Thanks Doc. I’m 100% on board with making the investment in the plant. My chart shows how long it would take to pay for the plant without diluting us for eternity. Once we’re diluted it never goes back. If we could average 40gt it would take us 7 to 14 months for the payoff, then we can keep all the enhanced revenue for ourselves for eternity.
Short term pain for long term gain!
By financing the $16million ourselves, we would be giving up $16million in enhanced revenue due to processing at Enami preplant. But, we would retain 100% of all future enhanced postplant revenues.
If we have to dilute to raise the $16million say at .23/share, we would issue another 70million shares, reducing our ownership interest to 50%. If the plant processes $500million, we retain $250million.
So the choice is:
(A) Give up $16million initially to retain $500million or (B) dilute ourselves by 50% and retain $250million.
I’ll take A.
Z. While we can only speculate, the decision to “take A” seems to be so glaringly obvious, from an economic standpoint, that one needs to question why it isn’t being pursued. Sending ore to Enami to bridge the 12 month gap required to build a floatation plant (there has never been mention of a CIL) would be obvious based on some of the math presented on this board. I’m not sure if using the cash flow from shipments to Enami to pay for the plant is as obvious due to the related delays. It could take years to get the plant built.
However, suddently deciding to NOT send anything to Enami after years of indicating they were or were about to, clearly demonstrates that this is no longer a feasible/economic option. I do not know if this is due to transportation costs, a lack of confidence in being able to consistently mine enough volume of high grade (20pgt+) ore, or if they don’t think there is enough high grade ore to “waste” any by sending to Enami and lose a few thousand $ per ton.
This clarification would be extremely helpful for investors to understand the status of their investment. Anyone in mining knows that once you finally get to the stage where you can monetize the stuff in the ground, it imperative to do so. Especially when you have no cash and growing debt obligations. There IS A REASON but no explanation offered to date. A $5,000 “financial impact”, if proven true, is an exciting data point once the floation plant is built but doesn’t explain the lack of production in the interim.
Equally important, AUMC is now at least 5 months into being:
actively engaged in discussions and presentations with potential investors for financing the construction of a milling facility
This financing has taken a long time and, given there is no production via Enami, it needs to be placed and confimred to investors ASAP. Isn’t winter coming in June?
Hi Zotron,
Some quick thoughts:
WHERE ARE WE HEADED?
I think that Auryn finally going into high-grade PRODUCTION AND STOCKPILING represents a game-changer. Of course, there will be a critic citing “but there’s no cash flow yet” and that will technically be correct. Perhaps there is something even better than CASH FLOW. There is an OPTION on the table for significant CASH FLOW TODAY and even higher levels of CASH FLOW if Auryn holds off on shipping the stockpiled ore until it has been froth-floated. Which is better, $4,500 per tonne TODAY or approximately $9,500 per tonne when the FF plant is completed? What’s interesting is that the person with “first dibs” on any cash that starts to flow, Maurizio, has weighed in and said, I don’t want to be paid now, I can wait and continue to charge no interest on the cash I already advanced and continue to advance.
The question then arises as to WHY there is no cash flow yet. As noted, the simple answer is that if Auryn holds off on shipping the stockpiled ore until after they run the ore through their on-site 100 tonnes per day froth flotation facility, they will receive an “ADDED BONUS” of about $5,000 per tonne or $100,000 per 20-tonne truckload OVER AND ABOVE the handsome amount of money Enami would pay (approximately $4,500 per tonne) if Auryn were to DIRECT SHIP their ore to Codelco/Enami’s DIRECT SMELTING facility. “OPTIONS” like this are very nice, they carry a lot of “VALUE”.
What people are about to learn is that they can NOW, FOR THE FIRST TIME, take pencil to paper and roughly estimate the amount of ore stockpiled to date (daily production times the # of days of production), the average grade of the ore stockpiled to date (from the recent smelting and channel sampling results), and the amount of money that ore is worth TODAY if Auryn were to opt to ship it to the smelter TODAY, which they are not planning on doing. Again, Enami is willing to pay approximately $4,500 per tonne (57 gpt gold, 978 gpt silver and 3.23% copper) which translates into a 70 gpt “gold equivalent” grade.
