Hello Brecciaboy:
How quickly can a Floatation Plant be built and put to use once all the permitting & financing is done? Since the financiers likely plan to use the FF too, then it makes sense to fast-track the construction while the POG is at all-time highs. Is this even possible?
Hi MDMN jaded,
With the POG, silver and copper where it is, I imagine everybody concerned is in race mode. A couple of updates ago, Auryn cited that the preliminary civil work might start in Q-4 of 2023. Itâs almost as if theyâre going for it even if the financing isnât 100% done or if the permitting isnât in hand yet.
Iâve spoken with a few manufacturers recently and theyâre pretty noncommittal as far as the time involved in putting up a FF circuit, lots of variables. Our 100 tpd âthroughputâ is pretty small relative to many. Most of the âcellsâ are prefabricated and modular in design. If you want to add to your throughput, you can apparently add âcellsâ when you want. Some facilities are built on cement pads while others just on cement footings.
A recent update cited: âWhile negotiations are ongoing, we are optimistic about reaching favorable terms that align with our financial planning and project timelines.â So, apparently management is optimistic about the financiers being able to match managementâs intended âproject timelinesâ, which I assume are âget it done fastâ.
The phraseology used suggests a high level of confidence of getting the deal done but also done to the specs Auryn management would prefer. The comment that Auryn is optimistic about reaching favorable terms that align with Aurynâs âproject timelinesâ almost suggests that the financier might be the manufacturer that can deliver the goods according to Aurynâs âproject timelinesâ. I guess it could also mean that the potential financier could come up with the money quickly.
A potential financier might also be the owners of a âCARBON IN LEACHâ (CIL) facility that, as part of the deal, Auryn promises to exclusively route their âfloat concentrateâ to them, in exchange for a back-scratch. The ideal scenario might be a financier with an interest in one of Aurynâs other assets, that is going to âdonateâ the FF circuit in exchange for a piece of the action on âXâ Auryn asset. Auryn is well-motivated to start monetizing their various other assets while the metals prices are so favorable. A recent update used the phrase that Auryn is âleveraging all resourcesâ to make this FF circuit financing a reality. I could see a scenario in which the FF circuit is shared by Auryn and âXâ party. We also heard in a recent update that another ADL asset is coming on line soon. That update didnât say if there was a jV involved in that âother assetâ. Lots of possibilities, but in a metals environment like this, deals have a tendency to get done.
Thank you, doc
Awww, you opened the barn door for more variables to squeeze out, darn it! 
Jokes aside, Iâm glad I asked. Hopefully the froth floatation plant will consist of these prefrabricated cells that you speak of. You unwittingly pointed out that I donât read shareholder updates very well, lol!. 
Seriously, these are great examples you managed to glean from limited communications.
Hi MDMN jaded,
It appears that recent developments have put us on a pathway to LEARNING a lot more about Auryn/Medinah and their chances for success. The chain of events started with Auryn learning that the DL2 Vein ore had a ârefractoryâ nature to it. This is usually associated with the particle size of the ore being very tiny which can result in sulphide mineralization surrounding these particles, referred to as âfinesâ and âultra-finesâ, impairing the ability to recover the gold. It is extremely common. This is kind of a mixed blessing in that although it costs a little more to process this type of gold, the grades in ârefractory oreâ average 86% higher than those in ânonrefractory oreâ, and the higher grade more than offsets the ârefractoryâ nature of the ore.
The processing solution for most ârefractory oresâ, whether they be gold, gold-copper or copper-gold ores, is to start with what is known as âfroth flotationâ. This, ESPECIALLY WHEN COMBINED WITH âFINE GRINDINGâ TO ABOUT A 75-MICRON PARTICLE SIZE, removes a lot of the surrounding sulphides, so that the âfinesâ and âultra-finesâ can be more easily recovered. So, if froth flotation is the way to go, the next question becomes should Auryn do it themselves on-site at their own facility, or should they delegate it to others like Enami.
Auryn got a little bit disillusioned when they ran 2 smelter tests of their DL2 Vein ore taken from where they have been producing. One was done at the Plenge Lab in Lima, Peru and the results were a through the roof 128 gpt gold (not counting the contributions from the silver and copper). A separate one was done at the Enami smelter facilities and it came back with 57 gpt gold, 978 gpt silver and 3.21% copper AFTER ENAMI TOOK OUT THEIR FEES. The disparity between the 2 smelting tests suggested to Auryn management, that perhaps they should âtake controlâ of the processing of their ore and build their own froth flotation plant on-site. The Auryn BOD unanimously agreed after carefully studying the numbers. Auryn commented that âour decision is rooted in rigorous data analysisâ which revealed that Auryn could realize an âextraâ $5,000 PER TONNE in revenue if they build their own FF circuit.
Auryn sought outside financiers to cover the CAPEX for the froth flotation facility. As is the norm, the potential financiers demanded formal studies to determine the PRECISE ECONOMNICS of this new processing facility. Auryn appears to have recently completed what is known as a âBANKABLE FEASIBILITY STUDYâ or âBFSâ. This may or may not have been associated with what is known as an âF-1 Technical Reportâ on the DL2 Mine project. The latter is a report on a mining project that has been done in compliance with the standards and guidelines set out by Canadaâs National Instrument (NI) 43-101.
The bottom line is that all of the extra testing and âdetailed cash flow modelingâ, mandated by the âpotential financiersâ should provide us shareholders and prospective investors plenty of data to study in regards to the all-important ECONOMICS of the project. Weâve never had VISIBILITY like this. Shareholders and prospective shareholders may or may not be able to access this data until a financing deal is consummated. Any âpotential financierâ would probably prohibit the release of any information that might attract other bidders UNTIL a deal is consummated. THE KEY IS THAT THIS CRITICAL ECONOMIC DATA IS NOW IN HAND. As an investor, Iâve established my INITIAL SHARE POSITION, but it is nowhere near where I want it to be once the ECONOMICS are confirmed by these âdetailed cash flow modelsâ. I have a very good feeling where Auryn/Medinah is headed, BUT I WANT THE SAME DETAILS THAT THE âPOTENTIAL FINANCIERSâ ARE GETTING.
This isnât ârocket scienceâ. I confirmed with Maurizio yesterday that Auryn will be producing and selling what is known as a âfroth flotation concentrateâ or âfloat concentrateâ. This is a common approach for miners with extremely high âintra-adit head gradesâ. For the most part, average-grade gold miners operating underground vein operations (4 gpt gold), cannot afford to put in their own froth flotation facility. The numbers just donât pencil out for these miners to build their own FF circuit or qualify for outside funding for the building of one.
