Auryn/Medinah - 2023 1st Half General Discussion

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DD,
Interesting you highlight one of my favorite portfolio positions. It has an interesting history and is doing very well:

If anyone else has followed and invested in Lundin Mining corp. over the years they may have seen this interview writeup from a couple of years back by Mark Sitter, Vice President of Sustainability.
A couple main topic threads ( it’s worth reading the link) discussed are excerpted below …

Why Mining Companies Should Care About ESG

Studies show that companies that do not focus on ESG are putting their long-term competitiveness at risk. What are the ways that the ESG proposition can create value for the companies?

  • · Access to capital:
  • · Access to resources:
  • · Access to customers:

Some companies operating in the junior space may not have a dedicated ESG function. How can these companies start developing and implementing an ESG plan?

… Juniors generally don’t have the resources or activities to merit a large and complex ESG strategy. So start small. Remember: ESG planning is a journey that’s iterative and gets better over time. Here are some thoughts on what that process should consider:

Typically, Large Cap companies do better when it comes to the visibility of their programs in sustainability. What can Small Caps do to get noticed by the ESG ratings’ agencies or be included in ESG indices?
(Why Mining Companies Should Care About ESG - Lundin Foundation)

That same year (2021) another position I hold, Karora Resources, published its Inaugural ESG Report For 2021. "Karora’s ESG program is overseen by its Board of Directors with a clear objective of introducing and maintaining policies and systems that reflect the Company’s goal of being a leader among our peers in the ESG and climate space.
… The ESG materiality assessment identified and prioritized the ESG factors with the greatest potential to materially impact company value and our ability to achieve our strategic objectives over the short, medium, and long term." There are many other examples. Solar is not a sideshow distraction as ESG governance is very mainstream. Baldy going back to 2016 is highlighting the pivotal year for MDMN under new management before Dr. Sillitoe was invited to outline the best path forward for successful exploitation based on a geology review and tour of the property. As promising as the Caren Mine (Larissa Adit) is, the strategic value was clearly stated before prioritizing to the Fortuna: “This report is for internal purposes. It will provide Auryn’s team with a fuller understanding of the diverse geological structures found at the Altos de Lipangue and help place them within an historical regional context.” This was part of AURYN’s previously announced District-wide Analysis. The larger and more historically investigated region of the Fortuna Mine was more clearly defined as to its preexisting data. I’m sure the earlier work done at the Larissa Adit gave much insight on the difficulties of narrow vein exploitation and will be returned to later with great success. A better course for early exploitation was decided upon as seen by the progress made to date.

When Baldy used to habitually belittle those commenting here the standing joke was … “Now where did DOC hide that tank?” Time to take cover! It was just expected that Baldy would arise to the occasion with some kind of incoming flak. The pandemic kinda put an end to that kind of good natured joking around. Now that exploitation is slowly coming together, I expect a rigorous PR campaign will be initiated after a beneficiation process begins and direct shipment to ENAMI is embarked on. Folks that actually have an interest based on the reported incremental progress and have money invested want this company to succeed. There are exciting times ahead for AURYN. Management has adopted a vision for long-term achievement and diligently working toward a profitable future for all stakeholders. We still need to wait and see results, but let’s not give up on current accomplishments just because they are taking longer than expected. Constant negativity is a nuisance, but does not harm management’s determination to turn this company into a producing mine. The harm instilled from the previous management is primarily what Baldy’s post from 2016 was highlighting.
EZ

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The 2016 PR was made by Maurizio not the previous management. I didn’t cite that post to be a “nuisance” but rather point out that management says a lot of things that don’t turn out to be true. They also said the project was “fully funded” in parallel to reaching out to myself and many others for financing. They also said the hit the DL vein, twice, before (I’m assuming) actually hitting it. There were dozens if not hundreds of posts speculating on when the hyper grade stockpiles would be sent to Enami in the new truck. Still has happened. I wish the company success and when they start to acheive some I’d be happy to jump back in by purchasing shares. However, my “constant negativity” has proven to be well placed so I patiently wait, follow with interest, and do my best to dilute the “constant euphoria” which has never been right. Doc left the tank a long time ago and has drifted into never never land. It all boils down to one’s perspective. Easy pretends to understand mine.