A PREDICTION
People will look at the current market cap of Auryn (about $14 million) which owns 100% of the entire ADL Mining District, and they’ll look at the current market cap of Medinah (about $2.3 million), which owns 24% of the entire ADL Mining District. This Medinah valuation represents a valuation of the entire ADL Mining District at about $9.5 million. Collectively, “the market” currently says that the entire ADL Mining District is worth about $12 million.
When you look at the entire ADL Mining District and its 6 Main Veins, the Pegaso Nero copper-moly porphyry prospect, the LDM shear zone/stratabound copper deposit, the Gordon breccia, the various skarns, mantos, shear zones, etc., “level 3” of the DL2 Vein might represent perhaps 4% of the entire Mining District (a rough guess). The question arises as to how the extremely high-grade stockpiled ore from level 3, can have a NET REALIZABLE VALUE (future sales price) of somewhere around $30 million, that could be cashed in on tomorrow, and yet “the market” values the ENTIRE MINING DISTRICT at about $12 million.
Note that if it takes 6 months to install and commission the froth flotation circuit, the NET REALIZABLE VALUE of the stockpiled ore will become about $9,500 per tonne and there will be another 180-days worth of ore stockpiled (180 DAYS TIMES 40 TPD=7,200 MORE TONNES) over and above the 6,800 or so tonnes present TODAY. This results in 14,000 tonnes upon the commissioning of the FF plant if it occurs in 6 months. Based on $9,500 per tonne NRV, this results in $68.4 million worth of ore about to go through the FF process.
If it takes 12 months from today to commission the plant, then you’d have to add another 7,200 tonnes (40 tpd times another 180 days) which gives you a total of: 6,800 tonnes plus 7,200 tonnes plus 7,200 tonnes=21,200 tonnes of extremely high-grade ore. This adds up to $201 million worth of ore waiting to go through the FF circuit 12 months from today. Would you rather have a boat-load of cash TODAY or an insanely large boat-load of cash in the near future? What are the numbers going to look like when that pathetically low 40 tpd INITIAL PRODUCTION RATE becomes 150 to 200 tpd in a couple of years when Auryn is producing from 4 or 5 different sub levels simultaneously while using a “jumbo” drill rig?
Thanks Doc. I agree.
Question for you?
Which option would you choose to finance the $4.5million plant?
(A) sell $4.5million worth of existing ore (preplant) and keep all the enhanced ore ourselves going forward.
or
(B) Sell $4.5million worth of stock at say .25 issuing 18million shares and diluting us by 20% and giving up 20% of all the enhanced revenue going forward.
Hmmmm. Sounds like a trick question!
And as Tennessee Ernie Ford said, "You load 16 tons, what do you get? Rich, Rich, Rich, beyond your wildest dreams!
Don’t these figures fly in the face of not yet being able to land non-dilutive financing? You are claiming there is $20M+ conservatively just sitting in a pile?
Sounds to me that they should move audited financials up on the priority list then. Surely there has to be plenty of mining friendly banks in Chile that can digest this data as legitimate collateral against the loan. If they end up taking a dilutive financing package, its either
A.) You are way off base, or
B.) Its an insider deal to take more equity from the common shareholders.
Time for Wiz to arrange a Zoom call with MC. Long time shareholders deserve better than guessing at this stage of the game, especially after decades of pain. We are approaching a decade under MC’s watch alone.
Jimmyp: “a Zoom call with MC…Long time shareholders…”
I would love to part of that!
– madmen
Will not happen. You have a better chance going to the show in Toronto and meet him face to face. That is if he’s willing to answer your questions. Bald Eagle will be there, maybe he will get some clarity and share with the board. Same ole dance with these guys.
Hi Z,
Sorry I’m so late to get back to you. We had a new family member (grand daughter) make an appearance about 3 months prior to the due date, so it’s been all hands on deck. She’s doing great now.