The technology involved in todayâs FF circuits is so advanced that miners with their own FF circuit can produce and sell a HIGHLY-CONCENTRATED âfloat concentrateâ. Dr. Mischo recently commented on âusing the latest and most effective extraction technologiesâ and âincorporating cutting-edge mineral processing technologiesâ. Almost all manufacturers of FF circuits, like Metso, Glencore and JXSC, have their own line of FF circuits specializing in dealing with âfineâ and âultra-fineâ gold ore. The average âpayout periodâ for these new âTECHNOLOGICAL INNOVATIONSâ, including CAPEX and OPEX (operating expenditures), all-inclusive, is only 158 days of production. The decision is a no-brainer for those that can afford to write the check.
The next step in the processing of these ores is nearly always a CARBON IN LEACH or âCILâ facility using cyanide as a leaching agent. Those industry participants that run these facilities need a constant flow of âfloat concentrateâ heading in their direction as âfeedâ for their plants. In exchange for an Auryn-type producer of âfloat concentrateâ, âCILâ plant owners will often enter into âofftakeâ agreements in which they will provide a credit facility to an Auryn-type player, to allow Auryn to build their FF circuit, in exchange for LONG-TERM âEXCLUSIVITYâ for purchasing Aurynâs âfloat concentrateâ.
Conversely, if a âCILâ plant owner needs to borrow funds in order to put in new equipment or expand its facilities, it can approach a banker, with the Auryn âofftakeâ agreement in hand, which will offer proof to the banker that the CIL facility owner has a direct line of âfeedâ to keep the cash flowing. In a relationship like this, which Auryn may or may not be a part of, Auryn would have a new âpartnerâ heavily-incentivized to make sure that Auryn is profitable. The mining industry is full of mutually beneficial relationships like these. The âAurynâs of the worldâ often eventually get taken out by âpartnersâ like these.
In this industry, a lot of time the âAurynâs of the worldâ will lie latent below the surface, out of everybodyâs view and on nobodyâs radar screen, UNTIL a âDEALâ is done and the heretofore missing âDETAILED CASH FLOW MODELINGâ data becomes available and these âmutually beneficial partnershipsâ become a reality.
In this Auryn/Medinah situation, there are still a lot of âinformational voidsâ out there. It would be nice if more people had been active in the industry for a long time and could understand HOW Auryn could earn that âextraâ $5,000 per tonne by building its own FF circuit. Itâs a little bit complicated on one hand, but then again, itâs not that complicated. If an industry participant canât afford to gain access to TECHNOLOGICAL INNOVATIONS like FF circuits or âjumboâ drill rigs, because the grades of the ore they are mining are weak, then theyâll never be able to LEVERAGE those wonderful TECHNICAL INNOVATIONS to their advantage. âGRADE IS EVERYTHINGâ, as is the saying in this particular industry.
In an âinformational voidâ, sometimes you need to use INDIRECT REASONING. For example, with the price of gold at all-time highs, the miners of 4 gpt âaverage gradeâ gold ore are making a fortune without access to these TECHNOLOGICAL INNOVATIONS, which pack a lot of LEVERAGE. What do you think is going to happen to Auryn/Medinah, who are mining gold ore, MANY, MANY TIMES THAT GRADE? I canât provide you with the âDETAILED CASH FLOW NUMBERSâ today, but perhaps very soon.
When a miner owns its own froth flotation facility, the âintra-adit head gradeâ is still important. After all, that is how and why it qualified to have it own FF circuit. But whatâs even more important is the grade of that which is being sold i.e. the grade of the âfloat concentrateâ. This all-important grade, relates back to the âintra-adit head gradeâ of the ore PLUS the efficiency of the FF circuit and how well it was able to hyper-concentrate the ore. The best of both worlds would be having the kind of grades that the DL2 Vein has been featuring all along PLUS an FF circuit that is extremely efficient at removing the âgangueâ material that has no value. These discards are destined for the on-site âtailings facilityâ.
I confirmed with Maurizio yesterday that Auryn will be producing and selling what is known as a âfroth flotation concentrateâ or âfloat concentrateâ.
Nice to hear you made contact with MC! Thanks for sharing, Doc.
Very interesting, MC states that the company will be selling concentrate. That doesnât sound like a company thatâs going down the tubes to me. And if BB says MC confirmed it, then I believe him. And, from what BB is saying, it seems financing an FF plant is extremely doable.
âThe average âpayout periodâ for these new âTECHNOLOGICAL INNOVATIONSâ, including CAPEX and OPEX (operating expenditures), all-inclusive, is only 158 days of production.â
I think Iâll just sit on my investment for awhile and not sell - I donât know how long it takes to build an FF plant, but âŚ
âAuryn sought outside financiers to cover the CAPEX for the froth flotation facility. As is the norm, the potential financiers demanded formal studies to determine the PRECISE ECONOMNICS of this new processing facility. Auryn appears to have recently completed what is known as a âBANKABLE FEASIBILITY STUDYâ or âBFSâ. This may or may not have been associated with what is known as an âF-1 Technical Reportâ on the DL2 Mine project. The latter is a report on a mining project that has been done in compliance with the standards and guidelines set out by Canadaâs National Instrument (NI) 43-101.â
Hey Doc,
I may be out of the loop, but I donât recall hearing about Auryn working on a BFS. If so, that sounds to me like they would be circumventing a whole lot of time-consuming, expensive, and frankly, necessary prerequisites to get to a BFS. A BFS would only come after a PEA/Scoping Study, a Prefeasibility Study (PFS) and a Feasibility Study (FS) have been completed â all of which depend on increasingly more accurate resource definitions, ultimately supported by extensive drilling and the NI 43-101. Iâm certainly not a âQualified Personâ, but Iâve invested in enough mining companies through the years to know that in order to drill enough holes with tight enough spacing to achieve the level of confidence to calculate the proven and probable reserves necessary for a viable BFS, it will require millions of dollars that I donât believe Auryn/Maurizio has - or has spent thus far.
Iâm not privy to the discussions Auryn is having with their potential lender, but I think it is highly unlikely that a BFS is being worked on in that regardâŚat least not a BFS that is typically generated by reputable mining outfits and required by reputable financiers.
BFSâs come in all different shapes and sizes.
And so, the admins of TMP have been approached by many shareholders to organize some type of Q and A between the shareholders and management. There seems to be a lot of confusion regarding several critical issues. The admins cannot guarantee that management is in a legal position to accept and answer questions but at least this might represent a start.
The hope is that management can answer these questions via the regular quarterly updates by weaving into them the answers to the most common questions that the shareholders have.
Weâll run the question list by the forum members prior to submitting them to management just in case any forum members might be in a position to provide at least some partial answers. If Kevin is in a position to weigh in, weâd greatly appreciate any contributions from him. I have volunteered to accept questions via the TMP private mail. Just click on my blue C circle in this box and choose âmessageâ to write me.- cabezon
Hey cabezon! Thanks for all you have done for us over the years!
