Has anyone seen and read the “mining options contract” referred to in the related party transactions in the notes to financial statements?
The related party does not own any assets of AUMC!! They have the right to explore and exploit. To the extent they have stockpiled ore, they have the right to sell as much as they need to until they are paid back.
Anyone going to PDAC?
Your previous post in reply to Jimmy1127 was very informative, and this post as well. You aren’t making any hard claims about the CIL facility or anything else, because you specify that it’s your opinion only, or it’s a possible outcome based on your research. I appreciate how you speak honestly without using any bluff to insinuate that you know more than anybody else. I respect your opinions alongside factual data. Nothing to hate there! 
Hi Zotron,
I don’t think I’d be too concerned about who technically “owns” the stockpiled ore at any instant in time. In the mining industry as well as in many other industries, the players will often operate in the context of “HOLDING COMPANIES” for a variety of reasons. It’s not a super-difficult concept to understand, but if this is an Auryn or Medinah shareholders’s first exposure to “HOLDING COMPANIES” then it might make sense to gain some familiarity with how they operate. The same holds true for how “MINING OPTIONS” work as well as “RELATED PARTIES” in the context of accounting rules.
AS FAR AS THE “MINING OPTION WITH THE RELATED PARTY” GOES
Historically, there have been 3 “Auryns”. One “Auryn” is sometimes referred to as “Auryn Holding Corp.” OR “AHC”. We don’t know who the exact owners are other than Maurizio appearing to prominently fit in within the ownership structure of “AHC”. This appears to be the “funding arm” of the various “Auryns”. A “holding company” is a parent company that “holds” (usually controlling) interests in various “subsidiary” companies. We don’t know what the various subsidiary/operating companies are under this “AHC” umbrella. Perhaps “Masglas” is in there somewhere. “Holding companies” are all about maintaining CONTROL of the companies you have built.
“Holding companies” are extremely popular in a high-risk industry like mining. Holding companies with financial strength can raise money at much lower interest rates than its “subsidiary/operating” companies can. The “holding company” will typically obtain the loan and then distribute the funds to the subsidiary. Holding companies provide liability protection and they allow their owners to “control” its subsidiaries without having to “own” all of the shares of the subsidiary. “Control” is the name of the game for many entrepreneurs. A “holding company” typically does NOT provide goods or services itself, its subsidiaries do.
There is also an “Auryn Private Corp.”, also known as Auryn Mining Chile, SpA. This privately held corporation, founded in 1988, executed an OPTION contract with Medinah. They had to do a certain dollar amount of work on Medinah’s land holdings at the ADL Mining District in order to “earn in” a percentage of the action there and also earn an OPTION to buy the entire ADL Mining District, then about 5,000 hectares, for a specified amount of money. We know that Maurizio prominently fits into the ownership of “Auryn Private Corp./Auryn Mining Chile, SpA”, but again, we don’t know who else might be an owner. During this option period and even after it ceased to exist, “Auryn Private Corp.” pledged to provide all of the cash needed to advance operations through the various exploration and exploitation phases at the ADL.
Medinah had a potential funding partner prior to Auryn Private Corp. This was run by a person named “Johan Ulander”. This person failed to raise the funds necessary to advance the project. In order to bypass the possibility of wasting the number of years wasted on the Ulander funding that never materialized, Medinah forced Maurizio (or perhaps “AHC” or “Auryn Private Corp./Auryn Mining Chile, SpA”) to post a $10 million line of credit prior to engaging in an option contract with him. Maurizio successfully posted the LOC through a bank in Madrid, Spain known as Banco de Sabadel. Now, let’s think about this for a moment. To get a Line of Credit for $10 million to be used to fund mineral exploration activities, a risky endeavor, somebody within AHC has got some “juice”, and the confidence of the bank. It may or may not be Maurizio. We do not know what collateral was pledged.
