Hi EZ,
Thanks for your hard work in providing background information as to the accusation that Auryn’s DL2 Vein assay reporting was somehow flawed. If the forum participants are waiting for assay results in a format like: “in between 140 and 150-meters of depth they encountered “X” gpt of gold and in between 190 and 210-meters depth they encountered “Y” gpt of gold”, they’re going to be waiting for a very long time. This is how DRILL CORE assay results are reported, not assays for underground veins. With drill cores, you’ll also get a fancy explanation of how they split the core, maintained custody of the core and the various QA/QC measures that were taken.
The standards and guidelines for sampling underground veins is to perform a “channel sample” or “channel chip sample”. What the Professional Geoscientist will typically do is create a channel or trough across the “true width” of the vein in a “representative area” (not just through the shiny stuff), from one border “selvage” (border between the vein material and the surrounding wall rock) to the other. The depth is typically an inch or two and the width around two inches. Some geoscientists will use a diamond tipped saw while others will use a chisel and hammer. The samples are collected and placed into a bag and labeled as to location and the width of the sample. The location of the sample site is often marked with a locator number in spray paint. A potential suitor may want to run a check assay at that site in order to confirm the bona fides of the sampling. A check assay like this would probably be run through a different lab.
The assay results of the DL2 Vein published by management clearly delineates the width of the sample as being 0.6-meters. The concentration of three metals were requested for by the geoscientist on the lab prescription. They were gold, copper and silver. They were accurately reported using the proper units i.e. grams per tonne for gold, ppm (same as gpt) for silver and percentage for the copper.
The methodologies typically used for assaying are AAS (atomic absorption spectrometry), ICP (inductively coupled plasma) and “Fire Assay” if the gold grades are over the maximum levels detectable for AAS and ICP. The gold grades averaging 164 gpt obviously needed a fire assay. Low-grade gold is typically defined as grading less than 1.5 gpt gold. Medium-grade ore is defined as having a gold grade of in between 1.5 gpt and 5 gpt gold. High-grade ore is defined as anything over 5 gpt gold.
The results for the initial samples taken at the intersection of the DL2 Vein and the Antonino Adit were professionally delineated on the assay result certificate. The “FF” on the assay certificate reports the results of the recovery of the smaller particles of gold or the “fines”. In Spanish, I believe FF refers to Fiero (fire assay), Fina (fine particles). You also see an FG entry. This refers to the coarser particles i.e. “Fiero Gravimetrica”. The assay report for the gold grades combined the FF and FG figures which is not unusual. The “fire assay” is the Cadillac of all gold assay techniques in regards to accuracy. They are, however, a little bit spendy.
This is an underground vein project with EXTREMELY HIGH-GRADE GOLD early production opportunities present. Don’t expect a bunch of drilling to block out Mineral Reserves and Mineral Resources (MR/MR). You’ll get plenty of that on the Pegaso Nero and the LDM. Don’t expect a formal scoping study (order of magnitude study), a pre-feasibility study or a feasibility study on the DL2 Vein project. The purpose of these very thorough and very expensive studies is to determine the ECONOMIC FEASIBILITY of a project leading to either a POSITIVE PRODUCTION DECISION or to a negative one. Auryn is WAY PAST that stage on the DL2 Vein project.
The average grade being mined worldwide in an underground vein project is 4.15 gpt gold. If this project were averaging 3 gpt gold grades in all of the preliminary testing, then management would have had to undertake and pay for a heck of a lot more studies and we’d have reams of paperwork to sift through as well as probably 20 million more shares outstanding. A POSITIVE PRODUCTION DECISION was made on this DL2 Vein project about 2 years ago. This led to the drifting of the Antonino Adit which was designed to intersect the DL2 Vein at the depth where prior mining efforts ceased back in about 1970 when the price of gold was $35 and the economics of the project were vastly different. Fast forward to today in which the price of gold has increased ABOUT 57-FOLD and the DL2 Vein grades, widths and ore presentation have improved with depth.