Hi HR,
Iâve always enjoyed your input over the years. I think you might be conflating the need for drilling out a vein that has already been in production for 30 years with an open pitable deposit that the discoverers know very little about. The DL2 Vein is traceable on strike for over 1,000-meters in a SSE to NNW direction. It is traceable for 700-meters vertically to an elevation of about 1,250 masl. This is a massive structure as are many mesothermal veins. Mesothermal veins are known for their âcontinuity and contiguityâ, they go way down deep and they tend to increase in both grade and width with depth.
The artisanal miners mined a 350-meter stretch of the 1,000-meter strike length down to a depth of about 100-meters. This represents about 4% of the vein. They produced about 2,000 tonnes of ore which is not a huge number BUT A VERY CONSIDERABLE âSAMPLE SIZEâ from a geostatistical point of view. The question to ask in geostatistics is: IS THIS SAMPLE âREPRESENTATIVEâ OF THAT WHICH WE MIGHT ENCOUNTER FURTHER DOWN IN THE STRUCTURE.
All of that 350-meter by 100-meter ârectangleâ are now empty stopes. The artisanal miners averaged 64 gpt gold for that 2,000 tonne âsampleâ. Auryn did extensive sampling within the âold worksâ composed of levels 0,1, and 2. These âchannel samplesâ of the working faces of the adits where the artisanal miners left off at, averaged 85 gpt gold.
The artisanal miners were being bankrolled by âCCMâ which was a mining bank that morphed into what we call âEnamiâ today. The artisanal miners approached CCM many, many times seeking yet more funding for various advancements in the âDL2/Fortuna Veinâ project. CCM would send up a geoscientist named Roberto Waisberg each time, and he performed a variety of what are now known as scoping and prefeasibility studies and did a vast amount of channel sampling and geological mapping at a scale of 1:500. CCM kept approving the next round of cash advances. The project was deemed to be âfeasibleâ from the point of view of these âbankersâ. These cash advances were guaranteed by future production. The vast studies by CCM kept finding the project âbankableâ and the checks were written.
Auryn made a âPOSITIVE PRODUCTION DECISIONâ without the need to drill 1 hole at the DL2/âFortuna Veinâ. The totality of the âGIS DATABASEâ of all information gathered to date, held in a computerized format, provided the data needed. They could have spent $30 million to $50 million by drilling out the entire vein at 60-meter spacings and 30-meter infill spacings in order to formally block out MR/MR.
Instead of having 70 million shares issued and outstanding Auryn would probably have perhaps 470 million shares issued and outstanding plus a report stating that the DL2 Vein has perhaps 1.5 million ounces of MR/MR in the 5 various categories (a total estimate). Anybody could calculate the approximate volume of that vein structure, and multiply it by the SPECIFIC GRAVITY of that ore (2.6 tonnes per cubic meter) and multiply that âtonnageâ figure by the average grade found to date, and come up with a minimum of perhaps a couple of million ounces of gold. Knowing the exact number is NOT worth diluting all of your future earnings to death. The work of Aurynâs geoscientist, Luciano Bocanegra already told us in a âpreliminary resource assessmentâ of the existence of at least 664,000 ounces of gold just in the top portion of the DL2 and Merlin 1 Veins.
People often forget that the CIM standards and guidelines for blocking out MR/MR in a vein deposit approve of âhistorical gradesâ and the grades found in âdevelopmentsâ like adits and stopes. MR/MR calculations mandate the modeling of 3-dimensional entities. A horizontal adit is basically an ENORMOUS horizontal drill hole that provides hundreds of times more information than a 2.2-inch wide âHQâ drill hole.
Under the circumstances, funding a massive drilling program would have been incredibly stupid and hyper-dilutional. Maurizio was willing to advance the funds needed to go into production at zero interest rate cost. I doubt he would have been willing to fund a $30 million drill program just to learn how many ounces of gold are present.
Most miners are FORCED to do expensive drill programs in order to attract and âDERISKâ a project from the point of view of a mining major with deep pockets and a lot of technical expertise. Auryn had already made a âPOSITIVE PRODUCTION DECISIONâ based on a huge amount of channel sampling and historical production results AT THE VERY SAME SITE WHERE THEY DECIDED TO RECOMMENCE PRODUCTION EFFORTS. They didnât need to attract a major miner.
In that 100-meters of vertical production, the grades experienced by the artisanal miners averaged 54 gpt gold in the top third, 64 gpt gold in the middle third and 74 gpt gold in the bottom third. Both Dick Sillitoe and Rob Cinits of ACA Howe concluded that, as is the norm with other MESOTHERMAL VEINS, BOTH the grades and widths were improving with depth.
Auryn ârolled the diceâ and decided to drift the Antonino Adit starting at about the 1,860 meters above sea level to the NNW of the âold worksâ, with the intent of intersecting the historical âlevel 2â of the âold worksâ right where âShaft Câ (of 7 vertical shafts that the artisanal miners had constructed) intersected level 2. The empty stopes in the âold worksâ, as well as 5 ventilation âchimneysâ already in place, would provide the ventilation needed to simultaneously mine from a variety of sub levels under level 2. It took a while, but they were successful and did extensive channel sampling at the intersection of the DL2 Vein and the Antonino Adit. The first group of 4 channel samples, over a width of 0.6-meters, came in at not 64 gpt gold, like the artisanal miners averaged, but 164 gpt gold. The second group of channel samples came in averaging 150 gpt gold.
Later, Auryn ran 2 smelting tests of the DL2 Vein ore taken from near the intersection site. The smelting test done in Lima, Peru at the Plenge Lab came in at 128 gpt gold. The smelting test done at the Codelco/Enami smelter (probably either Las Ventanas or Los Caletones), came in at 57 gpt gold, 978 gpt silver and 3.21% copper. This represents about a 70 gpt âgold equivalentâ grade. The grades found at the DL2 Vein have CONSISTENTLY been off the charts from the 64 gpt historical grades of the artisanal miners (a 2,000 tonne âsampleâ), the 85 gpt channel samples taken by Auryn at levels 1 and 2, the 164 gpt gold and 150 gpt gold grades found near the intersection of the Antonino Adit and the DL2 Vein and the 2 smelter tests coming in at 128 gpt gold and 70 gpt âgold equivalentâ. I look forward to studying the average grades found in the recently âstockpiledâ ore at the DL2 Mine.