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Another nuisance post does not negate the persistent forward progress management is making. My sock drawer investment is still intact while you’ve just failed to move on Baldy. :slightly_frowning_face: Keep up the good work, I’m sure management is paying it a great deal of attention to you, Baldy, while weighing it to what Dr. Sillitoe had to say toward a mine plan. :slightly_smiling_face:

Tribute to Richard H. Sillitoe
Tribute to Richard H. Sillitoe464×816 56.1 KB

I’m sure your words and wealth of knowledge overwhelm anything Dr. Sillitoe had to say in moving the company forward! :rofl:

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Q4 of 2017?? Six years ago?? Is “Dr” Silltoe even still alive?

I admire you and other’s patience holding this stock as we go through multiple market cycles and triples in the SP 500 over the past ten years. Must be nice to have play money. I have the unfortuante luck of having to focus on opportunity costs, ie: “dead money” as I cleary don’t have the same financial flexibility as many here to be invested in a stock that is down 90% over the past twenty years and claim it is “intact”. Hey, if the stock rallies 500% some may break even. Fingers crossed.

I’d much rather buy AUMC (wouldn’t touch MDMN) at 75 cents afrer they have acheived a few milestones vs. holding (forever) in the hopes they do so. Call it “nuisance” posting but this company, as of yet, has not hit their “milestones.” This is not an debateable point unless you think 7 years of sorting out a mine plan is commendable.

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Actually it will run at least 3x when AUMC announces the trading partner. (most like a ETF)

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Well said. This play was always going to be about timing things right. We all failed miserably at timing it. The goods are there, how long will it be now? It may have taken 7 years but at least there was no dilution. So I’m continuing to average down at these basement prices as I believe a 5 to 10 bagger is inevitable. Too much mineralization there and the precious metals are entering a bull cycle for the ages

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Wouldn’t a 5-10 bagger from here be a LOSS for MC et al? Maybe MC averaged down too, but that would have to be disclosed, right?

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I think we go higher than that but 10 bagger minimum seems completely reasonable given what we know.

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Are you saying that “founders” don’t lose money in mining ventures? What is the relevancy of his (and friends/family) cost per share in MDMN?

In any case, his actual cost per share in his blended AUMC/MDMN position is WAY less than 2, 5, or 10 cents per share in MDMN. He controls AUMC and received his share of that entity for a “song” (AUMC forgave $300k in debt owed by CDCH and then took control of the assets).

The Cerro Board of Directors increased its authorized share count to 7 billion shares and paid AURYN Mining Chile SpA 6.65 billion common shares and its 5% interest in AURYN for all AURYN’s mining claims

If you take his cost averaged across positions in both companies you may be suprised.

My guess is that his primary objective will be to recover the money he’s poured into the company over the past couple years (debt). If he could liquidate his holdings in AUMC at today’s price (which he can’t), he’d be in the money.

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For those wondering what is going on . . . the company is conducting a thorough analysis of the ore to determine the best method or methods for processing.

Gold ore can be processed in several ways, depending on the nature of the ore, its size, the presence of other minerals, and the final quality required of the gold. Here are some of the most common methods:

  1. Gravity Separation: This method makes use of the difference in density between gold and the impurities. It’s often the first step in gold processing because it’s relatively simple and cost-effective. Gold particles are separated from the ore using various devices such as sluice boxes, jigs, and centrifugal concentrators.
  2. Flotation: This method is typically used when gold is combined with sulfide minerals like pyrite or arsenopyrite. The process involves grinding the ore into a fine powder, then mixing it with water and chemicals that bind to the gold and float it to the surface. The gold-rich froth is then skimmed off the top for further processing.
  3. Cyanidation: This is the most commonly used method for processing gold ore. It involves treating the ore with a cyanide solution, which binds to the gold particles and forms a soluble compound that can be separated from the rest of the ore. The gold can then be precipitated out of this solution by adding zinc. This method can be used in either heap leaching, where the solution is applied to a pile of ore, or in carbon-in-leach processes, where the ore is ground and mixed with activated carbon before the cyanide solution is applied.
  4. Bioleaching: This is a more environmentally-friendly method that uses bacteria to extract gold from the ore. Certain types of bacteria can consume sulfide minerals and produce a weak sulfuric acid as a byproduct, which can then leach out the gold.
  5. Refractory Processing: If the gold is encased in sulfide minerals (making it “refractory”), it won’t react with the cyanide solution used in cyanidation. In this case, the ore has to be pre-treated to remove or alter the sulfides so the gold can be accessed. This can be done with roasting or pressure oxidation, both of which involve heating the ore to high temperatures.