“Holding Companies” can provide cover for powerful players, no matter when they took a stake in the “holding company”, to operate behind the scenes. That $10 million LOC was granted back when the ADL was in its infancy and nowhere near in “production and stockpiling” mode, as it is today. The creditworthiness of the DL2 Mine project has gone up leaps and bounds since this LOC was granted. “Auryn Private Corp.” drilled 14 diamond drill holes at the ADL’s Gordon Breccia project to compliment the 18 drilled by Medinah. They expanded the “footprint” of this deposit to the south and east.
When “Auryn Public Corp.” (“AUMC”) was started, the prior commitment of Maurizio’s “Auryn Private Corp’s” to fund all exploration and exploitation efforts apparently stayed in place and remains to this day (thankfully for the shareholders). From the point of view of “Auryn Public Corp.” or “AUMC”, “Auryn Private Corp” apparently remains a “related party with an OPTIONS contract”. They have an OPTION to be repaid for their cash advances once the DL2 Mine is churning out profits. It doesn’t appear that “Auryn Private Corp.” was dissolved when “Auryn Public Corp.” was formed.
The third “Auryn” is “Auryn Public Corp.” which trades on the OTCMarkets as “AUMC”. This corporation was formed when Medinah, Nuoco and “Auryn Private Corp.” consolidated their mining concessions at the ADL Mining District, into a package of about 10,500 hectares. The corporate structure came from the old “Cerro Dorado” corporate structure. The former Cerro Dorado shareholders owned about 5% of the mining concessions at the ADL and their shareholders were given 5% of the shares of “AUMC” or “Auryn Public Corp.” Other corporations have tried in the past, but it took Maurizio Cordova’s efforts to consolidate all of the disparate mining concessions at the ADL into one consolidated entity.
In this rather unique set of circumstances, the phraseology and the accounting seems a bit complicated. From a pragmatic point of view, management has clearly stated, many times, that the cash advances are being treated in an “off balance sheet” manner. We have been warned not to expect “Auryn Public Corp.”/AUMC, to pay off the cash advances directly. Those that advanced the cash will need to deal directly with the purchasers of the ore, once the profits are flowing. From how I, not an accounting professional, read the situation, perhaps there TECHNICALLY is no “DEBT” owing, unless and until, “AUMC” becomes profitable. Once the profits start flowing, the cash advances may or may not appear on the balance sheet as “DEBT”. From an investor point of view, the key is for management to continue to inform us of the net amount of the unrepaid cash advances on a timely basis, as has been their history. Of the $10 million line of credit awarded to Maurizio, it is not clear how much of that has been accessed or if any of it has been accessed to date. It may or may not be available to fund the construction of the froth flotation facility.
HOW DO HOLDING COMPANIES WORK IN THE REAL WORLD?
Imagine you have a holding company with 8 subsidiaries. Some are doing great, some mediocre and some not so good. The holding company holds a “controlling interest” in all 8. If subsidiary #6 needs money, the holding company can approach a financier and pledge a controlling stake of the assets in subsidiary companies #2, #4, #6 and #8. The bank is happy because it is well-collateralized. The holding company gets the money and directs it to subsidiary #6.
If company #5 needs money and is doing pretty well, it can approach a bank by itself independent of the holding company. It pledges its assets against a loan. If something goes wrong with subsidiary #5, the bank has no claim against the holding company or the other 7 subsidiaries. So, a holding company can pool together assets when one of the subs needs money but they can also limit liability when a sub acts by itself. Holding companies add FLEXIBILITY.
The 5 main benefits of holding companies are: liability protection, controlling assets for less money, lowering debt financing costs, fostering innovation and day to day management not required because the subs have their own management team.