In open pitable deposits, the miner needs to do an extensive amount of drilling in order to block out MR/MR and to do the wireframe modeling and âkrigingâ studies needed to design the optimal open pit design. These projects can have billion-dollar price tags so you need to do the drilling to mitigate the RISK. Thatâs not true with extremely high-grade ânarrow veinâ deposits that have already been in production for 30 years. If you already have the information, in hand, to make a âPOSITIVE PRODUCTION PRECISIONâ, the integrity of the SHARE STRUCTURE needs to be considered, so that future earnings will not be hyper-diluted on an EARNINGS PER SHARE basis. THE ULTIMATE SCENARIO WOULD BE MASSIVE EARNINGS BASED ON EXTREMELY HIGH-GRADE ORE BEING MINED DIVIDED BY A TINY NUMBER OF SHARES RESULTING IN AN EXTREMELY LARGE âEARNINGS PER SHAREâ FIGURE.
This is a different project from a classification point of view. Itâs not a classic âgreenfieldâ situation but itâs not a âturnkeyâ operation either, where Auryn approached the artisanal miners and bought out the project while active. The project had been âmothballedâ for 50 years but the high-grade gold didnât go anywhere in the interim. The price of gold went up from the $35 per ounce that the artisanal miners were being paid to the current price of just short of $2,400 per ounce. The TECHNOLOGY needed to recover the âfinesâ and âultra-finesâ (tiny gold particles) found at the DL2 Vein, went from nonexistent back in the days of the artisanal miners to a piece of cake with todayâs froth flotation technologies. What might the artisanal miners have averaged if they werenât discarding 14 gpt gold in their tailings piles?
In studying the ADL Mining District, you need to constantly be overlaying historical geological and geophysical findings with recent findings. The hyperspectral satellite imaging survey (CSAMT) done by C.S. Perez, (formerly of Vale and BHP), revealed the existence of a 7 Km swath of âabout a dozenâ intrusives extending across the southern downslope off of the ADL plateau. Perez concluded the presence of at least 2 porphyry structures among the various intrusives. The question then obviously became, what kind of grades might we anticipate finding in these âabout a dozen intrusivesâ. The partial answer to that is what we have been learning after the DL2 Vein was successfully intersected. We knew what kind of grades to expect based on the historical production results involving a very ârepresentativeâ 2,000-tonne âsample sizeâ. THIS INFORMATION, HOWEVER, NEEDED TO BE CORROBORATED AND NOW IT HAS BEEN.
The exhaustive trenching program done by Auryn revealed the existence of over 5,000-meters of veins having made it all of the way to the surface at the ADL plateau. Thatâs fine, but what kind of average grade might we anticipate within this âVEIN SETâ of mostly parallel veins? That question is also being answered now that weâve gotten deeper into the mountain.
The ridge crest sampling program done on the southern downslope off of the ADL plateau, revealed a massive 3.6 Km (north to south) by 1.5 Km (east to west) area of high-grade copper and moly known as the âPEGASO NEROâ. This aligns tightly with Perezâs conclusion of there being 2 apparent porphyries present, one of which is the copper-moly variety (Type 21A).
Detailed cash flow analyses have been given to the âpotential financiersâ of the DL2 froth flotation circuit. At some point in the future, we shareholders will be privy to this data. What you want to gain an appreciation for is the cash flow potential of a very, very tiny percentage of this overall ADL Mining District, that level 3 of the DL2 Mine represents.
But yet here we are at .0008âŚâŚ.
Would this help?
https://x.com/kingkong9888/status/1781385379771560240?s=46&t=Zxc4fzHbOQZu_86evosiMw
And so, the admins of TMP have been approached by many shareholders to organize some type of Q and A between the shareholders and management. There seems to be a lot of confusion regarding several critical issues. The admins cannot guarantee that management is in a legal position to accept and answer questions but at least this might represent a start.
The hope is that management can answer these questions via the regular quarterly updates by weaving into them the answers to the most common questions that the shareholders have.
Weâll run the question list by the forum members prior to submitting them to management just in case any forum members might be in a position to provide at least some partial answers. If Kevin is in a position to weigh in, weâd greatly appreciate any contributions from him. I have volunteered to accept questions via the TMP private mail. Just click on my blue C circle in this box and choose âmessageâ to write me.- cabezon
Gold taking a beating yesterday and today. Long run still bullish. I hope Maurizio doesnât miss this bull run.
Catch the next one in 2030âŚ.
Like I said the updates are boring why wait for the next one when you know what they are going to say?, people selling because nothing exciting to prop up the sp⌠Soon we will see .0001. What a joke this has become! we donât know if/when they will get the financing so definitely if they do it will be in 2Q. As soon as they announce the financing then add a minimum another year for the flotation plant. Not bashing just being realistic and aggravating sitting here year after year and nothing substantial has come up yet.
I would love to be part of a zoom Q & A with Maurizio.
No particular questions, no expectation of any bombshell revelation(s). I understand that in projects as sprawling as Auryn, shareholders wonât get to hear all the nitty-gritty details.
But I am glad to hear that Brecciaboy has had direct communication with Maurizio. And I would be happy to see Maurizio âin personâ once again â the 2016 shareholders meeting feels long ago. It would be great just to have a look at him and make my own read on how heâs holding up. I do hope heâs holding up well.
Now that I think about it, maybe one question: âHas he ever had any serious regrets about taking on the ADL?â Surely the man had other options in life.
â madmen
Hi Hulkster,
If I may, Iâd like to take the other side of âthe updates are boringâ sentiment. From my vantage point, the updates have been absolutely hitting it out of the ballpark, but I will humbly concede that the market seems to be more in alignment with your position. I sense a gigantic DISCONNECT between âthe marketâ and reality. Maurizio has so much on his plate right now, that he doesnât have the time to address this DISCONNECT through the only proper way to address it, namely, EDUCATIONAL EFFORTS. (Sorry about the length of this post.)
THE â2-BY-4 TO THE SIDE OF THE HEADâ MOMENT FOR AURYN/MEDINAH THAT APPARENTLY NOBODY SENSED
There was a recent sequence of events in the history of Auryn/Medinah that, from the response in âthe marketâ, apparently nobody noticed. It started with Auryn successfully intersecting the DL2 Vein via the drifting of its Antonino Adit. This occurred on 1/3/24. Shortly thereafter, Auryn successfully constructed a ventilation/safety egress âchimneyâ that intersected the DL2 Mineâs âold worksâ consisting of levels 0,1, and 2. This was promptly signed off on by SERNAGEOMIN, allowing Auryn to be able to simultaneously mine from the new level 3, that of the Antonino Adit, as well as several sub levels underneath it, in a safe manner.
The SERNAGEOMIN sign off then led to Enami being able to place Auryn on the CHILEAN MINING REGISTRYâS LIST of miners allowed to make regular deliveries to Enami. After intersecting the DL2 Vein via the Antonino Adit, Aurynâs geoscientists executed a series of channel sample assays that came back with off the chart gold grade results. The first group of 4 channel samples averaged 164 gpt gold over a 0.6-meter width, and the second group averaged 150 gpt gold. For benchmarking purposes, the average grade of gold mined worldwide in underground vein operations is 4.18 gpt gold.
