All the best to you Rich. It’s never easy to exit a long-term investment. If this board were a popularity contest I would be failing misearably. This being said, I’m only here to offer my opinion and keep my toes in the water in case it ever gets warm enough to jump in. While I appreciate that investors here would much prefer the morphine drip and fantastical projections provided by BB and others, I’ve simply tried to present a more realistic assesment of this investment. Nobody likes a realist but I can handle being unpopular on a message board. I would have a considerably harder time knowing that I’ve added to the financial misfortune of many of the good folks here by spinning tales of a Chilean pot of gold at the end of a rainbow.
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The worst of this for me was not the financial loss or that I spun any tales, but I did pass them along to a few who invested and suffered to some degree. Speaking of that, I certainly wish Les Price nothing but the absolute worst of everything.
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Les Price deserves the hell he bought. just sayin…
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Hi Baldy - I see you are quoting Hulkster from weeks ago, but perhaps you are taking it out of context? I went back to follow the bouncing ball …
Seriously, I’m just trying to make sense of some of these complaints, back-biting, shared DD and opinions.
In the March 2023 Shareholder Notification, we are informed how the Chilean Mining Authorities selected Auryn Mining to host a series of training workshops regarding safer materials & explosives for mining producers." This selection was made after Mr. Carlos Hunt, SEREMI de Mineria-Region Metropolitana visited AURYN’s La Fortuna de Lampa mine. “The mining authorities expressed their satisfaction with AURYN’s operation and its high level of compliance with ESG standards.”
BB commented, after sourcing Auryn’s quarterly updates, regarding how Maurizio was noticed as someone “willing to work with the University of San Sebastian in providing externships.” Your average Junior Miners aren’t given roles or opportunities like that. That definitely sounds promising for Auryn as they continue ramping up production, imo. BB suggests that Auryn appears to have an interesting role “towards mandated environmentall responsible mining and the following of ESG protocols.” BB shared some quotes from previous updates in his post and commented on them with his educated opinion. All very reasonable possibilities.
NOTE: ENAMI recently granted Auryn Mining the Mining Register so they can now commence delivery and sales of minerals to them. According to Hurricane Rick, ENAMI may give CU credit for any gold ore processed averaging 2.5% CU or better. It’s my understanding that ENAMI may provide support to their miners because they benefit from speeding up the process, too. Could this be another financing opportunity that Auryn can take advantage of?
Baldy responded to BB’s post:
But as the discussion progressed with more research, it turns out that other mines DO use this “ESG strategy.” And the hurdles Baldy submits about the winter months & expense are not big obstacles after all.
And finally, here’s Hulkster’s actual post where you can find the quote Baldy just used against him …
Baldy, it helps to read your post that Hulkster is referring to. Perhaps you took his quote out of context?
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Sorry. I don’t understand the point of your post. AUMC isn’t actually mining so their environmental impact is minimal. Hulkster’s main argument for AUMC/MDMN appreciating in value is because Dogecoin was able to appreciate in value. I don’t even know where to go with that.
ESG and mining are ying and yang. My point is/was that even the best financed companies (those that can afford ESG initiatives) have a very difficult time doing so. At this point AUMC is just trying to make a dollar. Yet, readers here have to suffer from delustions of a “Green Mining Co.” Baby steps.
Anyone parsing through the AUMC PR’s and interpreting the fluff (which is typically offered by companies not delivering on the stuff that matters) as gospel, only need to cross reference what has been historically stated vs. reality. If you depend on the PRs for guidance on this investment you would have assumed production started 6 years ago.
To your earlier post: AUMC and MDMN are one in the same. That should not be a confusing concept. The reason why I wouldn’t touch MDMN is simply because AUMC has failed to deliver the porponiate shares. There really is no excuse even though I realize that the excuse offered was expectations that AUMC would appreciate in value, therefore making the accrued expenses be less dilutive. That has clearly gone in the wrong direction and MDMN is a kiss away from being delisted. AUMC issuing shares to MDMN would make AUMC way more liquid (trades by appointment currently). Why folks like BB who have been decimated in their invesment aren’t making more noise about this 6 year delay in a share distribution is unfathomable to me.
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Are you a speed-reader? 
I ask because you seem to skim thru posts and only reply to the parts you cherry pick.
No, Hulkster was talking about how Auryn was recognized by the Mining Industry Authorities for their “technical & financial effort” and Auryn’s “high level of compliance with applicable ESG regulations.”
That’s when he said: “It seems that as a very smart investor you pretend to be you simply can’t put the pieces of the puzzle together. (taste of your own poison).” But Hulkster made that statement only after you discounted everything BB said (on May 7th) about ESG. And you denied ESG was mainstream or common.
