widths, before they start the mining process on those levels. If you accidentally intersect an “ore shoot” with screamingly high grades then that would make things interesting.
If a given sub level happens to have real strong widths and/or atypically high grades, I would assume that management will preferentially go after that level with a sense of urgency i.e. “high-grading”. In a scenario like Auryn’s, EXPLOITATION at progressively lower levels is also EXPLORATION except you get paid to do it instead of paying to do it. It also allows you to block out MR/MR. With those kinds of grades, you might be able to block out a lot of ounces of MR/MR fairly rapidly.
I’m going to assume that the METALLURGICAL TESTING will dictate what type of gravimetric methodology works the best with our ore. There will be a certain “MESH SIZE” post-crushing and pulverizing that brings about the best recovery rates. For the artisanal miners it was a “minus 200 Tyler mesh”. The artisanal miners had good results when they tinkered with different concentrating methodologies. A crude flotation system got their 64 gpt gold average SHIPPING GRADE up to 92 gpt gold. In 1970 they experimented with an undisclosed type of concentrating mechanism that got their 64 gpt figure up to 102.7 gpt gold.
Auryn has already played with a gravimetric concentration system and had “EXCELLENT RESULTS INVOLVING OVER A 90% RECOVERY RATE”. So, at least the DL2 ore has had a good history of being amenable to various “beneficiation/concentrating” methodologies but there’s always a certain fraction of the ore that might be “REFRACTORY ORE” that needs further treatment to separate the gold from the gangue (worthless material). A lot of the nuances of the DL2 Vein ore is already known because the mine has already produced 2,000 tonnes of ore over the course of 30 years.
Finding the offtake partner willing to pay the maximum amount can be a challenge. It sounds like Enami’s terms may have already been exceeded but who the heck knows who will table the best bid by the end of the process. Hopefully, there will be plenty of bidders for our ore at a time when few new sources of “concentrate” become available. A “gold/copper concentrate” could obviously be a hot commodity nowadays with the POG like it is and the demand for copper like it is likely about to become.
The good news is that at the end of the day, although the ore metallurgy is important, the ECONOMICS will be most determined by GRADE. There is no arguing that this is EXTREMELY HIGH-GRADE GOLD ORE. EXTREMELY HIGH-GRADE GOLD ORE tends to have EXTREMELY LOW ALL IN SUSTAINING COSTS (AISCs) to produce each ounce of gold within that “concentrate”. This translates into EXTREMELY HIGH-GRADE ORE TENDING TO HAVE EXTREMELY HIGH “MARGINAL PROFITS” PER OUNCE PRODUCED. ANY “REFRACTORY ORE” WILL HAVE A HIGHER AISC.
The way you might want to think of MINERAL ECONOMICS AS A FUNCTION OF GRADE is like this. Pretend that there is another junior producer on top of our plateau that is mining the worldwide average of 4 gpt gold ore from a different vein. Pretend that Auryn is cranking out gold with the same SHIPPING GRADE as the artisanal miners i.e. 64 gpt gold. (This is by no means a prediction but I want to be conservative.)
Let’s assume that the other miners have the same cost structure as Auryn, i.e. they pay the same wages, the same amount for diesel, explosives and electricity, the same amount for equipment and the same amount for transportation costs, etc. In other words, it costs the same amount (in TOTAL GROSS COSTS) for each company to fill up one truckload of ore and send it down the hill. The Auryn truck is going to have 15-TIMES AS MANY GOLD OUNCES IN IT because of the grade disparity. Compared to the other producer, THE ALL IN SUSTAINING COST to produce EACH OUNCE of gold in a concentrate form in those truckloads, will be MUCH, MUCH less for Auryn. The 2 companies will be paid the same amount PER OUNCE of gold delivered NOT PER TRUCKLOAD.