Subsequent to that, Auryn sent ore to 2 different smelting facilities, in order to test the amenability of the DL2 Vein ore to the smelting process. Yet again, stellar results were received back from each smelting test. The sample sent to the Plenge lab in Lima, Peru came back at 128 gpt gold and the âexperimental batchâ sent to the Enami smelter came back at 57 gpt gold, 978 gpt silver and 3.21% copper. The disparity between the smelting results from the Plenge Lab in Lima, Peru and those from the Enami smelter, suggested to Auryn management that they should look into performing some ore processing activities on-site, in order to be in a position to send lesser tonnages to Enamiâs somewhat expensive smelting facility. In the world of ore processing and assaying, there is nothing more accurate than the smelting process and these âfire assaysâ.
A variety of froth flotation studies were performed, and the results revealed that if Auryn were to build their own froth flotation circuit on-site, then they could realize an extra $5,000 per tonne in income over and above the handsome amount of money they could earn by DIRECT SHIPPING THE DL2 Vein ore to Enamiâs smelter. This great news, and the developments that preceded it, were the proverbial â2-by-4 to the side of the headâ that nobody seemed to notice. The Auryn BOD unanimously voted to build their own FF circuit on-site. Auryn went on to âmine and stockpileâ extremely high-grade ore for a period of about 205 days until opting to temporarily pause operations and concentrate on the various studies demanded by the potential finaciers needed in connection with the financing of the new FF facility and executing some of the preliminary on-site civil work. Enough had been stockpiled to keep the new facility busy for some time. Inexplicably, throughout this entire sequence of positive events, the share prices and market caps of both Auryn and Medinah plummeted to the all-time lows that they are currently trading at.
THE GOLD MINING PROCESS AND ORE PROCESSING IN GENERAL
The goal of gold mining is to go through the steps needed to convert âgold oreâ, within the belly of a mountain, into .9999 gold bullion. Those âaverageâ gold miners that are mining gold ore with an âintra-adit head gradeâ of 4.18 gpt gold have a lot of work to do in order to convert that ore into .9999 gold bullion. Since there are 1,000 grams in a âkilogramâ and 1,000 kilograms in a âmetric tonneâ of gold, then pure gold grades out at 1 MILLION GRAMS PER TONNE. Gold miners can opt to sell their gold product at any level of purification they choose to. They will be paid based on the âPRICE OF GOLDâ (âPOGâ) per Troy ounce at the time, currently about $2,300, less a discount proportionate to the cost of some other party finishing the conversion of their product into .9999 gold bullion.
A LITTLE BIT ABOUT THE SMELTING PROCESS
âSmeltingâ is kind of the ânuclear optionâ in purifying gold rapidly. It is very effective in getting the purity of gold in the general neighborhood of .9999 gold bullion, but it is expensive. In smelting, what you do is crush and grind the ore to a certain particle size known as a âTyler mesh sizeâ. You then place the ore into a giant clay crucible, you add a measured amount of borax or silica to act as a âfluxâ, some lead oxide to act as a âlithargeâ, then you add a source of oxygen and a source of iron. You heat this mixture under pressure in a blast furnace or reverberatory furnace and the various sought-after metals will melt when the temperature reaches their âmelting pointsâ. For gold this is 1,064 degrees Celsius. For copper it is 1,085 degrees Celsius and for silver it is 961 degrees celsius.
You then pour this molten mass into a conical-shaped mold with the apex of the cone aimed downwards. The solution cools and solidifies and then you separate the mold liner from the solidified mass. The sought after metals end up at the apex of the cone because they are denser than the worthless âgangueâ materials that gold is surrounded by.
You then hit the solidified âconeâ with a hammer near the apex of the cone, and the gold, silver, and copper âbuttonâ will break away in one piece, from the solidified gangue/discards which are then referred to as âslagâ. You then clean up the sought after metals contained in the âbuttonâ with nitric acid and they then become a âprillâ. In Aurynâs case, you then separate out the 3 different metals and weigh them individually. Enami will quote you the results reflecting their smelting fees (known as treatment charges or âT/Csâ and refining charges or âR/Csâ) having already been taken out i.e. 57 gpt gold, 978 gpt silver and 3.21% copper NET of Enamiâs fees. The actual, pre-smelting âintra adit head gradesâ, you often donât receive unless you run a second smelting test at a facility like the Plenge Lab in Lima, Peru.
The Enami results were wonderful from an economic point of view for Auryn. The problem, if you can call it a âproblemâ, is that a second smelting sample of the very same ore, which was sent to the Plenge Lab in Lima, Peru, came in at a totally off the chart, 128 gpt gold without any discount for smelting fees because this was done in a lab setting and not in a commercial setting. This basically amounted to a âfire assayâ done by smelting, the most accurate gold assay available. The copper and silver components were apparently not tested for in this lab test. The disparity between the gold grades in the 2 sets of results told Auryn management that it was prudent for them to look into doing some of their own âore processing/purificationâ prior to sending the ore to a smelter.
After ârigorous data analysisâ (as per a recent Auryn update), Auryn management opted to build their own âfroth flotationâ facility citing that they could improve the ECONOMICS by $5,000 per tonne, over and above Enamiâs offer, if they were to INEXPENSIVELY âfroth floatâ their sulphide ore, and then sell the product as a highly-concentrated âfloat concentrateâ. Nowadays, nearly all âsulphide gold oreâ, especially that with fine-particled gold, like about half of the gold present at the DL2 Vein, is âfroth floatedâ. Froth flotation is the norm and not the exception.
The University of San Sebastianâs Department of Mining Engineering had already tested the DL2 Vein ore via their âfroth flotationâ test facilities and the results gave management that staggering $5,000 âbonusâ figure over and above what Enami was offering. The âpotential financierâ of Aurynâs froth flotation facility, has been copied on these results as well as on âdetailed cash flow analysesâ but we shareholders have not seen the breakdown of that âextraâ $5,000 per tonne figure. Some of us that do a lot of due diligence on mining projects would love to see the exact breakdown of that $5,000 âDIRECT FINANCIAL IMPACTâ bonus figure. We trust the figure, but some of us really like to study the granular details. In reality, the important fact IS the $5,000 figure, and not its exact breakdown as determined by the engineers and geoscientists.
Iâve recently completed reading a couple of dozen articles on todayâs state of the art FROTH FLOTATION TECHNOLOGIES and the improvements having been made even in the last 5 to 10 years. Most of the articles conclude that âFROTH FLOTATION IS BY FAR AND AWAY THE MOST COST EFFECTIVE METHOD FOR CONCENTRATING GOLD IN SULPHIDIC ORES WITH FINE-PARTICLED GOLDâ (like that at the DL2 Vein).