See your post at Auryn/Medinah - 2023 1st Half General Discussion - #438 by Baldy (on May 9th). You referred to it as “psuedo ESG” and added, “To make the argument that AUMC is pursuing a green mining strategy is literally proposterous.”
THAT is why Hulkster originally made that statement you convenienly shot back at him recently. Incidently, you slapped him with that same “Dogecoin” blurb then, too. I gotta hand it to ya though, you have interesting ways of deflecting.
REGARDING SAFETY & ENVIRONMENT (ESG) Here’s another reasonable post from BB
Easymillion shares his DD, too
This post is just another example where you tend to beat up on others who share thier DD & factual data to connect the dots using their mining expertise to present educated opinions. But disagreeing with them in a civil manner is very different from attacking their character. I just don’t understand your refusal to view other posts objectively. Criticism is okay, but why not constructive criticism? Especially considering that much of what you post is speculation & opinions, why would you do that?
Deep sigh
OK Jaded. You win. If Google searches convince you that mining is truely becoming ESG compliant and AUMC is leading the pack that’s just one more positive box to check for this company. If you believe that AUMC has issued PR’s that have been accurate, dependable, and delivered upon that’s another box. And if you choose to believe that BB’s posts are “factual” that’s certainly your perrogative. I can tell you, factually, that all of the above have netted a resulting 90%+ drawdown on your investment since Maurizio took over 7 years ago (not including the massive dilution of the AUMC “merger”). I would be doing a lot more than deep sighs but don’t need to b/c I haven’t had the misfortune of relying on the preceding factors.
No need to engage with an ignorant, deflecting chump like myself. You’re doing just fine as is.
Lastly, I don’t feel the need to be civil to likes of BB. Keep in mind that he attacked me and my family on several occasions when I started to expose Les Price. BB defended him and the rest of the management team until the very end while slamming me for having an alternative agenda. Not to mention the wealth destruction created over 20+ years as a direct/indirect result of “pie in the sky” forecasts leading to may investor holding on to a “story” far too long. Has he or others EVER admitted to being wrong or pointed out company failures? Hard to have constructive criticism when debating a multi-decade unappolgetically positive spin in the face of what has actually occurred.
Enjoy the long weekend!!
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If I attacked you and your family on several occasions, I sincerely apologize.
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November 2015
John,
You don’t even want to get it. Your arguments are so weak yet convincing to those that don’t understand markets and mining that it’s scary. Let’s tell the whole truth in an unbiased fashion for a change. You say in a very convincing fashion:
“Great Jim. Who owns the Picasso? I can promise you that your stake has been reduced by more than 95%.”
When you say that my ownership interest got diluted by 95% the key to me who doesn’t have an “anger itch” needing a daily scratch, but obviously not you, is how much the VALUE of my overall stock position has gone up. By “value” I mean NPV not the share price the market assigns. I find the comment you made to be full of DECEPTION but I have witnessed and have accepted that this is something that you just have to do because that anger itch is much stronger than your desire to shoot straight with the investors that rely upon your comments as being unbiased. I know this just as I know that Les’s timing predictions are seldom accurate. BUT THAT’S OK BECAUSE I’M AN ADULT AND I KNOW THIS TO BE THE CASE. I find no need to regurgitate it on a daily basis. When I lock horns with somebody, I like to sit down and find out exactly where we disagree otherwise it has a tendency to consume me.
Recently you witnessed some selling. At first you said that’s Les Price selling. Then the story became that its not only Les Price but he’s actually ILLEGALLY selling RESTRICTED shares. Why was it illegal? You told us that he was not filing the forms that an insider needs to file if they are a 5% owner of shares. You told us that Les had been doing this ILLEGAL selling since September. Later the story became that Claro too was ILLEGALLY selling RESTRICTED shares without filing the appropriate forms. Then you told us that Medinah’s BOD has been doing this all along. Your certainty level was its usual 100%.
Let’s slow down a bit and review the TRUTH that somebody not needing to scratch an “anger itch” on a daily basis might say. First of all, there is no 5% ownership laws demanding the filing of any forms. There is a 10% law BUT IT ONLY APPLIES TO CORPORATIONS REQUIRED TO REPORT TO THE SEC UNDER THE TERMS OF SECTIONS 12 AND 15 OF THE '34 SECURITIES EXCHANGE ACT. These are SEC Forms 3 (initial),4 (any changes in beneficial ownership) and 5 (late reporting of a Form 4) that are supposed to be filed. Medinah is NOT one of these “SEC FILING” corporations. As an OTCMarkets Pink Sheet company “current” with the “alternative reporting requirements” Medinah disseminates public information by filing 211 (a)(5) reports accompanied by an “attorney’s letter”. There are 9,800 companies trading on the OTCMarkets. The reporting requirements of SEC registered issuers involving 10 Q’s and 10 K’s are vastly different than 211(a)(5). BUT WE KNEW THAT OR SHOULD HAVE KNOWN THAT BEFORE BUYING OUR FIRST SHARES.