It is my contention that if the ADL Mining District was seen by bankers as worthy of a $10 million line of credit, way back when, then the chances of it qualifying now that the DL2 Mine is in “production and stockpiling” mode, probably aren’t that bad. Extremely high-grade stockpiled ore, in conjunction with a froth flotation facility capable of increasing the value of each tonne of that ore from about $4,500 per tonne to about $9,500 per tonne, based on management’s calculations, seems like a pretty impressive source of collateral for any loan. The other option on the table would be to just ship the high-grade ore, as is, without being froth floated, to Enami’s DIRECT SMELTING facilities, which Auryn recently did via their “experimental batch” shipment, and take the $4,500 per tonne to pay for the facility. It would leave a lot of money on the table, but it would get the job done in a relatively short amount of time.
ONCE THE FROTH FLOTATION FACILITY IS IN PLACE, WITH OR WITHOUT A COMPANION CARBON IN LEACH (“CIL”) CIRCUIT, AS WELL AS THE NEW ON-SITE ASSAY LAB, WHAT HAPPENS TO THE “VALUE” OF THE VARIOUS MINERAL ASSETS IN PLACE AT THE ADL MINING DISTRICT?
The current VALUE of the entire ADL Mining District would be predicated on the current values of its constituent parts. Most of the attention recently has been on the new DL2 Mine, but the DL2 Vein is just one of 6 major veins present at the ADL. The ADL also hosts the Pegaso Nero copper-moly porphyry prospect, the LDM stratabound copper-gold/shear zone deposit, and a variety of skarns, breccias, mantos, etc.
The individual values of EACH of these deposits/prospects will increase markedly once a froth flotation facility and an on-site assay lab are in place. An on-site assay lab makes the exploration process much more efficient in that decisions can be made much quicker when critical information is more readily available. To a potential strategic alliance partner wishing to enter into a JOINT VENTURE relationship to explore one or more of these prospects, an on-site lab would be very desirable. Is there somebody currently in the background, prodding Maurizio to install an on-site lab? I couldn’t tell you but if I were a major or mid-tier miner with an interest in the ADL, I’d sure be bending Maurizio’s ear a bit.
Since Auryn has so many high-quality mineral prospects that are not likely to be monetized in the near term, I think that the ideal scenario in regards to the construction of a froth flotation facility and on-site assay lab would be to seek a partner willing to build these facilities, on their dime, in exchange for the use of the facilities and a minor stake in one of the mineral prospects of their choosing. Is this a long shot at this point in time? Absolutely, but the demand for copper-gold prospects right now has never been higher.
WHY MIGHT AMPARO (MAURIZIO’S WIFE), HAVE BEEN ADDED TO THE BOD OF “AUMC”?
As far as adding Amparo to the BOD of “Aumc”, it might have to do with VOTING CONTROL issues or some of the new rules about “DIVERSITY” amongst BOD members for corporations applying to trade on the NASDAQ. This is only a guess. The question arises as to why NOW, what has changed or is about to change, that resulted in this move?
If a mining entity wants to do a deal with “AUMC” and they insist on BOD representation, Maurizio might place Amparo onto the BOD for VOTING CONTROL issues. We don’t know if the 2 recent BOD appointees, Isac and Mark, are Maurizio’s choices or that of a potential strategic alliance partner insisting on board representation in order to keep an eye on its new partners. This is only a theory. It could have to do with FUTURE BOD appointees and maybe Isac and Mark were indeed Maurizio’s choices. Who the heck knows? Businessmen that operate through “holding companies” are very interested in CONTROL issues.