I recently confirmed with management, that the plan is indeed to do the froth flotation on-site at their own facility, and sell the resultant âfloat concentrateâ and thereby cash-in on the $5,000 per tonne bonus. As far as there being plenty of willing buyers for this âfloat concentrateâ, the comment was made that this is not of any concern whatsoever. With the recent advances in the price of gold, everybody seems to want to seek a profitable niche in the gold mining and purification process.
FROM A DUE DILIGENCE POINT OF VIEW, WHAT IS CRITICAL NOW IS GATHERING MORE INFORMATION ON THE âPROJECTED ECONOMICSâ OF THIS PROJECT
The âpotential financiersâ have been briefed on the âDETAILED CASH FLOW MODELINGâ for this project. The most recent quarterly update of Auryn suggested that âSIGNIFICANT ADVANCEMENTSâ have been made in the negotiations, no doubt, because of the âDETAILED CASH FLOW MODELINGâ results. Iâm pretty much convinced that more details will probably not be forthcoming (to existing shareholders or prospective investors) UNTIL after a deal is consummated. By then, a second â2-by-4 blow to the side of the headâ will have been delivered and weâll have to wait to see what the marketâs reaction might be.
The good news in a situation like this, is that if the market just refuses to react favorably to positive news, then management can simply declare and distribute extremely generous (based on a percentage of the share price), cash dividends, on a regular basis. EXTREMELY GENEROUS CASH DIVIDENDS, especially if they become even more generous over time as production rates scale up, will âforceâ the market to react favorably, otherwise shareholders could simply take their generous cash dividends, and redeploy that cash back into the market, and buy even more ridiculously-priced shares, in order to expose that many more shares to a flow of increasingly generous cash dividends down the line. This is basically what a positive feedback cycle looks like.
If we want more information on the potential ECONOMICS of this project, it would probably behoove us to get a little more familiar with the froth flotation process itself and the ECONOMICS associated with dealing with extremely high-grade, intra-adit, sulphide ore that contains a lot of âfinesâ and âultra-fineâ particles of gold. The question becomes, is there an inexpensive way to deal with these âfinesâ and âultra-finesâ in order to advance the purity of the gold towards that .9999 gold bullion target grade. Once a miner of âfineâ and âultra-fineâ gold ore gets over that hurdle, then the pathway to .9999 gold bullion is fairly straight forward. This mining of small-particled gold ore is an extremely common problem, and is why the technology has improved so much over the years. Nowadays, all of the manufacturers of froth flotation equipment, like Metso, Glencore and XJSC, have an array of models specialized in recovering the âfinesâ and âultra-finesâ. If the artisanal miners had access to this kind of equipment, then they would have averaged a lot higher grades than even the stellar 64 gpt gold they did average.
THE FROTH FLOTATION PROCESS ITSELF
Most ores being mined today are âSULPHIDEâ ores. Small-particled ore can become entrapped within the crystalline latticework of sulphide molecules like pyrite and arsenopyrite or âarpâ. This makes this type of ore somewhat ârefractoryâ (resistant) to some ore processing methodologies, like gravity separation. Almost all sulphide ores are somewhat ârefractoryâ and are in need of âfroth flotationâ. Thankfully, sulphide ores tend to be 86% richer in gold content than their counterparts like âoxideâ gold ore. You might be able to sense the ECONOMIC ADVANTAGE of an inexpensive way to treat these naturally rich gold ores with plenty of âfinesâ and âultra-finesâ.
The FF process occurs in âcellsâ which are large tanks of water (some as large as 500 cubic meters) in which finely ground ore is suspended in solution via âagitatorsâ. Gold-sulphide complexes are interesting in that the gold part of the complex hates water and is considered âhydrophobicâ. The sulphide part of the gold-sulphide complex, on the other hand, is attracted to water, and is deemed âhydrophilicâ. These âcellsâ have an agitator to keep the ore/âpulpâ finely disseminated in the water and there is a source of air bubbles often located near the base of the tank. The ore, which has been crushed and ground into a sand-like consistency, is injected under pressure into these âcellsâ.
If you introduce a chemical known as a âxanthateâ, which is extremely âhydrophobicâ (it hates water just like gold does), it will coat these air bubbles. The gold portion of the âgold-sulphideâ complexes will cling tightly to these xanthate-coated air bubbles, while the water-loving sulphide portion will be attracted to the water at the base of the âcellâ. As the air bubbles âfloatâ to the surface, a âtug of warâ ensues, and the rising bubbles will bring the fine-particled gold ore with them and they will collect as a âfrothâ on the top of the tank.
The gold-enriched âfrothâ will be swept into a collection vessel and the result will be a much-higher grade âfloat concentrateâ or âFCâ. The sulphide portion of the gold-sulphide complexes, as well as other contaminants in the ore like clays, silicates and carbonates, will then be pumped out of the bottom of the cell and piped to a nearby âtailings pondâ, on the ADL plateau, for disposal and perhaps another round of gold recovery later if deemed economic. The greatly enriched FC is then sold as a commodity to industry participants with the ability to further purify the FC into gold bullion.
Sometimes the buyers of âFCâ will be middlemen known as âmetals tradersâ, sometimes they will be the owners of âCARBON IN LEACHâ (âCILâ) plants, and sometimes they will be the owners of smelting facilities. The goal of the overall process for Auryn/Medinah is to greatly enhance the GRADE of the âFCâ as INEXPENSIVELY as possible, and to maximize the RECOVERY of the gold originally found in the untreated gold ore.
It can be confusing, but you need to keep in mind that the absolute amount of gold contained in the original âintra-adit gold oreâ never increases, it just gets hyper-concentrated into a smaller volume and lesser tonnage format. You need to keep your focus on BOTH the original GRADE of the âintra-adit gold oreâ, which determines the AMOUNT of gold present as well as the CONCENTRATION/GRADE of the product being sold. THE KEY TO MAKING AN INORDINATE AMOUNT OF MONEY WHEN THE PRICE OF GOLD IS TRADING NEAR ALL-TIME HIGHS, IS TO START WITH âINTRA-ADIT GOLD OREâ GRADING PERHAPS IN THE TOP 1 TO 5% OF ALL UNDERGROUND VEIN MINES, WHICH APPEARS TO BE THE CASE FOR AURYN, AND THEN INCORPORATING INEXPENSIVE PURIFICATION METHODOLOGIES IN ORDER TO FURTHER ADVANCE THE GRADES TOWARDS THAT .9999 GOLD BULLION TARGET.
There are a vast variety of parameters that affect both the GRADE of the âFCâ and the RECOVERY PERCENTAGE of the gold contained in the original intra-adit ore. The size of the particles of the crushed/ground ore, prior to treatment, is a critical one. Approximately 75 microns is a common idealized size. The diameter of the air bubbles is another critical variable, as is the concentration of the chemical additive âxanthateâ. The temperature of the water is another factor as is the rate of agitation of the suspended particles.