Your option A is a lot better than option B, but I think there are better options than either.
OPTION “C”: Send in perhaps a dozen truckloads to the nearest Codelco/Enami smelter, probably the one at Caletones or to Anglo’s Chagres smelter if they have favorable smelting rates and excess capacity. Codelco’s Las Ventanas smelter is closing down over the next 5 years. Each 20-tonne truckload to one of the Codelco/Enami smelters should net somewhere around $90,000 based on our last shipment to them. A dozen truckloads should net around $1.08 million.
What this would do is to put some “runs” on the scoreboard and confirm to the mining world that we’re open for business. The average grades and income made, should turn a few heads. I know that we would be missing out on about $100,000 per truckload (20 tonnes times the $5,000 per tonne “bonus” if we do the froth flotation) but the goal of this approach is to reveal the truth, turn some heads, and to get people to look at the market’s valuation of the entire ADL Mining District, $9.5 million if you use Medinah’s market cap and 24% ownership or $14 million if you use Auryn’s market cap and 100% ownership of the entire ADL Mining District (Medinah is a “holding company” that “holds” a 24% stake in Auryn’s shares.) The money raised would lessen the amount needed to borrow and the whole exercise would “DERISK” any debt financier’s role. As far as the current market valuation, level 3 of the DL2 Mine, perhaps accounting for maybe 4% of the value of the entire ADL Mining District, is not supposed to be cranking out about $180,000 per day in income (40 tpd times $4,500 per tonne WITHOUT A FF CIRCUIT FUNCTIONING) and about $380,000 per day (WITH A FF CIRCUIT IN PLACE). CLEARLY, SOMETHING ISN’T RIGHT IN “THE MARKET’S” VALUATION.
OPTION “D”: The $30 million or so worth of high-grade stockpiled ore sitting there right now represents “collateral” to a debt financier. So too is the completed froth flotation facility. In combination, these 2 represent instant cash flow “collateral” to any debt financier and their risk would be de minimis. They could basically “own” the stockpiled ore and the facility until they get paid back. During the construction of the FF plant, the value of that “collateral” is going to go up markedly.
Compare this to a junior explorer reaching out for money to drill out a prospect. There can be no guarantees that the drill program would find anything and even if it did find something, there is no guarantee that the junior explorer could ever get it permitted and into production. One unsuccessful drill program could represent a total catastrophe for both the junior explorer and the financier because any subsequent drill program is going to have a tougher time in getting funded.
OPTION “E”: We need to think in more of a “macro” sense because the FF plant construction and location needs to keep in mind the overall plan to develop the entire ADL Mining District. I’m suggesting that this FF plant issue is likely to give away some of the overall plan in developing this Mining District. If there is some large party that has been lying in the weeds off to the side has a serious interest, then this might be where they have to show themselves. Maybe they might have a totally different approach to developing things and the construction of a FF plant in a certain location might be contrary to their plan. Maybe the chosen location of the FF plant was right in the middle of an open pit they had envisioned. I’d prefer to design a “win-win” addressing our “wants and haves” and a potential partner’s “wants and haves”.
Auryn has more than one goal right now. They “want” a new FF plant but they also “want” to monetize a lot of their viable copper/gold assets that zero value is currently being ascribed to by “the market”. There are a lot of parties out there that “want” copper/gold assets and they “have” a lot of money and a lot of technical expertise.
In my opinion, Auryn has way too many assets that are a ways off from being monetized unless a deal is designed to have a strategic alliance partner perhaps build an FF plant, a CIL circuit, and an on-site lab in exchange for favorable terms on a JV on one of the other Auryn assets, and the right to use the new facilities.
When I saw the curriculum vitae of the 2 new “deal cutters” added to the Auryn BOD, I immediately thought that this was the goal and that something along these lines was in the works. Why bring them in NOW unless you have something for them to work on?