I agree, it takes all kinds of opinions to make life and investing interesting. Here’s some additional information I find of some relevance; some here may wish to consider. A few on the forum are familiar with Lion One Resources, an advanced narrow vein gold miner in FIJI. It has extensive infrastructure, but in the current disfavor of the market, took a severe haircut on a recent financing. What I find interesting and encouraging is that it favors jackleg handheld mining, ideal for narrow vein mining as it is precise and enables the effective development of narrow drives, thereby minimizing dilution. I also note, the preferred alternative for wider zones of mineralization is mechanized mining (i.e. jumbo drill) that are not sensitive to dilution. Baldy recently said, “The rock surrounding vein, the “host rock” tends to be worthless (which is why I’ve opined the that majority of the 10k tonnes cleared in finding the DL2 isn’t worth anything.” (post#116) I’m sure John did not remember when early last year WIZ commented, “My understanding is that the rock between the veins is not sterile but low grade. Also they are not including the “halo” in their measurement of width, as far as I understand. There is an area around the vein that is mineralized, just not to the same extent.” I bring this up because at Lion One it is currently focusing on mill operations during its pilot plant stage commisiioning. It is determining the best methods and parameters required to maximize gold recovery from each type of gold mineralization at Tuvatu with feed from different areas. Because of the complexity of the mineralization, predominantly low-grade material was put through the mill to determine how the plant responds in each case to different variability of ore types. BB mentioned mineralization at the Fortuna mine is certainly amenable to conventional mining processes, including Carbon in Pulp ("CIP”) and Carbon in Leach ("CIL”), flotation and heap leaching. Recall that ore has variability at different broad horizontal zones as well as the vertical depth of a vein where the vein tends to broaden. At one point BB mentioned that Auryn has run into about 20 different zones of mineralization on their way to the 255-meter level. I recall there was a broad zone that of higrade material that stretched across the plateau at about the 120 Meter mark that at the Larissa was tested and amicable to gravity concentration. The mill may well build in a gravity circuit to recover course ground free milling gold before the finer grinds go through the floatation circuit, and perhaps further treatment.
At another miner I follow, not higrade narrow vein, but rather low grade open pit, I found the following information quite interesting. Mining requires exploring the best methods to maximize returns:
January 2024 – Shareholder Update
The visiting team expressed high regard for the development of our mining project, with Prof. Mischo offering particularly favorable opinions about Fortuna. He acknowledged the evident presence of significant mineral deposits and the proven access to the vein structure at various levels and areas.
Prof. Mischo emphasized the critical challenge of optimizing mining operations for maximum efficiency. He advised that each mining site’s unique physical and chemical characteristics necessitate a tailored approach, using the latest and most effective extraction techniques. This advice aligns with Auryn’s strategy to consider a 100 ton/day flotation plant, incorporating cutting-edge mineral processing technologies. Prof. Mischo supported this strategy, suggesting that it could yield the optimal combination for recovering Fortuna’s minerals. He assured that once the most efficient recovery method is established, production scaling would be straightforward and highly effective.
One of Baldy’s most memorable quotes from a couple of weeks ago that I fully agree with states, There is common ground. … “The foundation of my baseless opinion starts with Maurizio NOT being insane.“ lol
I find this suggests staying the course as the anticipated secular gold market remains slow to show it’s face, and once started in earnest will remain for a number of years.
EZ
Far from insane. Very pragmatic which is why I made the subsequent claim/opinion that Maurizio would ship to ENAMI if he believed they could consistently make a profit. If one assumes that the hyper grades from 200lb sample were sustainable they would make enormous profits. Nobody, with the exception of one unnamed fellow and his flock, believe those grades are representative over any scaleable mining. No business decisions are being made on fantasies of becoming the highest grade producer in history let alone 20gpt. To repeat, Maurizio is, thankfully, not insane.
As the company provides more details I believe you will learn they are targeting 10-20gpt material. I’m invested in a high grade mine in Peru (~10gpt) that is producing at a 7gpt cutoff (they lose $ money on any lower grades) because they have to transport all of their ore a decent distance. AUMC is facing a similar issue so, like the company down in Peru, they have to build a plant to bring down the cutoff grade. In Peru they will bring it from 7gpt to 2gpt. It changes everything. If AUMC has similar logistical costs in addition to the risks of ENAMI “underreporting’’ they could lose money on 10gpt material. This creates unpredictable (and unacceptable) business risks.