The engineers will âtweakâ with all of these variables, and design the most effective FLOW SHEET to INEXPENSIVELY maximize both GRADE and RECOVERY. If a miner, like Auryn, can start out with extremely high-grade gold ore from the mining adit, and design a FLOW SHEET that maximizes both GRADE and RECOVERY in an INEXPENSIVE manner, then the ECONOMICS of the mining project can be extremely robust. This is the basis for that âextraâ $5,000 in income, over and above what Enami was willing to pay if Auryn were to âDIRECT SHIPâ their ore straight to the Enami smelter, without any other pre-processing of the ore. Keep in mind that management didnât divulge the exact details of the FLOW SHEET and ârecipeâ that resulted in this extremely significant $5,000 figure. Instead, they gave us the $5,000 figure (the proverbial â2-by-4â) for now. We can always wait on the exact ârecipeâ. The âpotential financiersâ and their geoscientists did receive the FLOW SHEET/ârecipeâ.
The smelting process is expensive on a PER TONNE SMELTED basis (approximately $200 per tonne versus $10 per tonne for FF), and Enami is not allowed to lose money and become a financial burden to the Chilean government. They have to charge what they have to charge, to pay for these billion-dollar behemoths. The key is to INEXPENSIVELY remove as much of the contaminants and discard them, prior to TRANSPORTING (also expensive on a tonnage basis) the highly-purified ore to the location of the next site for purification.
Contaminants INEXPENSIVELY discarded to the âtailings pondâ, never need to be TRANSPORTED or SMELTED. In the upcoming Auryn operations, it is not clear yet who will be responsible for TRANSPORTING the âfloat concentrateâ to the destination chosen by the buyer.
WHAT ARE PEOPLE MISSING HERE?
The mining industry and the various ore purification procedures are admittedly somewhat complex. POINT #1: If Auryn opts to build their own froth flotation (FF) plant on site, this would âtranslate into a DIRECT FINANCIAL IMPACT of around $5,000 per tonneâ (from the 10/9/23 Auryn update) over and above what Enami would pay if Auryn DIRECT SHIPPED that ore straight to Enamiâs smelters. Thatâs a lot of money. Thatâs your â2-by-4â IF, IF, IF, Auryn can successfully build the facility. The worse-case scenario for Auryn, is immediately shipping ore to Enamiâs smelters, and paying for the facility with the proceeds of those shipments. This reality gives Auryn some bargaining leverage in the negotiations.
POINT #2: The average COST for the owner of an FF circuit to âfloatâ ore is only about $10 per tonne. This includes the CAPEX COST of the facility plus the OPEX COSTS (to operate the facility). This process is extremely INEXPENSIVE and therefore there is a tremendous amount of ECONOMIC LEVERAGE present for those miners that can build their own FF circuit and especially if their ore responds well to the froth flotation process. Many months ago, Auryn mentioned within a quarterly update, that lab testing had been going on (in the background) and that the DL2 Vein ore was responding âEXCEEDINGLY WELLâ. I donât think anybody made heads or tails out of this comment perhaps until recently when the focus came onto the froth flotation of the DL2 Vein ore.
This ability to build your own facility is highly tied to the âintra adit head gradeâ of the ore being mined. From the point of view of a potential financier of an FF plant, the RISK involved is greatly mitigated if the ECONOMICS of the project are superior. That $5,000 âextraâ revenue, associated with building your own facility, which is the subject of that which is being financed, provides a lot of DERISKING to any potential financier. Contrast this with a financier being asked to fund a diamond drill program, the results of which nobody can estimate, and even if they are positive, the project still might be 5 years away from being able to cash flow. Financiers have this nasty habit of wanting VISIBILITY of how they are going to be repaid.
POINT #3: The average âpayout periodâ worldwide for the owner of an FF facility to recoup its CAPEX and OPEX expenses is only 158 days. If the ore is EXTREMELY amenable to being concentrated by froth flotation, then the âpayout periodâ will be even quicker. These stats have already been calculated and incorporated into the âdetailed cash flow analysisâ that has already been handed to the âpotential financierâ. AGAIN, THE IDEAL SCENARIO WOULD BE A MINER MINING ORE WITH AN EXTREMELY HIGH-GRADE GOLD CONTENT WITHIN THE ADIT, AND THAT ORE BEING VERY RESPONSIVE TO THE FF PROCESS. In a situation like that, the grades of the âfloat concentrateâ can be staggering.
POINT #4: A question: Are we to believe that these FF facilities are so efficient, when it comes to processing small-particled-gold ore, that the LEVERAGE present involves spending $10 per tonne in order to earn an âextraâ $5,000 per tonne, over and above the significant earnings from DIRECT SMELTING the ore with no other beneficiation occurring. Thatâs 500-to-1 LEVERAGE. The short answer to that question is the LEVERAGE will be less than 500-to-1, but the LEVERAGE will still be immense. It will be less because the tonnage of the ore being mined in the adit, will be larger than the tonnage of the ore sold as âfloat concentrateâ, because of the tonnage of the worthless gangue that got discarded to the tailings pile. If Enami is going to store your âdiscards/tailingsâ, then they have to charge you for it, and that will be built-in to their fee structure.
DISSECTING THAT $5,000 PER TONNE, âEXTRAâ FIGURE
Does this seemingly âtoo good to be trueâ scenario, have to do with the TONNAGES involved? Yes, it does. The daily âthroughputâ of Aurynâs FF circuit is going to be 100 tpd. This means that the circuit can âPROCESSâ 100 tonnes of recently-mined adit ore per day. But keep in mind that the âOUTPUT/PRODUCTIONâ is going to be less than the 100 tpd âTHROUGHPUTâ because of the weight of the nonvaluable material/gangue that got pumped out to a tailings facility. Note that the 100 tpd âTHROUGHPUTâ figure will scale up through time as the production rate predictably increases and new âcellsâ are added in a modular fashion. This would help support the declaration and distribution of PROGRESSIVELY LARGER CASH DIVIDENDS over time.
So, the good stuff, the âFLOAT CONCENTRATEâ is going to weigh less than the original 100 tonnes that can be processed daily. So, that 500-to-1 LEVERAGE is NOT going to be fully present, but the density (weight per unit of volume) of the material being discarded, is going to be much less than the âgood stuffâ/gold held within the FC. Gold has a SPECIFIC GRAVITY/DENSITY of 19.3 tonnes per cubic meter. It is one of the densest things on the planet. The ECONOMIC LEVERAGE will indeed be significant, but it will fall short of that 500-to-1 figure.