Admittedly, these types of deals take forever and a day to come together. In the last quarterly update, Maurizio reminded us that the long-term goal is to put the whole ADL Mining District into production and we know that the Pegaso Nero is way too big for Auryn to handle on a solo basis.
Several years ago, we had Freeport McMoRann, as well as 2 other majors “even larger than FMX” kicking the tires, especially looking at the Pegaso Nero copper-moly porphyry prospect. The recent findings in the Antonino Adit, with hundreds of meters of solid alteration being found as well as 24 new “veins/structures” emanating from down below sure sounds like a porphyry set-up to me.
If there is a deal in the works, the potential partner is going to want an “on-site lab” for exploration purposes. With the big boys, you need to meet their size threshold before they will show any interest. The Pegaso Nero, the LDM and the Gordon breccia combined should check that box.
The only scenario in which I could envision any sale of shares would involve a sale to a strategic alliance partner wanting an equity stake in Auryn, but paying way, way, way above current market levels for a block of shares. I’d love to have a major miner as our second largest shareholder. I could see some type of organic change in which the DL2 Vein and maybe the Caren Mine/Larrissa Adit, were tucked into 1 vehicle, the “earnings machine” vehicle, and the other assets into a different “long term monetization” vehicle essentially run by a major.
Auryn could continue to own 100% of the “earnings machine” and the new partner would get a decent stake in the “long term monetization” company. As it stands now, Auryn is not likely to monetize these other assets for quite a while, anyways. You might as well get that clock ticking now. By the way, if a party wanted a significant equity stake in Auryn or the ADL Mining District, you’d probably come through Medinah because of how tight the share structure is of Auryn.
Maurizio is a visionary, he’s probably got all kinds of plans that we may never have imagined. I read a good article the other day in which the author, a mining analyst, pointed out that new “junior producers” don’t stay in that category for very long. They either rapidly become mid-tier producers or they get taken out.
Maurizio’s going to do something big. Back when Auryn was planning to put the Larrissa Adit/Caren Mine into production before the DL2 Mine, he made the comment that the plan was to put 6 levels below the Larrissa Adit and 7 levels above the Larrissa Adit into production simultaneously. That a pretty ambitious plan.
The permitting for the FF facility is going to be important. Any terms for a financing will be much more favorable when that permit is in place. FIRST YOU GET THE PERMIT, OR A STATEMENT FROM SERNAGEOMIN INDICITATING THAT IT IS EN ROUTE. THEN YOU DOT THE I’s AND CROSS THE T’s ON A FINANCING DEAL. SERNAGEOMIN has already permitted DL2 Vein production and the new ventilation/safety egress system. FF systems are not environmental bad boys. There are a gazillion of them out there.
From the 10/9/23 quarterly update:
“Beginning in October, we will initiate the necessary permitting process for the flotation plant, including all required submissions for plant operations, tailings ponds, and an on-site lab. In parallel, preparations are underway for the launch of NEW MINING OPERATIONS in the Lipangue area.”
What is that last sentence referring to? It surely doesn’t sound like it’s referring to the processing of all of that stockpiled ore outside of the DL2 Mine. It sounds like there is another location up on the plateau that is going to be aiming production to that FF plant. What kind of production rate might this operation be capable of?
Also from the 10/9/23 quarterly update:
“AURYN Mining Corporation is happy to report that our mining operations at Fortuna are GOING STRONG [COMMENT: a 40 tpd production rate is not exactly “going strong”. Might this figure be too low?] We’re consistently pulling high-quality mineral from the Don Luis vein. Currently we’re stockpiling this valuable ore on-site. At the same time, we’re actively reviewing ways to make our mining efforts even better and MORE EXPANSIVE.”
What does “MORE EXPANSIVE” refer to? Opening up the sub levels under level 3? Is this also referring to those “NEW MINING OPERATIONS IN THE LIPANGUE AREA”?
Also from the 10/9/23 quarterly update:
“Q4 2023 – OBJECTIVES
Once we submit the permit application for the flotation plant, we plan to promptly initiate the preparatory civil work for construction and installation. Our ongoing efforts will focus on the continued extraction of high-grade minerals from the Don Luis vein. Additionally, we are gearing up to EXPLORE AND PREPARE OTHER PROMISING AREAS ON OUR SITE.”
