[quote=“Baldy, post:479, topic:3190”]
The only thing missing is a comma after ‘Apparently,’ though it’s not necessary in social media posts. You have no idea what type of journalism I work with. If you ever educate yourself in journalistic writing and master English grammar, only then would I ever entertain the thought of you trying to correct my writing.
I think the one press release/quarterly update and one revelation by management that people will look back on and say holy cow, how did I miss that?, is the most recent Auryn update revealing that if Auryn builds their own froth flotation facility and stores the tailings on-site at the ADL, they will earn an EXTRA $5,000 per tonne, OVER AND ABOVE what they would have made if they sent their extremely high-grade ore to Enami, and had them do the froth flotation at their facilities and have them store the tailings on their premises.
IMMEDIATE TAKEAWAY: Either Enami charges a lot of money for using their froth flotation facilities, or they charge a lot for storing the tailings on their property, or the customized froth flotation facility “flow sheet” designed by the University of San Sebastian Mining Engineering Department is very efficient. That’s a very large DIFFERENTIAL.
The first thing to note is that this is a DIFFERENTIAL between 2 scenarios. This is an EXTRA amount of money OVER AND ABOVE the profits associated with just shipping that ore to Enami without any on-site beneficiation. The question that obviously arises is what are the BASE PROFITS associated with having Enami do the flotation of the ore. This way we could calculate the TOTAL PROFITS. The artisanal miners of the DL2 Vein averaged 64 gpt gold when they mined the DL2 Vein vein. Clearing $5,000 per tonne, in and of itself, is a huge number in mining, without any BASE PROFIT.
Assume, for a moment, that froth flotation of that ore was totally ineffective. In this scenario, the DIFFERENTIAL would be zero and, of course, a froth flotation circuit would not be built. In this case, the DIFFERENTIAL, is no doubt attributed to a combination of a higher top line income figure and lower costs.
A HIGHER TOP LINE INCOME COMPONENT TO THE DIFFERENTIAL
Ore that started out with an intra-adit “head grade” of about 64 gpt gold and that later got beneficiated/concentrated due to the removal of impurities, will obviously fetch a higher price than ore grading 64 gpt gold. Keep in mind that the average grade being mined in similar underground vein operations is only 4.18 gpt gold, so we’re starting from a very high level. The ECONOMICS involved with shipping 64 gpt gold ore to Enami for flotation is just fine, but this option would obviously leave a lot of money on the table.
Statistically, froth flotation will concentrate ore by a factor of in between 2X and 20X the original grade. The average is 4X. If Auryn’s ore does in fact start out with a “head grade” of somewhere around 64 gpt gold and if the flotation process results in the average increase in the grade of the final product (4X), then the “float concentrate” will have a grade of around 256 gpt gold. This is what will be going into the trucks for shipment to the end buyer. Metaphorically, if the miner “next door” is mining 4 gpt gold (the average worldwide) and can’t afford a froth flotation circuit, then it will be shipping 4 gpt gold ore versus 256 gpt gold ore.
THE LOWER COST COMPONENT OF THIS $5,000 PER TONNE DIFFERENTIAL
For the last 15 or so years, the World Gold Council has pretty much mandated that miners delineate their COSTS in terms of ALL IN SUSTAINING COSTS (AISCs) PER OUNCE OF GOLD PRODUCED. The average AISC for a mining operation is currently about $1,050 per ounce produced worldwide. The AISC for a mining operation is HIGHLY INVERSELY RELATED TO THE GRADE OF THE DEPOSIT. Mining a “head-grade” of 64 gpt gold, would probably put that miner into the top 5% of the grades of gold being mined. It’s AISC would be expected to be in the bottom 5% of miners, maybe around $800 or so per ounce, wait for management to give us a firm number.
The reason for that INVERSE RELATIONSHIP between the grade being mined and the AISC, can be easily seen in regards to TRANSPORTATION COSTS. In the average gold mining operation, there are about a dozen components to the AISC to produce one ounce of gold. One of the largest is TRANSPORTATION COSTS.