Thus there are no 5% ownership “filing requirements” for Medinah affiliates/control persons nor are there any 10% requirements to file Forms 3,4 or 5. Further, as far as Les allegedly ILLEGALLY selling RESTRICTED shares there is no way you or anyone else can detect the sale of RESTRICTED securities in our markets. If your allegation is true, this would involve the COMPLICITY of Medinah’s Transfer Agent (for illegally removing restrictive legends)and their Corporate Counsel for falsifying the attorneys letter needed to remove a restrictive legend.
John, your pattern of DECEPTION in these matters is so clear that you must, as an investment professional subject to all kinds of codes of conduct, realize this. Recently you engaged in a campaign to solicit funds from Medinah shareholders in order to pay the legal expenses to audit the sale of shares of insiders that you already informed us in a declarative fashion have been going on. Did the cart accidentally get in front of the horse? To my knowledge and that of several of my colleagues, there is no legal theory available to compel compliance with such a demand. Who’s going to tell the donors?
You made the suggestion that the results of this campaign might even end up in Les Price being forced into the open market to buy REGISTERED securities and it might even result in Les going bankrupt. Notice the scratching of that “anger itch”. Shouldn’t you pay the legal expenses involved in seeing if your assertions of ILLEGAL behavior are true or not and shouldn’t the results of any such audit antecede your accusations. John, you just can’t engage in DECEPTION like this in conjunction with the purchase and sale of securities of issuers whether “registered” with the SEC or not. The same goes for soliciting the funds of others under false pretenses. That’s why 10b-5 is called the “omnibus anti-fraud” rule.
I think it’s time you came clean with the forum participants that have been making buy/sell decisions based on your allegations. I would include the legal issues involving your family and Medinah as a starter in order to provide some context to your behavior. Why do I request this? It’s because your actions have put me into an ethical “no man’s land”. My faith does not allow me to engage in the type of behavior you have undertaken. I brought your Dad into this deal. He has the exact same tempermant that you have. He made the exact same accusations you are now making and in a similar fashion. Medinah had no choice but to handle it in a legal fashion. In a derivative fashion, I am responsible for your behavior and your Dad’s which bothers me a lot. You brought this upon yourself, not me. What’s amazing to me is that even knowing that management is transitioning out you actually have accelerated your campaign. One question I have for you is don’t the clients that you put into this deal have recourse to recoup any investment funds lost when the party that suggested the investment has done everything in their power to crush the invested in company due to personal family issues?
BB I appreciate the apology even though I believe you sincerly don’t think you ever made any attacks. In this post, you dismissed my active attempts to audit the share count and expose Les Price as an “anger itch”. After these accusations were proven 100% accurate you never retracted any of your previous defenses of Les/MDMN management/Claro nor offsenses towards me. You even suggested that “clients” I brought into this investment should have recourse. I never brought “clients” in but I did bring in many collegues who sold as soon as I flagged highly suspicious insider trading activity. I would think that any financial recourse would fall on the lap of the guy who has vigorously promoted the investment regardless of what is actually occurring on the field vs. the guy who helped minimize losses by getting people off a sinking ship.
Even though I believe MDMN and CDCH shareholders got massively diluted with the AUMC merger, I’ll admit that Maurizio should not wear nor bare the stigma of previous management. He’s doing his best to create value. The only thing that gives me that “anger itch” is that you and others STILL cannot objectively admit to any negative development (even when management is admitting to the same). It just crushes credibility when every new development has to have a positive spin. Not a positive nor realistic dynamic when it comes to mining co’s.
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I would say the silent half of us here see the reality and are able to temper the optimism on this board with our own assessments. Maurizio is a HUUGE leadership improvement but I do think he is over optimistic as well. Lord knows he’s got to be sweating it financially right now. I don’t see a material way forward without some form of dilution. It is what it is.
But I like monitoring the progress, albeit slow.
Meanwhile, shares in drawer, making more popcorn …D
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Amazing how dragging up an ancient squabble can shut down all the dialogue, apology be damned.
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Shouldn’t we be getting some Enami numbers by now?
Shouldn’t we be buying jumbo drills and more trucks and hiring more mining crews and making money?
Or perhaps we are gonna sit around and contemplate a flotation plant and how we can’t afford one for 8-12 months before anything productive occurs.