I believe over time that investors will appreciate that the objective of the DL vein exploitation is small in nature (no jumbos, no 10 faces). This is simply a mechanism to advance exploration on the other assets organically and/or with minimal further dilution.
I believe over time investors will also learn that the company is still seeking financing ( there’s never been a $10M line of credit for these assets) and the mine is on care & maintenance (not producing vs 40tpd). There is no perceived collateral value in the small amount of ore that was previously stockpiled. No assays on stockpiled ore nor reason to do for financing purposes. No considerations of adding CIL.
Yes, the preceding “opinions” are the polar opposite of what is being propagated here without any challenges. My attempts to “challenge” will have to take a breather (it’s exhausting speaking to a wall) as I will, once again, be bound by an NDA.
As a final note, as previously noted, I highly encourage investors to seek info from the company as individuals or collaboratively as a group for “non-insider” clarity. Just because one individual has decided to spin their due diligence without being informed, investors can and should gain knowledge on their investment in an educated, informed manner (while using a modicum of common sense).
I would also encourage participants of this board to demand some accountability if/when some of these lofty speculations hit another dead end. Mark this post.
Accusations of an ulterior motive with false narratives to weaken a stock that is already trading at essentially zero make about as much logical sense as the counterpoints I’ve addressed above. There simply isn’t a lower price point for me to take advantage of. With this being said I wish all holders of this stock an opportunity to recoup some losses, average down, or establish a position ONCE there is some visibility for the path forward. It feels like it’s getting close and I hope progress warrants my establishing a position, when I’m allowed to, down the road.
Hi EZ,
WOW, lots of great observations. In regards to the use of the hand-held “jack leg” drills, management has mentioned many times that they are “extracting ore directly from the vein”. This tells me a couple of things. Expect the GRADES to run higher than you otherwise might have, because of the lack of DILUTION from the less well-mineralized wall rock from the hanging wall and foot wall.
With a super-narrow vein, you can’t “extract ore directly from the vein” because you have to have a minimum width to the adit in order to allow the equipment to pass through. So, if the minimum width for functionality is still exclusively within the vein proper, such that they are “extracting ore directly from the vein”, then the vein width has probably dilated since they intersected the DL2 Vein via the Antonino Adit. Nowadays, there is a lot of equipment available that is extremely narrow and which is designed specifically for “narrow vein” mining.
At the intersection of the Antonino Adit and the DL2 Vein, they stated that the channel samples were 0.6-meters in width. Kevin mentioned that this did not include the “selvage” of the vein which is the transition zone between the vein proper and the wall rock. This is that heavily “altered” zone which in the case of the DL2 Vein involves “sericitic” alteration which is a variety of “phyllic” alteration.
Our host rock is “GRANODIORITE” which is made of quartz, plagioclase feldspar, hornblende and biotite. When the gold-bearing hydrothermal fluids came into contact with the plagioclase feldspar within the granodiorite, it “altered” it into sericite, which is like “mica”.
We already knew that our vein was BOTH widening with depth and getting richer with depth. Both Sillitoe and Rob Cinits of ACA Howe confirmed this. This is the hallmark for MESOTHERMAL VEINS, like ours. As we go from level 3 to levels 4,5,6,7, etc. expect the vein to widen even more and get even richer. Although the average grades today are beyond stellar, the chances are pretty good that they are going to improve with depth.
Remember that with a “jumbo” drill rig, you need at least 4 working faces being simultaneously mined, in order to keep it busy. It is my guess that perhaps at level 4 or 5 is where they’ll probably deploy a “jumbo”. Maurizio has mentioned many times the intent to deploy a “jumbo” drill rig.
With a little more depth, the thinner DL1 Vein and the thicker DL2 Vein will have probably merged and given rise to a wider vein independent of the mesothermal veins getting wider with depth. At level 2, these 2 veins were 4-meters apart. At level 3, the separation was only 3-meters.