If the “next door” miner, is mining 4 gpt gold (the average) and it can’t afford to froth float its own ore, then it will be shipping 4 gpt gold in its trucks. In the above scenario, Auryn would be shipping 256 gpt gold ore. Both miners pay the same amount to buy a truck, buy diesel, maintain the trucks, etc. When you list out the various components of the AISC for these two miners, when you get to the line that says TRANSPORTATION COSTS PER OUNCE MINED AND SHIPPED, the number on Auryn’s list is going to be MICROSCOPIC compared to that other miner. The same will be true for several of the other lines in that AISC breakdown. This is why “GRADE IS EVERYTHING” in minng.
“LABOR” is usually the largest component in that list. Both miners will be paying the same hourly wage to their miners. In this example, the wheel loaders of Auryn will be hauling out ore with about 16-TIMES as many gold ounces per bucket load than the other miner (64 gpt divided by 4 gpt). The INTRA-ADIT LABOR COST PER OUNCE OF GOLD MINED entry for Auryn, will again be MICROSCOPIC compared to that of the other miner. If you see a mining cost labeled PER TONNE, immediately find out the average grade being mined and convert it into PER OUNCE as is the new rule.
There are several steps involved in “beneficiating” or concentrating ore. The froth flotation step is extremely inexpensive. Further down the refinement process, the steps get a lot more expensive. This would involve CIL or CIP plants, BIOXX facilities, POX facilities, roasting, smelting, etc. When the ore responds favorably to froth flotation the subsequent, more expensive, steps become a lot cheaper because less tonnes of ore need to be processed. A lot of the original tonnage is now sitting on top of the plateau in a tailings pile. It won’t get any further treatment. The same thing occurs with TRANSPORTATION COSTS. The tailings/discards created from froth flotation doesn’t get TRANSPORTED anywhere. That “other miner” is going to be TRANSPORTING a lot more tonnage. They’re going to have to buy more trucks to TRANSPORT their ore.
The difference between TRANSPORTING 256 gpt ore (for Auryn) versus 4 gpt gold for the “other miner” represents a ratio of 64-to-1 in terms of “OUNCES SHIPPED”. Auryn and that “other miner” might have the same TRANSPORTATION COSTS PER TONNE but that’s very misleading. Somebody hauling worthless clay to Enami with no metals whatsoever, might have the same TRANSPORTATION COSTS PER TONNE SHIPPED as Auryn has. Enami and other end users don’t pay for clay, they pay for ounces of gold.
DOING SOME MATH
If you send 1 tonne of 64 gpt gold to a flotation circuit and it removes half of the impurities on the first pass through, you’ll be left with 128 gpt ore and one half of a tonne of material. If you send it through for another pass and get the same results, you’ll be left with 256 gpt gold and one-fourth of a tonne of remaining ore. This represents the average 4X concentrating ability of froth flotation.
If you ship that 256 gpt “float concentrate” to Enami or somebody else for smelting, only one-fourth of a tonne needs to get smelted. In this case, you got rid of three-fourths of the impurities extremely cheaply and only one-fourth of the original tonne needs the more expensive smelting. Your ore will have been concentrated 4-TIMES the original grade.
You might think of Enami as charging you a “tolling fee” to process your ore but, in essence, they also charge you a STORAGE fee to store your discards/tailings in perpetuity on their land holdings. A miner that sends its ore to Enami for flotation is basically “renting” their flotation facilities, their workers, their administrative staff, their storage space, etc. Like apartments and houses, it’s a lot cheaper in the long run if you BUY and not Rent AS LONG AS YOU CAN AFFORD THE HOUSE AND THE DOWN PAYMENT.