Sorry, but its difficult to be optimistic or patient any longer. Just look at Trader Rich. If we have arrived like BB is shouting ad nauseum, why is someone who has 7 figures exiting. At the very least that should tell you something about this current management team’s ability to instill confidence. The time for exclusively comparing them only to the old corrupt guard has expired.
I’ll say it again, if this is a legit world class find and the assays confirming historical production is equivalent to a measured resource, then what is the issue? We should have our pick of the litter of suitors to kick this thing into high gear. All this talk about all the difficult work and risk has been completed without dilution and how MC gambled and won, well when are we gonna feel like we won? Because someone just exited a once 7 figure position not feeling at all like a winner. It says an awful lot that someone like TR who has all the reason to see it through can’t even stomach any more of it.
I challenge this management team to start getting very descriptive about forecasts and tangible outcomes and execute without missing timelines.
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I guess you’re going to have to wait until the October update to see what the next step is.
Well, there it is! Similar to the way you cut down others and twist their words, now you do the same to me. You interject and assume things I’ve said (or never said) so well, you’ve been promoted to poster boy for that old ass-u-me phrase. 
As far as your comment about BB and what you assume I believe, you ignore how often he writes a disclaimer note as he shares his ‘opinions.’ He does not present his opinions as fact. However, he has cited many facts in his DD, combined with his knowledge of geology & mining, to share important info that most here appreciate reading. I don’t know if his DD will point to the promised land or not, but much of what he says makes sense. Not that your posts aren’t appreciated too, but yours often come with growling and bared teeth about someone. 
You know it’s true. By the way, didn’t I just recently post that your suspicions about Les Price turned out to be right after all, way back then?
I’m fully aware of what has or hasn’t been done with either MDMN or AUMC. And yes, there are holes that have not been accounted for as of yet. But naysayers here are doing plenty of their own assumptions & guesses to fill in those voids. Is that supposed to be more reliable somehow?
The past is the past, I’m over it. Aren’t you? 
I, for one, am looking forward to the fact that AUMC has a lot going for it, despite the setbacks and lack of transparency. I’ve been disappointed too, but I also know that MC has s-l-o-w-l-y been meandering in the right direction. I’ve read your posts about how this investment has been dramatically decreasing for the past “7 years.” We can all see that, no doubt. But not every setback has been MC’s fault.
The fact we’ve had no dillution of our investment is a positive. MC has made significant progress in some areas. Not so much in others. Just because he’s not doing it the way you think it should be done doesn’t mean he doesn’t have a vision. We’ll see what happens from here. But as I said before, I’m looking at the glass half full. I’m so sorry that you nearly drank yours up. 
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Just for the record: TR had his reasons for selling his MDMN shares over a period of 4 months. He didn’t say he sold his shares of AUMC. His reasons (below) make sense in his particular case. He regrets that he didn’t protect his capital.
FWIW, Auryn has just recently commenced production. Progress is progress. We aren’t going backward.
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Yes, for the sake of clarity, if my cost basis was as low as .04 or lower I probably would have held my MDMN shares. When, back in I think 2012 when the stock ran to .19 and all here were in uber hype mode over the prospects of I think the Ulander deal, instead of holding a several million share position with around an .05/.06 basis and selling half for 50% or better profit and being content to hold the rest, I kept buying. Then I had a couple more opportunities to lighten up for some profit and did nothing… and then eventually watched the stock slide all the way here. If I had fewer shares and a lower basis I could have doubled up my position down here relatively cheaply and significantly lowered my basis, giving the AUMC dividend shares a better chance of lowering the cost basis of my current shares which are over $5. But my stupidity squashed all of that, so after so many years with what currently looks like a very slim chance for the stock to do well enough for me to get much of a return, I opted to unload my MDMN for about 22k and change, eat the loss, appreciate the lessons and move on. If I had done just a couple smart things during all that time I would have made a nice profit here and would be sitting on free shares that I’d be content to let sit into perpetuity, but no dice. As I said before, I do hold around 65k AUMC shares that I have no intention of selling unless it gets the kind of volume that will allow me to do so without hurting the share price. I’m not a billionaire or anything but I have a comfortable life and the few that have visited me know I live quite like a minimalist, so the loss hurts but life goes on and I’ll be fine.
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For any of you folks that are interested, I started a new thread here. Check it out and participate if you feel so inclined. Maybe we can help each other make some money with other investments/trades since we’re here anyway.
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I read TradeRich’s comments the other day about selling his Medinah shares at 1% of the value he paid for them, after going through what he and the rest of us have gone through. That was hard to read. I understand that you have to do what you have to do, but I hope nobody else is going through what he must have been going through in order to make that decision AT THIS PARTICULAR MOMENT IN TIME WHEN EXTREMELY HIGH-GRADE PRODUCTION IS FINALLY COMMENCING AFTER ALL OF THESE YEARS.
