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.