That “EXTRA” $5,000 per tonne DIFFERENTIAL, or $100,000 per 20-tonne truck, plus the BASE PROFITS is going to put a large dent in whatever the cost is for the equipment. I have no clue what the cost for the flotation plant that Maurizio has in mind is. If the cost ends up at, let’s say, $10 million, and if the BASE PROFIT for the ore was $2,000 per tonne or $40,000 per 20-tonne truckload (a total guess) then each truckload, under these circumstances, would represent about $140,000 in profit. Remember, under this scenario, 256 gpt ore is being shipped. Keep in mind that a flotation plant will also have “OPEX” or OPERATING EXPENSES over and above the CAPEX. It is not clear if this is already incorporated into that $5,000 per tonne figure.
The LEVERAGE here is insane. I would assume that finding a willing financier would not be that difficult as a pathway to being repaid seems pretty obvious. This is especially true since we know that ore is being added to the stockpiles daily. The froth flotation plant itself as well as the extremely high-grade stockpiled ore, would represent collateral to any financier especially with the price of gold at nearly all-time highs and the AISCs appearing to be very favorable due to the grades.
As far as upcoming milestones to keep an eye out for in the near term, confirmation of a financing deal with favorable terms (hopefully with no shares involved) would be right up there. Of course, the ideal would be for Maurizio to continue his ultra-generous advancing of cash with no interest charges but that is certainly not a given. Having a party interested in one of Auryn’s other assets fund the facility in exchange for a piece of the action on one of Auryn’s other assets would be extremely welcome. A “backstop option” of simply selling stockpiled ore to Enami and harvesting the BASELINE PROFITS, should obviously take any need to sell shares, especially at these levels, off of the table.
If you get a minute, re-read that most recent quarterly update dated October 9, 2023, there is a lot of information contained therein. It appears that the results of the independent smelting facility in Peru coming in at 128 gpt gold for our ore versus 57 gpt gold (70 gpt gold equivalent) coming out of Codelco/Enami, might have decreased our interest in Enami floating our ore. There is nothing at all wrong with that 70 gpt gold equivalent figure from Enami, that’s a tremendous number, but up against 128 gpt (gold only) would leave an awful lot of money on the table. It’s nice to get a “second opinion”. If the silver and copper contributions were the same as they were in the Enami smelter sample, that 128 gpt gold only figure would become about 154 gpt “gold equivalent”. Here’s the link:
October 2023 – Shareholder Update | AURYN Mining Corporation
Gold over 2020. How much money are we sitting on with all that stock piled ore?
Actually I would like to see a picture of what they have stockpiled (if any) up today.
So Baldy, you don’t know any other miners out there that are down appreciably in the last couple of years? There are many early stage miners that are incredibly undervalued right now. Take Eloro Resources as one example of many that are out there. In March 2022 it was trading at $4.46, and at the end of October 2023 it was $1.03! It has 87.3M fully diluted shares and completed 84,495 meters of drilling. Other posters can recount other miners I’m sure. Not to belabor a point, but drilling and resource does not tell the whole story.
Early on it’s been mentioned that narrow vein mining is not always done in a conventional manner, especially when starting out small. It has not been easy for present management or shareholders. As you’ll remember, Hochschild wanted a couple more holes drilled by Auryn at a time when funds were stretched to the max. Do you know how much work goes into just setting up a drill pad? It is an arduous and expensive undertaking. Just take a look at the shareholder update from August 2015 when things were still looking bright before the share structure fraud was discovered.:
Medina Mining Chile Reports to Sernageomin
(http://www.otcmarkets.com/otciq/ajax/showNewsReleaseDocumentById.pdf?id=16386)
It is no small task, and as shown by Eloro, it does not guarantee appreciation of the stock price, especially in the market conditions of the past couple of years. I’m confident in the path management has chosen to recoup its investment in extracting a profit for itself and those shareholders that have stayed the course with them. I’m grateful for management’s persistence in doing all that’s necessary for all involved to recover a profit. I’m especially glad they did NOT take the easy way out and sell out early leaving all shareholders with more than a paper loss as you had suggested in the past. I’m looking for brighter days ahead in this and other investments in the year ahead.