When/if a “jumbo” drill rig is deployed, this is when PRODUCTION RATES will probably go up markedly. You’ll have more working faces being simultaneously mined and wider widths plus the “jumbo” will outperform the “jack legs” by light years. The “jumbos” will have in between 1 and 4 armatures that simultaneously drill the blast holes prior to the insertion of the explosive. They also aid in the insertion of the explosive. The new ventilation system is already in place that will decrease the amount of time needed to clear the air of the blast debris.
Gold ripping this morning to 2080 before the PDAC convention. Be nice to get some news on financing of the plant so we can get moving.
That $30M stockpile just keeps gaining value by the minute!
For years there was a lot of talk regarding copper porphyrys in the ADL
Now even with copper demand slightly on the rise, all that’s talked about is gold here?
Hi JimmyP,
What’s going to be an eye opener for all of us is getting an appreciation for the value of what has been stockpiled to date, over the last 190 days or so. This is going to provide us with a benchmark or a metric THAT THE MARKET HAS NEVER HAD. I don’t think that it’s dawned on many of us that we’re in “production and stockpiling” mode. We have an OPERATING MINE.
The reason we’re not receiving CASH for the ore is because if we build our own on-site froth flotation circuit we’ll be able to realize an “extra” $5,000 per tonne. That is a very good thing. Based on the recent “DIRECT SHIPPING” results to the Codelco/Enami smelter, 57 gpt gold, 978 gpt silver and 3.23% copper, we could get about $4,500 per tonne TODAY if we shipped that ore prior to the construction of the FF plant. What a great OPTION to have in hand to pay for the plant. The other smelter test, done at the Plenge Lab in Lima, Peru, had about twice that result i.e. 128 gpt just for the gold. Forget those monster results, just have confidence in the $4,500 per tonne figure AFTER ENAMI TAKES OUT THEIR FEES. What these numbers tell you is that there is pretty much no way that Auryn will have to sell shares to fund the construction of the plant.
As far as the value of the ore stockpiled to date, let’s use that $30 million figure and not put a date on it. Maybe it’s worth that today or maybe it will be worth that in a month or two. It doesn’t matter. If approximately 4% of the ADL Mining District, can crank out $30 million worth of ore after paying for the smelting, and if the current valuation of the entire ADL Mining District by “the market” is $14 million using Auryn’s market cap and ownership percentage of the ADL (100%) or about $9.5 million if you use Medinah’s market cap and percentage ownership of the ADL (24%), then everybody will be informed that the share prices of Medinah and Auryn are way, way out of whack with reality. We’ll have an irrefutable “yardstick/benchmark” to evaluate the appropriateness of the current share prices. We’ve never had that. We don’t have to wait for the cash to flow from the sale of the product of the FF plant, a “float concentrate”.
That $5,000 DIFFERENTIAL between Auryn DIRECT SHIPPING unprocessed ore to the Enami smelter versus building their own FF plant on-site, is critical to understand. Enami charges about $200 per tonne to smelt ore. The cost per tonne to froth float ore, if you own your own plant, is about $10 per tonne. That includes building and operating the plant. If you have your own CIL circuit next to your own FF plant, sitting on the same cement floor and underneath the same roof, it costs about another $10 per tonne. The concentration of the “CIL concentrate”, which results from the treatment of the “float concentrate”, is EXTREMELY HIGH.
So, you can pay $200 per tonne to Enami or pay about $20 per tonne if you do it yourself and that includes CAPEX and OPEX. That’s where that $5,000 per tonne number comes in. Management didn’t bother to give us the details of what happens after the ore is “froth floated”. They didn’t have to, they gave us the important thing, the $5,000 “extra” income number.