Management has confirmed to me that they will be selling âfloat concentrateâ (FC) as either their end product or as one of their end products (plural). The tiny specs of gold known as âfinesâ and âultra-finesâ are tiny enough to have their weight supported by an upwardly ascending bubble covered with xanthate. The ACA Howe reports that about half of the DL2 Vein ore is composed of these âfinesâ and âultra-finesâ. But what about the DL2 Veinâs âmiddlingsâ and the more âcoarse goldâ particles that are too heavy to be lifted by an ascending bubble. How will they be recovered from the bottom of the FF âcellâ? âCoarse goldâ is usually inexpensively recovered via âGRAVITY METHODSâ after the âpulpâ found at the bottom of one of these âcellsâ is dried and treated. âGRAVITY SEPARATIONâ doesnât work very well on âfinesâ as the initial methodology to deploy, it works well on coarse gold. First, you get rid of the âfinesâ via FF, then perhaps âGRAVITY SEPARATIONâ, also a very INEXPENSIVE process, can be deployed later on.
âCoarse goldâ is âbulkyâ enough to be forced by the tremendous G-forces developed in one of these âgravity separationâ centrifuges, that they will indeed be transported to the outside of these vessels to be easily collected. âUltra-fineâ gold canât make its way to the outside layers even via huge G-forces but they are light enough to be carried on a bubble up into the froth layer of an FF circuit. The fate of the silver and the copper is more complex for reasons related to chemistry. These 2 metals are probably destined to generate âby-product creditsâ that will defray part of the cost of the ore processing procedures.
A LITTLE LOGIC GOES A LONG WAY
If the chemistry of these processes seems a bit overwhelming, then you can always resort to some simple logic. As noted, the average grade of gold being mined in underground ânarrow veinâ projects, like Aurynâs, is 4.18 gpt gold. The average âintra-adit head gradeâ of the ore within the DL2 Vein is many, many times that. The miners of âaverageâ grade gold may never be able to access the ECONOMIC LEVERAGE associated with having their own froth flotation circuit and INEXPENSIVELY remove a certain percentage of the worthless gangue material.
Yet, at todayâs price of gold trading at near all-time highs, these âaverageâ miners are making a fortune. OK, letâs use some INDIRECT REASONING if the scientific details seem a bit overwhelming. How much more can an Auryn-type company earn when it starts out with vastly superior âintra adit head gradesâ and adds to that the ability to access the ECONOMIC LEVERAGE associated with being able to INEXPENSIVELY remove much of the gangue material with an FF circuit and then be able to sell the resultant extremely high-grade âfloat concentrateâ to other industry participants like ârefinersâ?
The smelting of gold ores is extremely âhonestâ and accurate. The most accurate assaying technique for gold containing ores is what is referred to as âfire assaysâ. âSmeltingâ is synonymous with âfire assaysâ. Aurynâs 2 smelter tests went very well. The âintra-aditâ ore they are mining at the DL2 Vein is extremely high-grade and they could make a lot of money by just DIRECT SHIPPING the ore to Enamiâs smelter. The disparity between the 2 smelter test (128 gpt gold via the Plenge Lab test and about 70 gpt âgold equivalentâ via the Enami test after Enami took out their fees) told management that they might want to entertain the concept of doing at least some of the ore processing/gangue removal, ESPECIALLY IF IT IS VERY INEXPENSIVE, on-site at their own facilities, in order to enhance profits BY DIMINISHING TRANSPORTATION AND SMELTING COSTS.
Auryn did a lot of froth flotation testing especially at the University of San Sebastianâs testing facilities. The Auryn BOD performed ârigorous data analysisâ (recent update) and unanimously decided to build their own froth flotation facility after they learned that they could realize a âDIRECT FINANCIAL IMPACTâ of an extra $5,000 per tonne, if they did just that.
Suppose for a minute that the froth flotation testing did NOT go well and that froth flotation barely added any value whatsoever. The BOD would have obviously NOT unanimously approved the building of a multi-million-dollar FF facility. Under this scenario, they would have probably just opted to send their ore âDIRECTLYâ to the Enami smelting facilities post haste and they would currently be busy producing as fast as they could. But this wasnât the case and management opted to spend available cash on things like permitting applications, cash flow analyses, and doing some of the civil prep work for the new facility. This civil prep work was scheduled to commence in the last quarter of 2023.
The 128 gpt gold smelting results from the Plenge Lab was a crazily high number for smelting results of ore that had no prior concentrating work done on it. But it wasnât inconsistent with the prior assay results obtained to date of the DL2 Vein ore located near where the Antonino Adit intersected the DL2 Vein. These off the chart grades have been remarkably consistent.
The BOD of Auryn opted to âmine and stockpileâ this extremely high-grade ore for a little over 200 days while doing the permitting paperwork and negotiating the financing of the plant. Clearly, the froth flotation process worked but not only worked, it apparently worked very well based on the $5,000 extra per tonne âDIRECT FINANCIAL IMPACTâ figure. THERE IS A LOT OF INFORMATION CONTAINED IN THAT $5,000 FIGURE, albeit the granular details are not yet available to us. Does a geo-dork like me wish he knew the grade of the FC that will end up being shipped to the buyer? Of course, I do. As an investor, however, Iâm much more interested in that $5,000 figure and not so much on the exact breakdown of it. Iâm going to assume that a âDIRECT FINANCIAL IMPACTâ (accent on the âDIRECTâ) has to do with the bottom-line earnings and not just top-line revenue.
That $5,000 per tonne figure could have been $200 per tonne, but it wasnât. If the number were $200 per tonne, then it might not have made sense to pause the âmining and stockpilingâ of ore for whatever the length of time is involved in building the facility. It might not have made sense to borrow the money needed only to have to pay it back with interest if this is a âdebt dealâ being contemplated. The concept here is ECONOMIC LEVERAGE. If there were no such thing as FROTH FLOTATION, then we wouldnât be having this discussion. Affordable TECHNOLOGICAL INNOVATIONS bring ECONOMIC LEVERAGE.
If the next stop for Aurynâs FC is a CARBON IN LEACH or âCILâ facility, and if the work done by the Auryn FF plant enabled the CIL facility to absolutely âgo to townâ in its efforts to hyper-concentrate the already concentrated FC, then Auryn is going to have to be compensated for that. The froth flotation process âsets upâ the âCILâ process to outperform, so that the cyanide solution in the CIL process can get through a lesser amount of sulphides and make contact with the gold molecules in order to dissolve them. Another option is going straight to the smelter after the FF process takes place. This way less TONNAGE of ore needs to go through the more expensive smelting process.
Here is one of the questions I received:
â For me the number one question: when is MDMN going to be converted to AU shares? If they canât answer that directly ask what circumstances determine when it will happen.â
I think I can address this. It is my understanding that they need to wait until Auryn shares show some value. MDMN has a few debts to pay so the higher the value of those shares when sold for debt, the more shares will be left to distribute among us.