When it comes to the MARGINAL PROFITS per ounce produced, (the amount paid per ounce minus the AISC to produce an ounce) Auryn’s MARGINAL PROFITS will crush the MARGINAL PROFITS of that other miner. When it comes to calculating the TOTAL PROFITS of each company, Auryn will be able to multiply a vastly superior MARGINAL PROFIT PER OUNCE produced by a VASTLY LARGER NUMBER OF OUNCES PRODUCED in a given amount of time. THE CONCEPT OF BEING ABLE TO MULTIPLY A VASTLY LARGER MARGINAL PROFIT PER OUNCE BY A VASTLY LARGER NUMBER OF OUNCES IS A PRETTY POWERFUL CONCEPT.
If the Auryn operation also has a VASTLY superior ability to ramp-up production levels (in terms of truckloads of ore) i.e. “SCALEABILITY” because it was able to tap into a VASTLY superior ventilation and safety exit system due to producing immediately under the “old workings”, and they’re able to safely mine several sub-levels at a time, then………you get the picture.
I call this phenomenon “MINING MATH”. It doesn’t seem fair to the guys mining 4 gpt gold ore but at least they’re making a buck or two at these gold price levels. Another “VASTLY” you can add to that string of “VASTLYs” is the VASTLY improved price of gold when compared to the $35 POG present when the artisanal miners were doing their mining. The POG has gone up 57-fold since then. The reason most of us (speculators) are invested in this sector is because we’ve read about these 30- and 40-baggers that others have experienced. The reason there are 30- and 40-baggers in this sector is “MINING MATH”. The catch is, only the producers of extremely high-grade ore have access to “MINING MATH”.
From my point of view, Auryn is “IN PRODUCTION” as we speak. The “ventilation/safety egress chimney” is being constructed WITHIN THE DL2 VEIN MATERIAL. They’re mining the DL2 Vein ore while going upwards at a 20-degree angle to level 2 of the “old workings”, where the fresh air resides. The artisanal miners mining in the “old workings”, immediately above where we are today, were mining this same DL2 Vein or “sheet of plywood”. The way you tie into the 7 shafts and 5 chimneys within the “old workings” is mine your ways upwards through the vein until you hit a big cavernous system of empty “stopes”.
This “Ventilation/safety egress chimney” has a variety of purposes. The first is VENTILATION. The second is to provide a safety egress manway. The third is to provide PRODUCTION during its construction. The fourth is to provide “SCALEABILITY” because of its provision of ventilation and a safety egress manway. The commissioning of each of those future sub levels into production, should double, then triple, then quadruple, then quintuple the original production rates from the 2 working faces provided by level 3.
Oh sure, the production levels will crank up like crazy soon but, like Kevin tried to tell all of us a while back, the single most important press release made in the history of Auryn had to do with finally intersecting the DL2 Vein and the SUCCESSFUL CONFIRMATION of the original assay results received from the original sampling at the intersection of the Antonino Adit and the DL2 Vein. It seemed like an innocuous tweet at the time. What happened was that Auryn hit the TRIFECTA. They finally located that elusive EXTREMELY HIGH-GRADE DL2 Vein after thrice thinking they hit it but the geochemistry failed to confirm it. They also successfully corroborated the EXTREMELY HIGH HISTORICAL SHIPPING GRADES and they completed the PRODUCTION ADIT (the Antonino Adit) needed to transport the mined ore up to the surface.
Auryn had already reached one of the most critical milestones in any mining project. They had already submitted their BASELINE ENVIRONMENTAL SURVEY several years ago and got it approved. Much more recently they successfully finished and submitted their OFFICIAL MINE CLOSURE PLAN and got it approved by SERNAGEOMIN. And they also completed their DEFINITIVE MINE PLAN, submitted it and got it approved by SERNAGEOMIN. This led to their being granted their DEFINITIVE EXPLOITATION PERMIT.
The Chilean Mining Inspectors, after a recent unannounced inspection of the DL2 Vein project was successfully completed, reminded management to tie-in the completed “ventilation/safety egress manway” with the current forced air ventilation system once the “chimney” was completed. I would imagine that the official ALLOWABLE PRODUCTION LEVELS will be determined once the new “chimney” is signed off on.