Placing a VALUE on the ADL Mining District has always been a difficult task. What we do know to be a FACT, is that Maurizio and his colleagues, the “smart money”, were buying shares of Medinah several years ago, at 100-times the current Medinah share price of $0.0009. When you factor in the Les Price situation, let’s round that down to 50-times the current price. From a mining industry point of view, what has happened to the VALUE of the ADL Mining District since then? It has gone up markedly as accomplishments, like intersecting the DL2 Vein and partially VALIDATING the stellar historical shipping grades, have taken place.
Auryn now has a completed PRODUCTION ADIT to transfer the extremely high-grade ore from the belly of the mountain to the plateau surface. The “gallery” was recently completed as was the “ventilation/safety egress chimney” linking level 3 to the “old workings”. This provided SCALABILITY as Auryn can now simultaneously mine from level 3 as well from several different underlying sub levels in a safe fashion. It also provided OPTIONALITY, in that Auryn can now focus their exploitation efforts on the levels with the greatest vein widths and highest vein grades. SERNAGEOMIN recently signed off on the new ventilation/safety egress systems. This allowed Enami to receive regular shipments/consignments of DL2 Vein ore.
The recently completed “COMPREHENSIVE METALLURGICAL ANALYSIS” identified “flotation” as being the most effective methodology to “beneficiate/concentrate” the ore. A shipment made to Codelco/Enami’s DIRECT SMELTING FACILITY revealed excellent recovery results including 57 gpt gold, 970 gpt silver and 3.3% copper. A lot of VALUE enhancement has occurred since Maurizio was buying Medinah shares at the 9-cent level. At the same time that these improvements were occurring, the share price of both Medinah and Auryn were literally falling off of a cliff. Clearly, either “the market” or Maurizio and colleagues, have/had it wrong. But how can you identify which party had it wrong?
What is the irrefutable ARBITER of VALUE? It’s earnings capacity. We have finally arrived at the MOMENT OF TRUTH. I’ve been criticized for being too positive on the prospects for Auryn and Medinah and too positive on the geology of the ADL Mining District. My approach is very different than that of most mining investors. My time horizons are very long. My share purchases go straight to the “sock drawer”. I’m not a big fan of looking at stock quotes all day long. I’ve been through enough mining deals from start to finish that I have my own approach with these stocks.
I simply list out all of the steps, from A to Z, that a junior explorer is going to need to traverse in order to get into production. For me, the two biggest risk boxes I was able to check off on, in regards to Auryn/Medinah, were the confirmed intersection of the DL2 Vein and the VALIDATION of the historical shipping grades and the recent checking off, by SERNAGEOMIN, of the new “Ventilation/safety egress chimney” directly leading to the important industry concepts of SCALABILITY and OPTIONALITY. Auryn will now be able to mine level 3 at its 2 separate working faces as well as several underlying sub levels which will also have 2 separate working faces per level.
I sense PROGRESS not in share price improvement but in the number of risk boxes I’ve been able to check off on and how many are left to check off on. I add incrementally to my position as the risk boxes get checked off on. Management has to earn my buy orders. I added 4 million Medinah shares with the checking off of each of the 2 risk boxes cited above. I know that I have an ace up my sleeve in that no matter what twists and turns the share price of those shares in the “sock drawer” takes during the journey, I know that once EARNINGS appear, the market will find the proper valuation. That’s when true VISIBILITY presents itself and difficult to understand geological principles no longer matter. Everybody understands EARNINGS.
I’m going to attempt to explain Maurizio’s chosen approach and how critical it is, when this is the approach taken, to keep your eye on the FINISH LINE and what that’s going to look like no matter what today’s share price quote looks like. I’ve referred to the World Gold Council’s statistics dozens of times on this forum. It really, really, really, takes an average of over 24 years for the tiny percentage of successful junior explorers (most often-quoted as 1-in-1,000) to go from the commencement of exploration efforts all of the way into production. These are ULTRA-HIGH RISK MARATHONS. In an industry characterized as one involving the taking of ultra-high risks in search of ultra-high rewards, what do you think is going to happen to that lucky 1-in-1,000 mining corporation that goes into extremely high-grade gold production with only 70 million shares issued and outstanding and the price of gold near all-time-highs? There can be no guarantees, but then again, this is not exactly rocket science. What initially attracted us speculators/investors to this sector was probably the 30- and 40-baggers that we either already participated in or that we read about.
The no frills, ANTI-DILUTION, “bootstrapping” approach, adopted by Maurizio, by definition, is going to lead to a slower pace of development than an approach involving selling shares or ownership percentage points early on, in order to buy fancy equipment like “jumbo” drill rigs.