Auryn management has been blessed beyond comprehension with 30 years of HISTORICAL SHIPPING GRADES provided by ENAMI on this very same DL2 Vein. SHIPPING GRADES include the grade of the vein itself, the grade of the surrounding wall rock that must be mined, and the amenability of the ore to various “beneficiation” methodologies. Because it includes ALL of these critically important factors, it is the single most accurate predictor for the ECONOMICS that Auryn will encounter. Pretend for a moment that 53 years didn’t lapse in between the last day of operation for the artisanal miners and the first day of production by Auryn AT THE VERY SAME SPOT IN THE VEIN STRUCTURE.
What would be the most critical parameter to evaluate if Auryn were to have purchased this operation in a “turnkey” fashion on the day after the artisanal miners ceased operations? It would be the HISTORICAL SHIPPING GRADES especially if Auryn commenced production at the same spot that the artisanal miners ceased operations. What happened in the intervening 53 years in this case? Did the extremely high-grade gold go anywhere in the interim? No. What happened is the price of gold went up 57-fold. People in this industry like to say that “all of the low-hanging fruit has already been pretty much been plucked”. This is accurate for the most part but there will be sporadic instances of scenarios like this one.
What would the NET PRESENT VALUE of just level 3 of this operation be if Auryn stepped in and started producing gold ore with the same SHIPPING GRADE as the artisanal miners achieved at level 2 (about 74 gpt gold)? Let’s look past the fact that the “beneficiation” methodologies in use today put those used 53 years ago to shame. Based on Medinah’s number of shares issued and outstanding (2.8 billion) and their 24% ownership of the entire ADL Mining District as well as Medinah’s current share price of $0.0017, “the market” values the ENTIRE ADL MINING DISTRICT at less than $20 million. If you started tomorrow morning, you couldn’t purchase a group of disparate mining concessions and consolidate them into a unified mining district for $20 million. If you tried to, it would probably take you 5 or more years.
The artisanal miners, known as “SMFL”, mined a 350-meter length of the “surface strike” of the DL2 Vein down to a depth of about 100-meters. In the top third, they averaged a SHIPPING GRADE of about 54 gpt gold. In the middle third, the average was a SHIPPING GRADE OF 64 gpt gold. In the bottom third, they averaged a SHIPPING GRADE of about 74 gpt gold. These grades are “off the charts”. In their last year of production, the miners used a “beneficiation” methodology (probably gravimetrics) that allowed them to produce a “concentrate” averaging 102.7 gpt gold.
Again, the average grade of gold being mined worldwide in an underground fashion is 4.15 gpt TODAY. These projects are obviously ECONOMIC or they wouldn’t be in production. So, 4 gpt gold grades are ECONOMIC today in underground vein projects. “ECONOMIC FEASIBILITY” was never a question for the DL2 Vein project. Management had the financial wherewithal to not only advance all of the funds needed to put the DL2 Vein project into production, they did it without charging any interest. That’s a pretty solid attestation to what management feels about the ECONOMIC FEASIBILITY of this project.
Management has now taken 3 separate sets of samples at the Antonino Adit (level 3). One hundred meters to the NNW of the intersection of the Antonino Adit and the DL2 Vein, below where shaft A intersected level 2 of the “old workings”, 12 samples were taken averaging about 150 gpt gold. At the recent intersection of the Antonino Adit and the DL2 Vein, two groups of samples were taken. The first group averaged 164 gpt gold and 4.5% copper, and the second averaged “about 150 gpt gold” and the copper results were not reported. The average grade of copper being mined worldwide is 0.6% copper.