GLTA
EZ
Absolutely. I think the current price in AUMC/MDMN reflects both the realities of a punishing precious metals markets generally and many failed milestones/timelines specifically. I don’t blame bogeymen planting false flag negatives so that they can pivot at undervalued prices. Maurizio has undeniably made some progress and if the company makes a lot more progress the share price will ultimately reflect the same. However, 30-40 cents in AUMC given the AMOUNT of progress over a seven year timeline should not suprise anyone.
So is there any chance that copper could come back into play?
Well guys, I have been in MDMN for over 10 years now and I am tired of waiting. I am sitting on a few million shares and hopefully I will be able to sell my position to offset my tax gains in other stocks. Too many times over too many years there was hope in Medinah but it is no longer worth waiting.
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Gold hit an all time high yesterday even though superman (Jerome Powell) reiterated that he wasn’t done with hiking rates. Most likely now gold will be moving much higher. Apparently we have a property with lots of gold but does not reflect the current share price.
From the last update we are supposed to be stockpiling ore, my question is how much are we stockpiling in a day/week, month?
Maurizio can post some pictures on “X” on how much ore is piled. Management needs to get things rolling and update shareholders more frequent. This is the time when gold and miners are going to take off, we do not want to miss this bull run.
Hi Hulkster,
You just made the post of the century! Management needs to start COMMUNICATING MORE FREQUENTLY. Frustrated shareholders are selling their shares, not because things aren’t going well behind the scenes, but more so out of the lack of information flow that gives rise to frustration, the sale of shares by loyalists, and the share price tanking. It would be better if management tell us things like current production rates, the grade of the ore being stockpiled, the cost range for a new froth flotation plant, etc. That COMMUNICATION VOID is going to be filled by people like me, doing my best to fill in the blanks, from 43 years of being active in this business. All we want is information that is MATERIAL for us that need to make buy, sell and hold decisions on behalf of our families.
Hulkster,
Here is a humble effort to fill in some of the blanks with historical information. In order to estimate the amount and value of the ore that Auryn has stockpiled to date, you need to estimate the DAILY PRODUCTION RATE in terms of Tonnes per day, that they have been achieving and multiply it by the NUMBER OF PRODUCTION DAYS they have been producing and stockpiling. This will give you the TOTAL TONNAGE STOCKPILED. Then you need to multiply that figure by the average grade of the ore being mined and stockpiled in terms of grams per tonne. This figure then needs to be divided by 31.1 grams of gold per Troy ounce of gold. This will give you the approximate number of OUNCES of gold in those stockpiles.
DAILY PRODUCTION RATE
Originally, management thought that they could produce 40 tonnes per day (40 tpd) just from the old workings on levels 0,1, and 2. This was right after they commenced the drifting of the Antonino Adit designed to interest the DL2 Vein which is the same vein already exposed in the “old workings”. Later, management said that they could not hit this 40 tpd PRODUCTION RATE until after they intersected the DL2 Vein via the Antonino Adit. In an update subsequent to that, they mentioned that they definitely thought they could hit that 40 tpd production rate once they intersected the DL2 Vein. They finally intersected the DL2 Vein on Jan. 4, 2023.
After intersecting the DL2 Vein, the production rate would go up for a couple of reasons. First of all, now they could be working on 2 working faces simultaneously at this new “level 3”. The Antonino Adit, in essence, bisected the DL2 Vein. At this 90-degree intersection, management could “turn right” and start mining towards the NNW, or “turn left” and start mining towards the SSE, or BOTH which is what is occurring.
After making this intersection, Auryn management constructed a “gallery” to allow wheel loaders to turn around or load up “LOAD/HAUL/DUMP” (LHD) vehicles, if they opted to deploy them. This would allow the wheel loaders to rapidly return back to the 2 working faces in order to secure another load while the LHD truck transported the ore to surface along the course of the Antonino Adit. This would expedite the PRODUCTION RATE.