Each method has its own advantages and disadvantages, and the choice of method depends on a variety of factors, including the nature of the ore, environmental considerations, and cost. Often, more than one method is used in combination to achieve the best results.

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Thank you Kevin for the breakdown. When you say company, is this the mineral trader from Peru that has a term sheet Mou with Auryn or Auryn themselves?

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The recovery rate for gold extraction methods can vary widely depending on the specific nature of the ore and the particular extraction method used. However, here are some typical recovery rates:

  1. Gravity Separation: For free-milling ores, gravity separation can achieve high recovery rates, often up to 90% or more. However, for complex ores or ores with fine gold particles, the recovery rate can be much lower.

  2. Flotation: Flotation can also achieve high recovery rates, often over 90%, for sulfide-associated gold. However, the gold concentrate needs to be further processed, usually with cyanidation.

  3. Cyanidation: When used on free-milling ores, cyanidation can achieve gold recovery rates over 95%. For complex ores, the recovery rate can be lower, but cyanidation is still often the best option because of its relatively low cost and high efficiency.

  4. Bioleaching: The recovery rate for bioleaching can vary widely, from as low as 50% to as high as 90%, depending on the specific nature of the ore.

  5. Refractory Processing:

    • Roasting: Recovery rates can be quite high, often over 90%, but the process is energy-intensive and can be expensive.
    • Pressure Oxidation (POX): Recovery rates can be very high, often over 90%, but the process is also energy-intensive and can be expensive.
    • Bio-Oxidation: Recovery rates are usually in the 80% to 90% range, and the process is less energy-intensive than roasting or POX, making it a more environmentally-friendly option.
    • Ultrafine Grinding: This method can achieve high recovery rates, but it’s energy-intensive and can lead to high wear and tear on equipment.
    • Nitric Acid Pretreatment and Alkaline Oxidative Leaching: These methods can also achieve high recovery rates, but they are often used in combination with other methods, such as cyanidation.

Please note that these are typical recovery rates, and actual rates can vary depending on many factors, including the quality of the ore, the specific extraction method used, and the expertise of the personnel carrying out the extraction process.

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AURYN is conducting the analysis, as far as I’m aware. I suspect it is required by the mineral trader, but I don’t know that.

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Yea good luck getting any sort of decent size position at .75 now, let alone after any single milestone is made. Mark this post.

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Baldy,
I don’t pretend anything here. You and I quite simply have a completely different perspective on this one equity. I hold it for a very specific reason, and you sold it when you did because it benefitted you in a particular way. I did not have that option and so in that respect I’m a stuckholder. I’m not advocating buying MDMN to average down because I’m already overweight here. For many years I bought dollar for dollar the same amount in CDCH and MDMN. As a result, I have a respectable position in AUMC which apparently you do not, and a large MDMN position that I’m neither buying nor selling. I agree with all your reasons for not holding this stock, and why you are not buying. Most investors quite wisely are risk adverse in the present era of uncertainty. Both AUMC and MDMN are presently illiquid. I invest to make a profit the same as you do, preferably in equities that are both liquid and have good fundamentals. I’ll repeat for the umptieth time I have a large “FULL” position in this stock held in an IRA and ROTH. I know why I post here. I do question what your purpose in posting here is. At times you are entertaining and laughable! Only 12 posts in 12 days without a company update? :rofl: :point_down:

It is an annoyance (to me personally) with your attitude of a know it all that knows better than management in this particular stock. Your way to investing in this stock is not wrong, but it is also NOT suitable for all stockholders here. You fail to recognize and respect other shareholders points of view and why they did not sell and wait to buy back as you may eventually do.