In essence, there are 2 ways to build a mining company. The way that 98% of companies are FORCED to do it, is to DILUTE the heck out of their share structure early on, before any success is attained, and sell a bunch of shares at ridiculously low-price levels in order to drill out a prospect and have a consulting firm execute “scoping studies” then a “pre-feasibility study” (PFS) and then a “bankable feasibility study” (BFS). That’s just how it’s always been. There usually aren’t any alternatives to this approach.
This is the STANDARD APPROACH taken by almost all junior explorers and developers. It is less than ideal because the price that willing financiers will pay you for your shares, prior to any exploration success, is going to be extremely low because your project has not been DERISKED yet and there’s nothing riskier than bankrolling a junior explorer. Exploration financing is an ultra-high-risk endeavor and willing financiers are going to demand steep discounts to even the existing low share prices. “Private placements” of funds sold to financiers like me, have a hold period during which we purchasers are not allowed to sell our shares. These financiers are going to need to be compensated, via a deep discount to existing share prices, for this lack of liquidity, because a lot of bad things can happen to a young mining company during that hold period.
For a project the size of the DL2 Vein project, the bill attached to this very common STANDARD APPROACH involving formal drill programs and the execution of a variety of studies, is typically somewhere around $30 million and it might take somewhere around 5 years to accomplish. This is simply what you have to do in order to sufficiently DERISK the project in order to attract a major miner with the financial wherewithal and technical expertise needed to advance the project, hopefully all of the way into PRODUCTION. THE MAJORS AND THE FINANCIERS CONTROL THE PLAYING FIELD.
But what if you didn’t need to attract a major miner or outside financier and you could bypass the DILUTION associated with doing what a major or outside financier would FORCE you to do, prior to them being willing to get involved?
Perhaps 2% or so of mining companies can take the IDEAL APPROACH as opposed to the STANDARD APPROACH, but a certain list of “ingredients” need to be present in order to pull this off. First of all, the mining project needs to be an UNDERGROUND VEIN type of project like the DL2 Vein project. This is because an OPEN PIT type of project necessitates a formal drill program and the execution of all of those studies. Why? Firstly, it’s because the drilling is needed to design the optimal open pit design by a process called “kriging”. Secondly, the CAPEX of these projects is often approaching $1 billion and almost all junior explorers need both a major miner and its financial wherewithal as well as the vast amount of technical expertise necessitated to pull it off. Rule #1: VEIN DEPOSITS, where a formal drill program is OPTIONAL and not mandatory, only will qualify for the IDEAL APPROACH.
Besides being a VEIN project, the IDEAL APPROACH necessitates a Maurizio-type figure willing to bankroll the project all of the way until a POSITIVE PRODUCTION DECISION can be made. Advancing the necessary funds while charging zero interest is beyond IDEAL and don’t expect to ever witness this again in your lifetime of making mining investments. For a low-grade deposit, you pretty much have to take the STANDARD APPROACH and do the drilling and execute the studies in order to just arrive at a POSITIVE PRODUCTION DECISION. So, low grade (2-3 gpt gold) deposits WILL NOT QUALIFY FOR THE IDEAL APPROACH because you really need to sharpen your pencil on those projects just to confirm that the project is a “GO”.
The historical shipping grades at the DL2 Vein project were so high that a POSITIVE PRODUCTION DECISION became a no-brainer for Maurizio. Snow White and the 7 dwarfs could mine the DL2 Vein and make a fortune. Maurizio actually provided the funds needed to bring the project all of the way into production and well past the POSITIVE PRODUCTION DECISION stage. This included paying for the drifting of a PRODUCTION ADIT (the Antonino Adit) to the site within the belly of the mountain where the artisanal miners ceased their high-grade mining operation many years ago. The MINE CONSTRUCTION phase started a long time ago.
The historical shipping grades can only be trusted, however, if Auryn were to commence their production efforts IN CLOSE PROXIMITY to where the historical shipping grades were achieved. This is where Auryn decided to commence production at. Let’s recap for a second. The IDEAL APPROACH necessitates 1) A VEIN DEPOSIT, 2) A Maurizio-type figure willing to bankroll operations and 3) a relatively HIGH-GRADE VEIN DEPOSIT (perhaps over 8 to 10 gpt gold). The historical shipping grades of 64 gpt gold is what made the POSITIVE PRODUCTION DECISION possible without a formal drill program and the execution of all of those studies.