Management also constructed a new “ventilation/safety egress chimney”. This would allow management to quickly get rid of the blast residue caused by blasting the two “working faces” of the adit. Prior to this, the crews would wait overnight for the blast residue to dissipate. With this new ventilation system present, the miners can now work 24-hour workdays. This would also “STREAMLINE” operations. The enhanced ventilation would also allow Auryn to simultaneously mine from not only the new level 3, but also from various sub levels underneath it. All of these improvements should greatly enhance the PRODUCTION RATE. For the sake of argument, I would write “in pencil” an estimated DAILY PRODUCTION RATE of perhaps 30 tpd in order to be conservative. I sent a message, via Kevin, to management asking them to keep us posted on the number of tonnes that have been stockpiled to date and the approximate grades of the ore contained therein. We’ll see if it did any good on the next update.
ESTIMATED GRADE OF THE ORE BEING MINED
The freshest information we have here comes from the 2 “DIRECT SMELTING TESTS” recently completed. The one done at the Codelco/Enami DIRECT SMELTING FACILITIES came in at an average of 57 gpt gold, 978 gpt silver, and 3.3% copper AFTER ENAMI TOOK OUT THEIR FEES. Auryn also had a separate DIRECT SMELTING TEST done in Peru. The results here came in at 128 gpt for the gold alone. The average of these 2 tests is about 92 gpt gold WHICH IS BASICALLY OFF THE CHARTS. The “fire assay” is the most accurate gold assaying technique there is. “Smelting” involves a lot of the same steps as a “fire assay”. The reported smelting grades are the “agreed to” or “settlement grades” AFTER THE SMELTERS TOOK OUT THEIR “TC’s” AND “RC’s” (treatment and refining charges) as well as deducted for any contaminants.
Despite the off the chart smelting settlement grades, in order to be conservative, I would “pencil in” the same 64 gpt gold that the artisanal miners averaged when they were mining the DL2 Vein from 1940 to 1970.
NUMBER OF DAYS WORTH OF PRODUCTION THAT ARE CURRENTLY STOCKPILED
In The August 10, 2023 update, management noted: “Our dedicated team is currently active at the mining site, focusing on producing and accumulating minerals directly from the vein” (my emphasis). As of 11/28/23, this was 108 days ago. To be conservative, let’s pencil in 80 days of production and stockpiling to date. Management has accentuated at least 3 times in quarterly updates that they are “EXTRACTING ORE DIRECTLY FROM THE VEIN”. Many months ago, management cited that they were extracting ore from the “old works” (above the current level 3) WITHOUT BLASTING.
Typically, the “working face” of a 3-meter-wide adit, will have the vein proper, located in the middle of the working face and to the left and right of the vein will be less well-mineralized granodioritic “wall rock” making up the “hanging wall” and “foot wall” of the vein. Have they been mining the vein proper material in a “DIRECT” fashion and keeping it separate from the less well-mineralized “wall rock”? Typically, when you “drill and blast” the working face of an adit, all of the material falls to the adit floor and becomes co-mingled. The adit width has to remain a minimum of about 3-meters so that the heavy equipment can pass. The ideal scenario would be if the vein width would match the 3-meter width of the adit. This way all of the material hitting the adit floor would be composed of the higher-grade vein proper material. At the intersection of the Antonino Adit and the DL2 Vein, the vein width was reported to be 0.6-meters wide. So, we need some clarity on this issue.
DOING THE MATH
30 tpd multiplied by 80 days results in 2,400 tonnes of ore being theoretically stockpiled since Auryn commenced production on the DL2 Vein. If the average grade is 64 gpt gold (matching the grade of the artisanal miners on the same vein), then this represents 153,600 grams of gold contained in those stockpiles. This equates to an estimated 4,938 Troy ounces of gold being stockpiled to date (approximately Nov. 28, 2023). If you multiply that figure by today’s price of gold of $2,070 per ounce you get a nominal value of $10.2 million worth of gold in stockpiles. BUT, THIS GOLD HAS NOT BEEN PROCESSED YET SO THESE ARE NOT “PROFITS”.