My guess is that Auryn will put a CIL circuit right next door to their FF circuit. This might come now or later. Maybe they found a nearby CIL facility that is reasonably priced and we’ll ship the “float concentrate” to them. IT DOESN’T MATTER, THOSE COST FIGURES ARE ALREADY BUILT INTO THE $5,000 PER TONNE “BONUS” FIGURE. The $5,000 “bonus” figure suggests that our ore responded very well to both FF and CIL treatments. We got a hint of this a while back when management cited that the lab results from the testing of our ore was “EXTREMELY ENCOURAGING”. Now we know how encouraging.
Deleted post…,
Actually it would be nice if Maurizio once in a while skips the 3 month updates and issues info on the pre stock pile. With this hush hush someone would think they are not stock piling ore. Why not just post a picture of the ore that is stockpiled? They were posting so many pictures before when they were trying to find the vein.
All we get is boring garbage every update.
We do need News on the financing of the plant or we aren’t going anywhere. As of today still looks like we don’t have one.
One point in regard to MINERAL ECONOMICS that I’ve failed to make is that you need to multiply your DAILY PRODUCTION RATE, in terms of “tonnes per day”, times the AVERAGE INTRA-ADIT “HEAD GRADE” in terms of grams per tonne, in order to get the extremely important
GRAMS OF GOLD PRODUCED PER DAY.
If you’re producing 40 gpt gold intra-adit head grade ore at a rate of 40 tpd then you’re producing 1,600 grams of gold per day. If you’re producing 80 gpt gold ore (don’t count on it) at a rate of 20 tpd, then you get the same 1,600 grams of gold ore produced daily.
One of these 2 variables is more important than the other and it is GRADE. This is because the COST to produce that 1,600 grams of gold per day is INDIRECTLY tied to GRADE not tonnage. If you’re evaluating 2 miners that both produce 1,600 grams of gold per day, then pay special attention to the miner mining the higher-grade ore.
Since 2013, the World Gold Council, has pretty much mandated that all miners report COSTS in terms of “ALL IN SUSTAINING COSTS” (AISC) to produce EACH OUNCE of gold. Accent goes on the “EACH OUNCE”. There are about a dozen line-item subdivisions of AISC. One, for example” is TRANSPORTATION COST PER OUNCE OF GOLD TRANSPORTED. If, for example, it costs about $700 per truckload to TRANSPORT the ore to the ore processing facility of choice on a round trip basis, and if Auryn is shipping ore directly out of the adit, (no on-site froth flotation or CIL) with a “head grade” of 40 gpt gold, then each 20-tonne truckload of ore would contain 800 grams (25.7 ounces) of gold. The AISC line-item for TRANSPORTATION COST PER OUNCE would be $700 divided by 25.7 ounces or $27 per ounce shipped.
If a competitor of Auryn, operating a mine next door to the ADL, were mining the worldwide average of 4 gpt gold ore, using the same truck and paying the same for diesel and for truckdriver wages, its AISC line-item TRANSPORTATION COST PER OUNCE, entry would be $270 per ounce, 10-TIMES that of Auryn, because only one-tenth as many ounces would be “TRANSPORTED” on each round trip.
If Auryn’s froth flotation facility increases the grade from, in this example, 40 gpt gold to 4-times that concentration, which is the norm worldwide for FF plants, then Auryn’s TRANSPORTATION COST PER OUNCE would go down from $27 per ounce transported to $6.75 per ounce transported. Compare this to the $270 per ounce that the “average” miner next door is paying. If Auryn has their own CIL plant on-site sitting next to their FF circuit, then their TRANSPORTATION COST PER OUNCE would go down to a dollar or two PER OUNCE TRANSPORTED because a gazillion ounces of gold are going to be contained in each truckload. TRANSPORTATION COSTS are important because they can average around 18% to 21% of AISC.