Management is dropping “bread crumbs” all over the place that something we’re not aware of is going on. Are there partners involved in these “NEW MINING OPERATIONS” and the “EXPLORING AND PREPARING OF OTHER PROMISING AREAS ON OUR SITE”?
HOW TO DO THE BEST DUE DILIGENCE YOU CAN ON AURYN AND MEDINAH
Concentrate your efforts on the press releases and quarterly updates. An already successful management team DOES NOT LIE on press releases. Management loves to keep things encrypted. When you come upon a line that doesn’t make sense put it on your “DOESN’T IMMEDIATELY MAKE SENSE” list. When you read the next couple of quarterly updates, you’ll find yourself crossing out those entries on your “DOESN’T IMMEDIATELY MAKE SENSE” list. I can almost guarantee you that things like “NEW MINING OPERATIONS” and “OTHER PROMISING AREAS ON OUR SITE” and “MORE EXPANSIVE MINING OPERATIONS” will soon make sense to you. I think that management would like to bring us totally up to speed on these matters but it’s just not time yet.
As far as the TIMING of when to ship some ore to the Codelco/Enami smelters, I think that right after the Fed makes their first rate cut (probably of many) might make sense.
These figures/predictions fly in the face of sanity. Enami DOESN’T have a standing offer to pay 57gpt. That is the number they came up with for the “hand picked” 200lb sample sent to them. This has ZERO representation of 1) what AUMC can consistently mine nor 2) what Enami will end up paying. Similarly, the other “experimental batch”, with considerably higher grades went to a lab, NOT a smelter. You can’t just multiply a grade from a small assay taken at a lab by how many tonnes you hope they are mining each day and come up with some fantastical number for the stockpile ore. Or maybe you can.
There is ZERO evidence from the company that they are currently mining 40t per day. In fact, many of the recent updates have indicated caution on the progress of mining. The company has NOT provided any information nor informal assays on what has been mined. Stockpiled ore is an asset that should be reflected on the balance sheet (which I agree). The AUMC Q3 financials were released on November 13th, 2023 and there was NO assets (Current Assets = $0) and the long term/assets or tenaments actually went down in value.
BB asserts that there is NO way the Maurizio would issue shares to build the floation plant and yet the company has stated, in multiple PRs, that they are actively pursuing equity financing. Ask yourself, would it take 5 months (and counting) to offer shares at at $15M market cap if there were $40M let alone $15M of stockpiled ore? Maybe the market and mining investors need to attend a “teach in” from some of the participants here. If AUMC could sell a fraction of their stockpiled ore “today” why wouldn’t they use those proceeds to build a plant vs. dilute shareholders?? Sell 1000 tonnes, a mere 15% of their stockpiled ore, build the FF plant now and proces the balance (5500 tonnes stockpiled and everything in the future) with the enhanced economics. “Insanity”
I’m admittedly tough on BB for some of the ridiculous calculation he pulls from thin air. Investors are free to believe whatever wild speculations good or bad are offered on this board. However, simply ignoring (and refuting) what the company is disclosing in both financial statements and regular updates WHILE not even bothering to speak to company for clarification, really isn’t excusable.
As a prime example, BB confidentlhy states that AUMC must be producting at least 40tpd and points to the October update:
“AURYN Mining Corporation is happy to report that our mining operations at Fortuna are GOING STRONG [COMMENT: a 40 tpd production rate is not exactly “going strong”. Might this figure be too low?]
Yet no reference to the same update, only a few paragraphs below, which CLEARLY indicates they are having issues???
The recent winter season posed unexpected challenges at our Fortuna site, with an increased frequency of disruptive weather events such as rain and snow. This led to multiple temporary cessations and evacuations of the site over the past two months.
