Hi Mike,
I’m not sure if you saw it or not but on 10/30/24 Auryn put out a release that had a paragraph entitled “lab results and grade expectations”. Here is the text: Laboratory Testing and Grade Expectations
AURYN recently submitted an experimental batch from the DL2 Vein to Enami’s smelting facilities, which returned promising results, showing 57 grams per tonne (gpt) of gold, 978 gpt of silver, and 3.23% copper in a one-tonne sample. This sample represents vein ore with minimal dilution, providing a solid baseline for grade expectations.
While mining grades may vary due to natural dilution factors, we anticipate achieving a plant head grade of at least 10 gpt on average as we advance the project. AURYN is committed to advancing mine development across the entire project area, and we will continuously update shareholders as progress is made. We appreciate your confidence in our journey as we work diligently to unlock the full potential of the Fortuna de Lampa Project and the Altos de Lipangue mining district.
The “gold equivalent” grades for that Enami test came in at 70 gpt “gold equivalent” when you do the math. All 3 metals are clearly “economic”. It’s a little bit confusing, but on one hand management stated that 70 gpt GE “provides a solid baseline for grade expectations” but in the next line they say “at least 10 gpt”.
The “experimental batch” of ore sent to Enami was mined “DIRECTLY FROM THE VEIN WITH MINIMAL DILUTION WITH PERCUSSION HAMMERS/JACK-LEGS” i.e. without blasting and the dilution that it induces. The sample weighed in at 2,200 pounds or one Metric Tonne, so the “sample size” was adequate. THAT 70 GPT GRADE WAS A “NET” GRADE AFTER ENAMI TOOK OUT THEIR FEES AND LEVIED ANY PENALTIES FOR CONTAMINANTS.
An issue arose because they sent a second sample FROM THAT SAME AREA to the smelter testing facilities at the Plenge Lab in Lima, Peru. They only reported the results from the gold component of the ore. It came in at 128 gpt gold JUST FOR THE GOLD. Enami was only offering to pay 42-cents on the dollar after taking out their “tolling fees”. If you assume that the silver and copper contributions were the same as Enami detected (978 gpt silver and 3.23% gold) then the GROSS results would be about 157 gpt GE without any tolling fees.
When Auryn intersected the DL2 Vein, they took 2 groups of 4 separate channel samplings of the vein material itself in a “representative” area according to Maurizio’s statement to me. The first grouping came in at an AVERAGE of 164 gpt gold. The second grouping came in at 150 gpt gold. The overall average of the 2 different groupings came in at 157 gpt gold WHICH WAS THE SAME NUMBER THAT THE PLENGE LAB ESSENTIALLY GOT.
When Auryn said expect 70 gpt gold to “PROVIDE A SOLID BASELINE FOR GRADE EXPECTATIONS” (for ore mined without blasting) they had already given that 70 gpt NET figure a haircut from the 157 gpt figure GROSS figure.
When I read that 10/30/24 update I got in Maurizio’s ear within a half hour. I told him that the shareholders are going to get confused with that 70 gpt phraseology followed by “at least 10 gpt” phraseology. He agreed but then stated that the Board was very careful about the wording used.
If the average grade comes in super high and Auryn only said “at least 10 got” then they would catch heck from the shareholders but if Auryn is mining in an area where the vein constricted and a bunch of the blasted ore was composed of less well-mineralized wall rock that came in at, let’s say, in between 15 and 20 gpt GE, then other shareholders would get ticked off if they were led to believe that 70 gpt GE “provided a solid baseline for grade expectations”.
What management did was threaded a needle to cover both bases. A lot of this has to do with “VEIN WIDTH”. As you know, mesothermal and epithermal veins tend to constrict and dilate as they course their way through the rocks. At the “informational meeting” held in Las Vegas, Maurizio mentioned that the DL2 Vein was like a “Rosary”. There are narrow areas which represents the Rosary chain, and there are dilated areas which represent the Rosary beads. If you’re mining in a Rosary bead, the whole width of the adit working face is going to be pretty much VEIN ONLY material that is going to run hot. In the Rosary chain areas blasting will be needed in order to maintain the MINIMUM ADIT WIDTH needed to get the men and equipment through. The fancy geoscientists refer to this as a “BOUDINAGED VEIN SYSTEM”. “BOUDINAGE” is French for sausage links. A chain of sausages will constrict and dilate out. The dilated portion is not known as a “Rosary” bead but as a “LENS”.
Both Richard Sillitoe and Rob Cinits have stated that THE DL2 VEIN IS DEFINITELY GETTING BOTH RICHER IN GRADE AND WIDER IN WIDTH WITH DEPTH. This is the hallmark of “mesothermal veins”. In Theresa Moreno’s book called “THE GEOLOGY OF CHILE” she had a guest writer Victor Maksaev do a chapter on mesothermal vein systems in Chile. We are right smack in the middle of a “mesothermal vein belt” in Region 5 of Chile. It extends from Curacavi, our next-door neighbor to the south to Colliguay, our next-door neighbor to the north. Mesothermal veins totally blow the doors off of the much more common “epithermal veins” in both WIDTH and GRADE. It’s like redwoods versus saplings.
The “mesos” start much lower in the earth’s crust where the PRESSURES and TEMPERATURES are extremely high. This increases the width of those cracks and faults within the host rock that end up becoming veins.
You remember the form of quartz known as “chalcedonic quartz”, or “aphanitic quartz”, or “cryptocrystalline quartz”, or more commonly “milk quartz”. It is found in “boiling zones”. We have it all over the place. The highest-grade gold in the world likes to hang out in boiling zones in conjunction with “milk quartz”. These “boiling zones” range in vertical width from 50-meters to 800-meters. Their average width is about 300-meters. As you just stated, Auryn is going to be mining these 7 Main Veins for a very long time.
Maurizio told me that he is not going to be giving any OFFICIAL GUIDANCE on average grades until a bunch of ore is run through the new FF plant. In his words, “I refuse to give firm guidance based on incomplete data”. He’s right. In the market if you miss OFFICIAL GUIDANCE you can get punished. Why risk it? For now, I personally am penciling in about 20 gpt GE while hoping for an upside surprise.
