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.
- 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.
- 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.
- 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).
- 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”.
- 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.
- 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.
- In Q-1 of 2021, Auryn shipped 9 tonnes of ore to Enami, with an average SHIPPING GRADE of 45 gpt gold.
- All of these grades were achieved WITHOUT the benefit of modern day “beneficiation/concentration” methodologies designed to remove impurities and thereby enhance the grade.
- 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.
-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.