The top line income that Auryn will be earning will be a function of GRADE, TONNAGE and the PRICE OF GOLD. Their AISC COST TO PRODUCE EACH OUNCE will be HEAVILY dependent upon GRADE. “GRADE IS EVERYTHING”, as the saying goes in this industry. This is why. The intra-adit “HEAD GRADE” of the ore is super-critical, because it will determine if a miner can ever afford to put in your own FF circuit by simply “DIRECT SHIPPING” ore to Enami’s smelters for a little while to pay for your own FF plant. If you opt to finance the FF plant via some other party, then the intra-adit HEAD GRADE will also be critical in order to diminish the RISK borne by the financier. The financier wants to know if he’s going to be paid back promptly.
Once you confirm that you can build your own FF plant, then forget about the intra-adit HEAD GRADE for now. Instead concentrate on how good of a job your FF circuit does in increasing the grade of the resultant “float concentrate”. The average is a 4-fold increase, with the range going from 2-fold to 20-fold. Now is when you concentrate on the grade of the “float concentrate”. Hopefully, the engineers can get that dialed in nicely to perhaps increase the intra-adit HEAD GRADE maybe 6 or 8-fold (no promises). Just think of what this could do to that AISC line-item entry of TRANSPORTATION COSTS PER OUNCE figure.
Recently, Dr. Helmut Mischo, Auryn’s new collaborator from Germany that has written 258 scientific articles on mining efficiency, stated: “Once the most efficient recovery method is established, production scaling would be straightforward and highly effective.”
In other words, get the grades of that “float concentrate”, in the case that we don’t have a companion CIL circuit on-site, or the “CIL concentrate” in case we do, as high as possible, and then you’ll have enough cash flow to ramp up production significantly. I don’t think that it has dawned on many yet, but management has already told us how the behind-the-scenes efforts at getting the GRADES cranked up is going. This data is part of that “extra” $5,000 in income associated with building our own FF circuit. Whether we’re going to have our own CIL facility on-site and management just hasn’t told us yet, or maybe that decision has not yet been made, doesn’t really matter. It’s contained in that $5,000 figure.
Make no mistake, I’d sure like to know the GRADES of the ore being stockpiled. As I explained above, to a lesser extent I’m interested in the TONNAGE. Like Dr. Mischo said, concentrate on the GRADES first, the TONNAGE is a no-brainer once you’ve got the grade increasing processes (like flotation and CIL) dialed-in.
Remember that the GRADE of that which is to be TRANPORTED, is the primary component of Auryn’s future top-line income figure. The TONNAGE is a no-brainer as Auryn opens up new sub levels for production. The GRADE of that which is to be TRANSPORTED is the primary component of the COST to produce each ounce of gold. The FUTURE PROFITS are incredibly tightly tied to the GRADE of that which is to be TRANSPORTED whether it be an extremely high-grade “float concentrate” or an incredibly high-grade “CIL concentrate”.
I’d have to disagree in the “garbage” comment. I believe management is trying to communicate progress at the company to the best of their ability. The problem lies in the fixation and extrapolation of the details they provide. As an example, they provided the grades of the experimental batch sent to Enami and a lab in Peru. I do not believe they anticipated that anyone would use those grades to forecast cash flow/production/ASICs. The danger in providing any details is that those details are then twisted and warped into a narrative that creates unlrealistic expectations. I would encourage the company to clear the air so that this destructive pattern is remedied, investor psychology becomes more grounded, and appropriate milestones are set (to hopefully be met and/or beat). If the company is able to find financing for a plant and begin production in 12-18 months (?) AUMC may start trading like a normal stock. At that point, the company’s forecasts and investor expectations need to be properly aligned. The current speculation is simpy toxic to anyone who currently owns MDMN/AUMC. The quicker the company can address the disconnect, the better.
Maybe Kevin/Wiz can shed some light on the topic.
Gold breaking above 2100. Let’s hope this put a fire under MC and get this moving so we don’t lose out on this Bull run.
Hey Jimmy, looks like that stockpile is increasing in value even more after this morning run. 2114 now
Maybe we could get to a penny!!
Yes maybe if they release some positive news.