THE PRESENCE OF THE ”OLD WORKS” (levels 0,1,and 2) WERE A GODSEND IN REGARDS TO THE AURYN VENTILATION/SAFETY EGRESS SYSTEM
One of the biggest expenses in any underground vein project is the construction of a VENTILATION and SAFETY EGRESS SYSTEM. VENTILATION SYSTEMS usually involve a system of vertical “ventilation raises” and “chimneys”. It is extremely expensive to “go vertical” in underground mining operations. The ventilation systems usually involve 2 large fans. The “intake fan” will bring in fresh air from surface and the “exhaust fan” will drive the blast residue and its toxic gases out to the surface. This system of “raises” and “chimneys” could easily have cost Auryn another $20 million to $30 million or so. Auryn was extremely fortunate in this regard in that the artisanal miners had already constructed 7 vertical shafts, now serving as “ventilation raises”, as well as 5 vertical “chimneys” leading to the plateau surface. Let’s add a #4 to the IDEAL APPROACH list, i.e. an already completed ventilation/safety egress system. This might belong in the “beyond ideal” category. This provides SCALABILITY and the ability to simultaneously mine level 3 and various sub levels. This will “supercharge” any future earnings.
The IDEAL APPROACH would also involve a deposit with not just high grades, but also a NEAR SURFACE deposit (close to fresh air), and a deposit with EARLY PRODUCTION OPPORTUNITIES that could provide significant cash flow and perhaps even act as a catalyst for further development activities. When you have a large mining district like that of the ADL, the cash flow could also strengthen management’s bargaining leverage in developing other deposit types present like that of the Pegaso Nero, the development of which WILL necessitate a formal drill program and execution of those studies mentioned. The PN would admittedly not qualify for the IDEAL APPROACH. Think of the DL2 Vein project not just as a potentially huge money maker, but also as a “catalyst”.
Auryn’s situation fit the bill nicely for taking the IDEAL APPROACH. They didn’t need to drill out the property and execute all of those reports. They had 30 years-worth of historical shipping grades (although only about 2,000 tonnes) from the same area where Auryn is to commence production. That’s what you need i.e. PROXIMITY TO HISTORICAL WORKS WITH WELL-DOCUMENTED SHIPPING GRADES. Auryn didn’t need a “defined resource” (MR/MR) to attract a major miner for its money and expertise, it had Maurizio to fill the gap until EARNINGS could take over in driving developments. Maurizio provided the funds necessary at zero interest rate i.e. no “COST OF CAPITAL”.
Auryn did not need to raise money to pay for a VENTILATION SYSTEM which also provided a safety egress system. Maurizio was able to make a POSITIVE PRODUCTION DECISION without incurring many tens of millions of dollars of cost because the GRADES were so high that the POSITIVE PRODUCTION DECISION became a no-brainer. What Auryn did have to fund was the drifting of a PRODUCTION ADIT in order to access the high-grade ore at the spot where the artisanal miners ceased their mining activities.
What Auryn was able to accomplish was INSANELY RARE. They were able to successfully bypass massive levels of DILUTION in BOTH their share structure and in the percentage ownership of the project. They were not FORCED to sell massive amounts of restricted shares, at ridiculously low prices (because of the RISK), in order to fund drilling and the execution of those studies. They were able to advance straight into production and avoid not only this DILUTION but the number of years needed to execute a formal drill program and execute all of those reports.
Historically, not many mining companies have had all of the “ingredients” needed to take this IDEAL APPROACH. Of the many, many dozens of junior explorers I’ve invested in, this is my first IDEAL APPROACH. Part of the reason that it was an IDEAL APPROACH from the point of view of shareholders is that, along the way, Maurizio shouldered most of the RISK burden. Most juniors spend the majority of their time searching for financiers. It is a very good thing when management owns 60% of the shares of a mining corporation. This way, the financial incentives of the smallest shareholder lines up nicely with those of management and if management had significant financial wherewithal, it would be highly motivated to advance funds for further development without its share position being DILUTED. Notice also what management DIDN’T DO. They didn’t sell themselves ultra-cheap shares in order to fund developments. They did just the opposite, they provided funds without charging interest. In valuing mining assets and mining corporations, I’m always looking for “comps” or “comparable” mining situations. Where in the heck are you going to find one for this situation?
BEING ABLE TO TAKE THE “IDEAL APPROACH” IS BEYOND RARE
Here’s the problem with being able to take the IDEAL APPROACH. It is so rare that many observers will, as if by default, say that without a formal drill program and formally blocked out ounces of “MR/MR”, and without all of those studies, you just can’t have anything of “VALUE”. If you ask them why, the answer might be: “It’s because EVERYBODY does it that way, any you just can’t shortcut the system. It’s always been done that way.” Baloney, EARNINGS CREATE THE MOST DEFINITIVE FORM OF “VALUE” ESTIMATION THERE IS.