The highest cost of the various component COSTS that make up the ALL IN SUSTAINING COST (AISC) to produce an ounce of gold, LABOR, has probably already been paid, but not the other various costs like processing costs, energy costs, diesel, dynamite, taxes, general and administrative, etc. This stockpiled ore may have value in the form of acting as collateral for any loan obtained by management to build the flotation facility. The stockpiled ore, plus the completed facility needed to monetize that ore, plus the current price of gold, seems like a pretty compelling source of collateral to de-risk any loan made by a financier.
The COST component of Auryn’s doing the froth flotation of that stockpiled ore could be estimated by taking the CAPEX costs of the facility and amortizing it over the life expectancy of the facility. To that figure you’d have to add the “OPEX” or “operating expenses” related to the plant.
DISCUSSION
First of all, write all of these calculations IN PENCIL until we get the accurate numbers from management. These numbers would correspond to how Enami would treat Auryn if Auryn shipped that currently stockpiled ore TODAY to Codelco/Enami’s DIRECT SMELTING FACILITY, without Auryn deploying any “beneficiation” methodologies like froth flotation. Although these numbers seem pretty impressive, this scenario would portray more of a “worse-case scenario” for Auryn, that is not likely to happen because the economics associated with Auryn doing the froth flotation on-site are vastly superior to shipping unbeneficiated ore directly to Enami. That is IF, IF, IF, Auryn can get the project funded.
In the most recent update of Auryn dated 10/9/23, we learned that if Auryn were to build their own flotation plant and store their discards/tailings on-site, then each tonne of ore mined by Auryn would earn an EXTRA $5,000 per tonne, or $100,000 per 20-tonne truckload, OVER AND ABOVE what Enami would pay if Enami floated that extremely high-grade ore on their premises and stored the tailings on their premises. The new Auryn BOD unanimously opted to build their own flotation system on-site, in order to access these EXTRA PROFITS.
It was the disparity between the Peruvian DIRECT SMELTING FACILITY’S results (128 gpt gold only) and those from the Codelco/Enami’s DIRECT SMELTING FACILITY (57 gpt gold) that alerted management that Enami’s fees were not a bargain. The enhanced profits associated with Auryn opting to build their own flotation facility necessitate that the numbers I “penciled in” above, are likely going to be discarded and greatly improved upon. The currently stockpiled ore, as well as that which will be stockpiled in between now and the commissioning of the new plant, is going to be worth a great deal more money than indicated above.
As far as the INITIAL DAILY PRODUCTION RATE penciled in at 30 tpd, the point should be made that this is a pathetically low DAILY PRODUCTION RATE that is liable to ramp up rapidly, especially once the new sub levels are accessed. The metric that we’d like to be working with, but currently can’t due to the lack of data, is the AVERAGE PRODUCTION RATE for the first, let’s say, 2 or 3 years. The deployment of one “jumbo drill rig” would also markedly increase the DAILY PRODUCTION RATE.
The initial plan of Auryn, prior to them being convinced of the enhanced economics associated with building their own flotation facility, was to send in the “low-grade ore” (less than 20 gpt gold) to Enami’s flotation facility. I put the quotation marks around “low-grade ore” because 20 gpt is 5-TIMES the average grade being mined worldwide in similar underground vein mining operations. The ore above 20 gpt would qualify as DIRECT SHIPPING ORE and be sent DIRECTLY to Codelco/Enami’s smelting facilities.
Since froth flotation is an inexpensive means to remove unwanted sulfides in the ore, I’m going to assume that all of Auryn’s ore is going to go through the “froth flotation” plant at the ADL, and then shipped on to a smelter (or CIL/CIP facility) somewhere. After the froth flotation facility removes a lot of the sulfide contaminants, which are then stored at the ADL in a tailings pond, then a much smaller tonnage of ore will have to go to the much more expensive smelter. This is the basis for some of that $5,000 in EXTRA profits associated with Auryn doing the froth flotation on-site and storing the tailings on-site at the ADL instead of having Enami store them at their facilities.