THE SIGNIFICANCE OF THESE ASSAYS AND THE COMPLETION OF THE ANTONINO ADIT IS THAT THE 30-YEAR HISTORICAL SHIPPING GRADES HAVE NOW BEEN CORROBORATED AND THE “PRODUCTION ADIT” NEEDED TO TRANSPORT THIS EXTREMELY HIGH-GRADE ORE TO SURFACE IS IN PLACE. The timing of these achievements needs to be appreciated. All of this occurred as the price of gold is approaching its all-time high. The share structure of Auryn also needs to be appreciated. All of this occurred in a corporation with only 70 million shares issued and outstanding, 60% of which are held by management and subject to Rule 144 resale restrictions.
We recently learned that several parties have submitted MEMORANDUMS OF UNDERTANDING (at least 1 accompanied by a TERM SHEET), seeking to purchase the ore produced by the DL2 Vein operation. What does this tell us? Purchasers of ore like this need to be convinced that a reliable flow of ore will occur over time. These purchasers of ore will, in turn, typically have contracts in place committing to a given level of ore flow to those further downstream. They will obviously have already thoroughly checked out the operation and probably taken their own assays. Why didn’t management tell us about exciting things like this going on behind the scenes? They did. They told us the grades they encountered at the intersection “T” as well as those found 100-meters to the NNE of this “T”, and our due diligence already told us what the HISTORICAL SHIPPING GRADES were from this same area. We just needed to see some corroboration of these off the chart SHIPPING GRADES and we got it. Of course, there would be parties behind the scenes wishing to get a piece of the action.
The due diligence of the MOU providers could not have been completed UNTIL the Antonino Adit had made an intersection with the DL2 Vein. These parties were well aware of the HISTORICAL SHIPPING GRADES but they needed this information to be corroborated prior to advancing in the negotiations with Auryn. The intersection with the DL2 Vein occurred on December 23, 2022 so a lot has happened in the brief timeframe after this intersection.
Auryn has put a pair of negotiators with impeccable credentials onto the BOD recently. Chile’s Mining Ministers have been touring the on site operation and showering it with compliments. They even chose Auryn and its geoscientists to host a series of workshops explaining new technologies in the mining industry. Management never told us that we had hosted a bunch of outside parties after the intersection of the DL2 Vein and the Antonino Adit and the corroboration of those HISTORICAL SHIPPING GRADES. There’s a lot that management can’t tell us when the deal cutters are in action.
Are a lot of these developments behind schedule? Absolutely. Management wanted to host an Annual General Meeting in Santiago 4 months ago on December 6, 2022. The plan was to give guided tours to the shareholders of an operating mine. A lot of developments were hinging on a successful intersection between the Antonino Adit and the DL2 Vein AND THE SUCCESSFUL CORROBORATION OF THE HISTORICAL SHIPPING GRADES.
These successes represent a significant DERISKING for any party interested in co-developing the Pegaso Nero porphyry area. Mesothermal Veins like the DL2 Vein tend to “telescope” out of existing porphyry deposits. A porphyry deposit represents the now cooled magma chamber and area immediately above it. While in a molten state, it was the magma chamber that gave rise to the hydrothermal fluids and gases that mineralized the cracks in the overlying rock that are now extremely high-grade “veins”.
Kevin made some interesting comments a few weeks ago. He stated that the two biggest announcements made in the history of Auryn were firstly that seemingly innocuous statement by management that the initial assays received from the sampling done at the intersection of the DL2 Vein and the Antonino Adit (that came in at 164 gpt gold) AS EXPECTED, HAD BEEN CORROBORATED BY THE SECOND ROUND OF SAMPLING DONE AT THIS SAME SITE. Management basically referred us back to the assay report from the initial sampling for the details.
He went on to say that the second most important press release ever made in the history of Auryn was the one citing the 2 new accomplished deal cutters with impeccable credentials as accepting seats on Auryn’s BOD. Kevin went on to say that these 2 important press release were somehow linked as if one triggered the other. I THINK THIS ADDRESSES THE IMPORTANCE OF NOT JUST THE CORROBORATION OF THE INITIAL 164 GPT GOLD ASSAYS AT THE INTERSECTION “T” BUT ALSO OF THE OFF THE CHART HISTORICAL SHIPPING GRADES.