That “no MR/MR translates into no VALUE” mentality only lasts until the first dozen or so truckloads of ore have been shipped. After that, it won’t resonate. The people cutting the checks don’t care if you have blocked out ounces of “MR/MR” or a 150-page “Bankable Feasibility Study” in your top desk drawer. Financiers need those things, not the people cutting the checks, and certainly not investors that choose to focus in on EARNING POTENTIAL. Auryn has already gathered most of the information contained in a PFS or BFS. The recently completed “COMPREHENSIVE METALLURGICAL ANALYSIS” performed in Peru added nicely to this accumulation. We now know that “flotation” and “direct smelting” work just fine for the DL2 Vein ore. For those that are big fans of “gravity separation” beneficiation methodologies, there will be plenty of opportunities for deploying that methodology. At the current level of the DL2 Vein, a combination of “flotation” followed by smelting, for the lower grade ore, and DIRECT SMELTING, for the higher grade ore, works the best.
What an investor needs is for SOMEBODY WILLING TO TAKE THE RISK associated with the lack of those drill results and studies. This is where Maurizio stepped in and I would guess that it was the historical shipping grades that allowed him to take that RISK and to arrive at a POSITIVE PRODUCTION DECISION. Once the POSITIVE PRODUCTION DECISION was made by Maurizio, the company commenced the drifting of the Antonino Adit. Keep in mind that the process of drilling out a deposit and performing those studies DOES NOT PUT A PROJECT INTO PRODUCTION, IT ONLY LEADS TO A PRODUCTION DECISION i.e. A “GO” OR A “NO GO”.
After performing the drill program and executing those studies, the junior mining corporation is typically left with a massively diluted share structure and a lesser ownership percentage of the project. The next task then becomes finding a willing financier to fund into production that damaged company with a MASSIVELY DILUTED SHARE STRUCTURE AND A LESSER OWNERSHIP PERCENTAGE OF THE PROJECT. After that occurs, if it occurs, there is not much of the pie left to split up. Ounces in the ground are not ounces in the truck. The markets don’t give a mining firm much credit for “ounces in the ground” any longer. This is because those ounces may never end up in a truck. Would it have been nice if those artisanal miners of the DL2 Vein would have drilled out the entire vein? Sure, it would have been nice but they didn’t. Maurizio rolled the dice and he won.
WHEN TAKING THIS “IDEAL APPROACH”, WHAT DOES THE “FINISH LINE” LOOK LIKE?
For Auryn, the “finish line” might be likened to a ribbon-cutting ceremony with the first truckload of high-grade ore sitting at the top of the North Road aimed down towards the processing facilities. Part of the “ceremony” would be the appending to the back bumper of a metaphorical IDEAL APPROACH “congratulatory bumper sticker”. In the case of being able to take the IDEAL APPROACH, the bumper sticker would read: “This truckload of high-grade ore is owned 100% by Auryn. The proceeds from the sale of this ore will be divided by only 70 million shares in order to calculate the EARNINGS PER SHARE for Auryn and its shareholders. The EPS will then be directly tied to the SHAREHOLDER REWARDS (share price) earned by Auryn’s shareholders.”
For the vast majority of mining companies unable to take this IDEAL APPROACH, their version of the bumper sticker might reference perhaps 470 million shares outstanding instead of 70 million. An owner of 1 million shares of Auryn would theoretically be entitled to one-seventieth (1/70th) of the proceeds resulting from the sale of the ore, in the case of the IDEAL APPROACH versus perhaps one-four hundred and seventieth (1/470th) in the case of the company unable to take the IDEAL APPROACH. If that company had to give up half of its ownership percentage perhaps to a “royalty streamer” in exchange for funds, then that 1/470th figure becomes 1/940th. The IDEAL APPROACH is not for everybody or for every mineral deposit, but if you can pull it off then things could get interesting.
There’s nothing wrong with the STANDARD APPROACH for building a mining company if you don’t have the “ingredients” necessary to take the IDEAL APPROACH and earn that bumper sticker. As the owner of shares of mining majors, I like it when juniors with a significant discovery are FORCED to use the STANDARD APPROACH. When I’m in those shoes, I like it when the shareholders of the juniors shoulder that risk. I doubt that most mining investors even realize that there is a different way to build a mining company than by taking the STANDARD APPROACH.
As investors, our focus, over the last couple of years, probably should have been, put the shares in the “sock drawer”, and concentrate on the progress being made towards achieving that bumper sticker and the reaching that finish line. Because we are investors trying to make a profit, our focus was probably on the share price and “the market”. Can “the market” recognize when a mining company is taking the IDEAL APPROACH? Of course not, that is, not until they see the bumper sticker on that truck rolling down the road and get an appreciation for potential earnings.
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Thanks, Breccia!
I needed that…
– madmen
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