Accumulated water within the site has become a substantial operational issue. It demands additional time and resources for removal and has disrupted regular activities. As we transition into spring, it’s evident that traditional seasonal patterns are becoming less reliable. We anticipate encountering more extreme weather events in the months ahead, even during seasons typically known for milder conditions.
This situational complexity is now part of our ongoing operational landscape. We are proactively developing strategies to mitigate these climate-related disruption
Let me try to visually illustrate the “insanity” I refer to. Here’s a picture of a 250 ton rock. If we were to believe that Maurizio is currently sitting on 6500 tonnes of stockpiled ore, you would need to picture over 25 of these rocks stacked on top of what we all know as a very small footprint on top of a very steep mountain. I won’t even bother getting into the permitting or logistical realities of stacking this much ore. Maybe Maurzio bought a crane.
"HOW TO DO THE BEST DUE DILIGENCE YOU CAN ON AURYN AND MEDINAH
Concentrate your efforts on the press releases and quarterly updates. An already successful management team DOES NOT LIE on press releases"
Priceless. I couldn’t agree more.
The last update states that they are looking at “financing options”. Not Equity financing options.
And there are no assets on the balance sheet for the same reason there are no liabilities on the balance sheet. MC currently has mining rights as a separate entity from AUMC. See notes to financial statements “ related party transactions”.
a) Maybe they were unable to place the equity financing? Its been a very tough market for the junior PM names.
b) the MC debt is off balance sheet b/c he’s a related party and has choosen to avoid disclosure by claiming its not actualy debt (a bit murky but allowable). The tenaments, cash, accounts receivable and stockpiled ore SHOULD be disclosed but those filings are so opaque its certainly possible they have just choosen to not include them.
If one were of sane mind and they knew they had millions of $$ of stockpiled ore, and they were actively trying to raise money, wouldn’t they want to advertise this pile of gold? Get the stock going higher, garner more interest, etc. etc?
Nobody knows any of these debated points with certainty but using a modicum of common sense should be a prerequiste before those points are taken seriously.
I don’t understand why so secretive about the stockpile. Why doesn’t Maurizio say how much they have stockpiled or post a picture on X. That is if they are still stockpiling. Shareholders should not have to be guessing in these kind of situations.
I sent an email asking approximately how many tons of ore have been stockpiled.
Will keep you posted if I get a response.
Smart. Someone actualy taking the intiative to reach out to the company. Now, if a dozen other people did the same, with the same general question, the odds of a response are pretty high.
If I were to guess the approximate size of the stockpiled ore it would be ~500 tonnes. Might be too high, I have no idea but I’d be suprisised if it was more.
The other question might be "how are they trying to estimate the intrinisic value/grade of the stockpile and when will investors learn the same? If AUMC isn’t planing on providing this information its going to be a long wait for the FF.
6,800 versus 500 is an enormous difference of opinion. It’s disappointing that the company has not shared this information. You would think that they would want to unless the amount proves that they have not been producing at 40tpd at all or very long. Questions need answering.
Again, I don’t know but I’m guessing that Maurizio assumes noboby (except the fanatics) would conclude that they are mining 40tpd. That figure was presented in the context of sending the mined ore down to Enami and MONETIZING it on a daily/regular basis. Even if they could mine 40tpd they aint going to do so if its just getting stacked on top of the mountain . There is limited space to stockpile up there and mining is very expensive. They (Maurizio) would be hemmoraging cash if he decided to mine 40tpd for a year without bringing in any cash flow.
Ask anyone who actually understands mining and how these operations work. If you’re already on a shoestring budget you 1) immediately monetize ore if its econimic to do so (clearly not the case with Enami) or 2) you preserve cash until you are in a position to monetize ore. There isn’t an option 3 where a company is already borrowing money, has no cash, but has also decided to mine ore that is going to be stacked and collect dust for a year. You WILL NOT find a mining co with ZERO working capital make a decision to make more money down the road vs. making some money today. That is an existential decision/bet that’s only afforded to well financed companies that have the resources to wait.
This isn’t about an enormous difference of opinion. Just add a little common sense and see where you land.