You cover no new ground in your posts to anyone holding this stock long term, and primarily kept in a sock drawer. I did misspeak when I attributed your focus to the past management; I should have said it reminded me of why we took several giant steps backwards when the prior management’s myriad misrepresentations to stockholders were finally being exposed in 2016 and the lawsuits that followed. The present management has made tremendous strides forward compared to where we stockholders were at back in 2016, and finally started moving forward in 2017 with their longer term planning. If you could get off your high horse of always being right and everyone else is wrong when presenting your viewpoints it would be less of an issue.

Continue using your investment acumen for profits in the DOW, S&P, and NASDAQ. NASDAQ was down 33% last year and has come back 22%. Stocks can exhibit both cyclic and seasonal effects. ( an interesting article on seasonality - Best and Worst Months for the Stock Market - Seasonal Patterns - Trade That Swing). This stock is clearly not in the same category as major markets, or investable with the same metrics used in the major markets. AUMC is in a unique market and stage of it’s development. Management is looking for it’s payday the same as investors. Management is not looking to unload for $30M all at once as you frivolously suggested recently.

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”
Winston Churchill

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Marked. Wasn’t hitting the DL Vein, when they actually hit it, a milestone? What’s the next one, just so I can keep track? An MOU with a global minerals trader? This is becoming comical

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YOUR QUOTE was that you would rather take a position at .75 AFTER they hit milestones. Your words, not mine.

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Once we get the answer on the metallurgy tests, it’s just a matter of:

Effecting the deal
Finishing the chimney/escape route
Purchasing whatever equipment is necessary for processing, scooping, and hauling
Setting it all up
Getting to work

Probably a lot of detail I’m leaving out, but it all seems logistical, except for the negotiating and decision on the deal.

The point is it all seems logistical.

I imagine, in time they’ll want to construct a camp so work can be done 24/7.

New mining faces.

Maybe I’m naive to think these guys can make a profit - MC gets his money paid back and then we get dividends? Hopium.

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WHAT KIND OF GRADES TO EXPECT IN THE ORE THAT AURYN WILL BE MINING AND SHIPPING WHEN AND WHERE THEY COMMENCE PRODUCTION

First of all, the point would need to be made that this subject couldn’t even be broached UNLESS Auryn is going to commence production at the very same spot that the artisanal miners ceased operations i.e. at the 1.840 meters above sea level elevation (level 3), immediately beneath where the artisanal miners ceased operations. This being the case, then there is a plethora of historical data available to ROUGHLY project an estimated SHIPPING GRADE.