With the recent increase in the price of gold, Auryn should be in a position to increase their PRODUCTION RATE more rapidly. This is because some of that “extra” income associated with the increasing price of gold, could be deployed towards the purchase (or rental) of a “jumbo” drill rig that is light years more efficient than the hand-held “jack leg drills” they are using now.
The goal would be to access a “positive feedback cycle”. The increased price of gold enhances the ability to increase the PRODUCTION RATES more rapidly than otherwise, this then further enhances the PROFITS, which in turn then frees up yet more cash flow to further increase the PRODUCTION RATES even more, perhaps by having the ability to open up the sub levels under level 3 for production. This “cycle” spins round and round.
The timing seems rather fortuitous to be going into production and stockpiling right at the same time that “spot gold” is hovering over its all-time high price level of about $2,074 per Troy ounce. Contrast this with a miner that just sold shares in order to fund tens of millions of dollars’ worth of drilling in a project that might not be put into production for 10 years, if ever. TIMING IS CRITICAL BECAUSE THE PRICE OF GOLD IS VERY CYCLICAL.
The breakout in the POG, should theoretically attract new investors to the CURRENT PRODUCERS OF GOLD that are able to capitalize on the increase in prices. A junior miner that is still 5 years away from potential production, is not going to attract as much attention as a new producer of gold. The price of gold is cyclical, in 5 years, gold may be trading at a level that doesn’t resemble the current levels. Investors are also going to want junior producers that have SCALABILITY and can rapidly ramp up production rates and therefore profits when the POG is breaking out. They’re also going to prefer tight share structures like Auryn’s 70 million shares outstanding, fully-diluted. This will maximize the all-important EARNINGS PER SHARE figure. In the mining industry, corporations trade at an average “multiple” of 30.21-times their EPS figure.
Great post! Thank you BB!
Maybe MC will surprise us with an early Christmas gift ala December 2022 intersecting the DL 2
How would they be able to tell us the approximate grades without an onsite lab?
Hi JimmyP,
I don’t follow how you’d need an onsite lab to assay stockpiled ore. The “AAA” lab Auryn currently uses is just fine. You can take the wheel loader and approach the stockpile from the north, south, east and west. You load up the bucket and hoist it up as high as you can and you spill the load onto the top of the stockpile a few times from each direction.
Then you take samples with a pipe core or a hand-held auger around the pile at one-third of the way up the pile and a separate round of samples two-thirds of the way up the pile. Then you take these samples and mix them up even more in an appropriately-sized container. Now, you’ve got a fairly “homogenous” mix that is “representative” of the entire stockpile. This gets sent off to the lab in Santiago for analysis. The stockpiled ore will have already gone through the primary crusher Auryn has on-site.
Thank you for clarifying the actual process of stockpiling ore & samplings to the lab.
I would agree that a company could choose to use this rudimentary workaround to estimate representative grades being stock piled but its a very tedious process and one that will not be accurate enough to facilate any “collateral” or fungibility to the previously mined ore. Its better than nothing and a decent yard stick to establish a general understanding of what is being mined but the benefit of an onsite lab is real time assays vs. having to wait months (like last time) to determine grades. When it comes to targeted mining the problem with a lag on assays are pretty obvious. Not as detrimental when you are chasing a visible vein vs. open pit (where you have to have a block model) but still not ideal.
When/if AUMC builds a facility they will 100% have a lab onsite. Literally worth its weight in gold. Either way, it will be interesting to see if they bother taking samples (as illustrated by BB) in the interim. Unlike the hand picked bucket of ore previously sent to labs, a larger sample size to determine realistic average grades to expect will be very useful. IMO, anything around 20gpt as a blended average would be a great outcome.
QUESTION: Why would MC be bringing in professionals like this if MDMN’s properties were not commercial? Just asking.
Just in case for those who can’t open up the link here is the tweet that Bubba posted yesterday
Delighted to welcome Prof. Helmut Misho & his team from @tubaf_freiberg to our Fortuna project. Their expertise on underground mining methods shines light on our work. Prof. Misho’s positive feedback on our approach affirms our path forward.
Lately it feels like the ADL is basically an academic lab for graduate students 
The time for 10-bagger bets will come later - Midas Touch’s Florian Grummes - Kitco
Above is a link to an excellent interview done at the recent Zurich Precious Metals Summit with Florian Grummes of “The Midas Touch”. He echoed the common sentiment that when the price of gold breaks out to the upside, the first stocks to move will be the majors and then the mid-tiers and then the junior producers. He made the comment that there are so many junior explorers out there right now that it’s tough to tell one from another.
He’s right, my own mistake was investing in juniors way, way too early when there are that many out there competing for financings or the attention of investors. The correct approach is to wait until your favorite explorer is able to distinguish itself from the rest of the pack by going into production. There’s only a handful of junior “producers” in this category, whereas there are somewhere around 4,000 junior “explorers” out there currently.
I’ve been getting up every morning and looking at the Medinah and Auryn quotes and volumes only to see the same thing every morning. The “junior explorer” field is too crowded right now. A company like Auryn needs to irrefutably prove that it is in the process of going into production. The building of a froth flotation plant and the stockpiling of ore to serve as “feed” for this new plant hasn’t been noticed by anybody yet.
Once you isolate this handful of new “junior producers”, the focus of attention will be on how high of a grade of ore is being produced. This will further narrow down the field especially if gold is continuing to breakout to the upside. Everything in this sector boils down to RISK versus REWARD. This investment neighborhood is characterized by assuming ULTRA-HIGH RISKS while seeking ULTRA-HIGH REWARDS. Most of us were probably attracted by the stories of 10-, 20-, and “30-baggers” in this sector. Auryn is at an interesting stage of development right now. It is transitioning from being a “speculation” to an “investment”.
The problem for the “junior explorers” is mitigating all of the RISKS on the pathway to going into hopefully extremely high-grade production. First you have the “DISCOVERY RISK”. Can the junior explorer make a legitimate “discovery” before running out of money. Then you have the “FINANCING RISK” for those that did make a discovery. Can you gain the attention of a major in order to provide the financing and technical expertise needed to go into production. Auryn got lucky with Maurizio being willing to advance all of the funds needed to go all of the way into production without charging any interest.
The RISK that accompanies the FINANCING RISK is always the “DILUTION RISK”. Can you attract financiers without undergoing massive levels of “DILUTION” associated with either the share structure or the percentage ownership of the project? Again, it was Maurizio to the rescue. Auryn is entering production/stockpiling with only 70 million shares outstanding and with 100% ownership of the entire ADL Mining District. We’ll have to wait and see how the flotation plant gets financed. One of the RISKS that I’ve run into and that caused me the most headaches has been “PERMITTING RISK”. Can you get the production process PERMITTED without spending years in the process. The recent prompt signing off on the new ventilation system and new safety egress chimney by SERNAGEOMIN was a huge accomplishment for Auryn/Medinah. That could have easily taken several years.
So, where does Auryn/Medinah sit today? An awful lot of “RISK BOXES” have been successfully checked off, but still pretty much nobody has ever heard of Auryn or the ADL Mining District. But, they finally have something to PROMOTE at the very same time that the price of gold is breaking out to the upside. The universe of potential investors is expanding rapidly with the increase in the POG. The story here is that of GRADE. The grades obtained to date are pretty much off the charts. The combination of the extremely high grades and the all-time highs in the price of gold, will combine and make the story all about ECONOMICS. If you get a chance, listen to that interview, Florian Gr
Who’s the hottie in the pics ?