FACTS

  1. The artisanal miners averaged a SHIPPING GRADE (DL2 Vein material plus lower grade surrounding wall rock) of 64 gpt. The amount of ore shipped was 2,000 tonnes.
  2. After cleaning up the tunnels within the “old workings”, Auryn removed 54 tonnes of DL2 Vein ore that averaged a SHIPPING GRADE (without beneficiation) of 85 gpt gold. WHAT IS INTERESTING IS THAT THIS VEIN MATERIAL DID NOT NEED ANY BLASTING WHATSOEVER PRIOR TO REMOVAL. It remains to be seen if Auryn can have this same good fortune in their upcoming exploitation efforts involving mining the DL2 Vein ore slightly below this area. The texture of the DL2 Vein ore appears to be vastly different from the host rock (granodiorite) that Auryn had to drill through while drifting the Antonino Adit. Management cited the extreme hardness of the rock being removed from the Antonino Adit drifting.
  3. Auryn took 12 samples of the DL2 Vein ore from the level 2 to 3 area, under the location where shaft A intersected the DL2 Vein. This location is about 100-meters NNW of the intersection of the Antonino Adit and the DL2 Vein. The average VEIN GRADE was about 150 gpt gold. Several samples were over 100 gpt gold and one was actually 1,220 gpt gold with off the chart silver grades. (WARNING: Possible “nugget effect” involved).
  4. Upon intersecting the DL2 Vein via the Antonino Adit, the first round of four, 0.6-meter-wide channel samples of the DL2 Vein, revealed an average VEIN GRADE of 164 gpt gold and 4.5% copper. These results were reported in a very professional manner delineating the grades of gold, copper and silver. The gold grades were measured by the most accurate of all gold assay procedures, namely the “fire assay”.
  5. A second round of sampling from this area came in at a “VEIN GRADE” OF “about 150 gpt gold”. This report was made in a much more nonchalant manner. The wording was basically, “as expected, the second round of samples came in at about 150 gpt gold”. This second tranche of sampling came from the same area at the site of the intersection, but it was done at a later time because of an equipment breakdown prior to the DL2 Vein being completely uncovered. The first tranche was taken from near the floor of the adit at the intersection point while the second was taken from near the “back/roof” of the adit at the intersection point.
  6. Note that these grades were VEIN GRADES. What we are actually waiting for are SHIPPING GRADES. These will incorporate (but not isolate) things like the ratio of the width of the working face that is composed of VEIN MATERIAL versus less-mineralized wall rock, the grades of the less-mineralized wall rock, and the efficiency of any post-mining “beneficiation/concentration” procedures deployed. The paycheck received will be determined by TONNAGE and SHIPPING GRADES. The results of the METALLURGICAL testing being currently done at 2 labs in Peru which involve gravimetric beneficiation using centrifuges, should give us a better indication of projected SHIPPING GRADES.
  7. In Q-1 of 2021, Auryn shipped 9 tonnes of ore to Enami, with an average SHIPPING GRADE of 45 gpt gold.
  8. All of these grades were achieved WITHOUT the benefit of modern day “beneficiation/concentration” methodologies designed to remove impurities and thereby enhance the grade.
  9. In the end, the only grade that really matters is the SHIPPING GRADE of the “concentrate” being purchased. From an ECONOMICS point of view, the keys will be the terms of the offtake agreement with the party purchasing the ore, the price of gold and copper, and the ALL IN SUSTAINING COST (AISC) to produce each ounce of gold concentrate purchased by the buyer.

IF THERE WAS ONE CHARACTERISTIC OF THIS DL2 VEIN PROJECT THAT STANDS HEADS AND SHOULDERS ABOVE ALL OTHER CHARACTERISTICS, IT WOULD HAVE TO BE THE INCREDIBLY HIGH GRADES OF THE ORE, ESPECIALLY IN COMPARISON TO THE AVERAGE GRADE BEING MINED WORLDWIDE IN SIMILAR UNDERGROUND VEIN DEPOSITS OF 4.15 gpt GOLD. I’ll review the relationship between GRADES and PROFITABILITY in a moment.

RELEVANT INFORMATION

-despite the extremely robust grades averaged by the artisanal miners of 64 gpt gold, their mining and recovery methods were so inefficient that their tailings/discards averaged 14 gpt gold.
-50% of the ore mined by the artisanal miners had a preponderance of “fines” consisting of extremely small particles of gold. These miners had a very difficult time recovering the “fines” using the technologies available 75 years ago. Nowadays the various manufacturers of gravimetric concentration equipment (like Sepro and Knelson) have makes and models that are designed specifically for the recovery of “fines”.

WHAT DOES THE HISTORICAL DATA SUGGEST ABOUT THE AMENABILITY OF THE DL2 VEIN ORE TO BEING “BENEFICIATED” BY THE VARIOUS METHODOLOGIES AVAILABLE TODAY?

-The artisanal miners experimented with a 4-cell “flotation” circuit designed to remove more of the “sulfides”. They were able to get the 64 gpt average up to 92 gpt gold.
-In their last year of operations, the artisanal miners experimented with an undisclosed type of beneficiation methodology. This methodology (probably using gravimetrics) allowed them to get the average SHIPPING GRADE up to 102.7 gpt gold from 64 gpt gold. THE ORE SOURCED FOR THIS TESTING WAS TAKEN FROM LEVEL 2 IMMEDIATELY ABOVE WHERE AURYN IS TO RECOMMENCE PRODUCTION.
-Auryn has already completed testing of beneficiation methodologies known as gravimetric concentration. This technology (manufactured by “SEPRO/Falconer”) recovered over 90% of “even the fines”. As we speak, even newer methodologies are being tested in 2 labs in Peru to determine recoverability.

-THE QUESTION THEN BECOMES, BASED ON THE HISTORICAL MINING GRADES CITED ABOVE, AS WELL AS THE HISTORICAL “BENEFICIATION” EFFORTS JUST CITED, AS WELL AS THE CURRENT STATE OF THE ART IN “BENEFICIATION METHODOLOGIES, WHAT KIND OF PROJECTED “SHIPPING GRADES” MIGHT BE ANTICIPATED FOR AURYN WHO IS ABOUT TO RECOMMENCE PRODUCTION AT THE SAME SITE WHERE THE ARTISANAL MINERS CEASED OPERATIONS.
I think that we are close enough to receiving actual results that making projections might not be advisable.
-Note that in order to make any FINANCIAL PROJECTIONS we would still need to know the terms of any offtake agreement entered into as well as projected production rates per level, the number of levels anticipated to be in production simultaneously, ALL IN SUSTAINING COSTS, etc. Management promised “financial projections” soon after commencing production.
-When Maurizio was about to put the Larrissa Adit into production prior to SERNAGEOMIN mandating the construction of 3 approximately 140-meter tall “ventilation/safety egress chimneys” which led to putting the DL2 Vein into production first, he spoke of putting 6 levels below the Larrissa Adit level into production as well as 7 levels above the Larrissa Adit into simultaneous production. I don’t know if his ambitions have changed much since, but I wouldn’t at all be surprised if the “ramping up” of the number of sub-levels going into production might be quicker than many might otherwise sense. Once into production, all of a sudden everybody in the mining sector that does financings becomes your best buddy because of the “DERISKING” involved. If the “INTERNATIONAL MINERALS TRADER” becomes involved, and if they have deep pockets, then I would think that they would be highly financially incentivized to have the “ramp-up” in production occur rapidly. Back at the “informational meeting”, held in Las Vegas several years ago, Maurizio made it very clear that he wanted to become a “mid-tier gold producer” as rapidly as possible. This translates into producing somewhere around 300,000 ounces of gold annually. Up until I read his words about the original plans for the Larrissa Adit and simultaneously producing from 14 separate levels, I thought that his stated goal about becoming a “mid-tier gold producer” was a little bit “out there”. Now, I’m not so sure. I also never envisioned a bunch of Chilean Mining Ministers touring around in our adit or Auryn hosting “workshops” designed to teach the mining community about proper ESG compliance protocols and new breakthroughs in mining technology. Keep in mind, however, that things in this industry are famous for moving slowly.

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All good questions and fun to speculate about. Another question would be: where did the ~$300k (54 tonnes at 85gpt) and subsequent ~$27k (9 tonnes at 45gpt) go? If they actually shipped to Enami one would think, or at least ask, why the company financials reflect zero revenues over those time periods.

You could assume that the following would offer an explanation:

“The Company holds a mining option contract with a related party. Pursuant to the agreement with that related party they would incur all expenses related to the exploration and exploitation of minerals. There will be no repayment of those expenses from Auryn Mining. When minerals are found and sold the profits will reimburse the related party for all expenses incurred before profits are shared with Auryn Mining. As of December 31, 2021, the related party has incurred approximately $2,585,000 of expenses. These funds will not be refunded or repaid by the Company and are not payables of the Company and have therefore been excluded from the income statement for the year ended December 31, 2021.”

Maybe those lost revenues went towards paying down Maurizio’s accrued debt? However, if that is the case it would legally need to be detailed in the financials/filings. Maybe the shipments never happened. If they did, its a scary concept to think that the “insider third party” is going to be paying down this debt without investors knowing when, how much, etc.

*"As of September 30, 2022, the related party has incurred approximately *
$3,260,000 in expenses."

*"As of December 31, 2022, the related party has incurred approximately *
$3,685,000 in expenses"

Just another thing to speculate on.

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