The Mining Play

Cerro/Medinah/Auryn- 2018 Q1 General Discussion 🌄


#464

Yes, it is being generous. Good point!

I too am still ignorant about mining / mining investing, but less so than when I fell for the BS that was being spewed from the early days. I know enough now to realize I have no business owning this stock. But it’s sunk cost today and I have complete confidence IF there is significant economic value in the ADL district, I’ll participate in a proportionate share and will be fairly treated.

I NEVER had that confidence before AURYN. In fact, I had reason to believe the opposite which is the hardest part to get over. I KNEW the character of the people and was an idiot for holding through the ups and downs. Greed and ignorance are a deadly combination.


#465

thanks KEV. Any way you can find out if we can at least get some type of progress report from them. I know its not gonna be much just an Idea of what has transpired in the last year or so. Are we still drilling texting, do we have areas where we are cashing in minerals, Do we have the goods here as expected? tia its a long shot but its been so quite a little info would go along way for us since we have been the victims here.


#466

Thanks Kevin for everything that you have done greatly appreciated. I still believe that not just Auryn but any public company whether it mining or any other industry has an obligation to their shareholders to report in a timely manner. whether it’s News, updates or quarterly financials shareholders have a glimpse of what a company is doing going forward. We will just to wait and see the CDCH’s quarterly financials but not holding my breath. I’m almost sure there are quite a few on this board that are keen investors and not gamblers and not invested only in penny stocks…


#467

MINERAL PROPERTY EVALUATION PROCESS

There is a pretty well-established process in evaluating the economic prospects of a mineral property. Some familiarity with this process might help Medinah and Cerro investors assimilate the information that management has already released. The overall concept of mineral exploration is actually fairly straightforward although the execution of it can be highly technical and confusing especially for those without a background in chemistry and physics.

First of all, no matter how you sugarcoat it, the reality is that any management team’s exploration efforts are probably going to fail. Thankfully this bullet has already been dodged in the case of the ADL Mining District. [As an aside, from the discussions I witness on “TMP” I don’t sense that AMC is getting the recognition deserved for contributing the Caren Mine into the portfolio of properties assimilated by Medinah and Cerro. The importance of extremely high grade near surface early production opportunities cannot be overstressed in regards to the potential catalytic effect for developing the entire ADL Mining District.]

What the mineral exploration team does is start on a broad scale and implements the lesser expensive “screening” techniques at first in order to determine if further expenditures are justified. These initial efforts include studying the history of the property and making a topographical grid of the surface and doing geological mapping, geochemical sampling, using satellite imaging techniques as well as more localized geophysical techniques like IP/IR.

This process helps to “define” potential targets perhaps worthy of spending larger amounts of money on usually via the more expensive drilling process. Drilling is very spendy so the preliminary data will help guide not only whether or not to drill but also where to target the drilling in order to get the best bang for the buck. Half of the battle in mineral exploration is losing the minimum amount possible before deciding that a mineral prospect has very little economic potential. This is because of the overwhelming odds against any mineral explorer not only making an ECONOMIC discovery but successfully accomplishing the tasks needed to get it into production. This overall first phase of evaluation is referred to as COLLECTING GEOLOGICAL INFORMATION AND BUILDING A “GIS DATABASE”. This information is then assimilated into an easy to draw from computerized format i.e. the “GIS database”. Layer upon layer of information is catalogued and as new information comes in the geoscientists are constantly referring back to previously acquired information in order to connect the puzzle pieces.

The second phase is to take that information and BUILD A COMPUTERIZED 3-D GEOLOGICAL MODEL. This will identify the suspected “mineralization envelope” which roughly delineates the outer boundaries of the mineralization under evaluation.

The third phase is to superimpose a 3-D BLOCK MODEL upon the 3-D geomodel. There might be hundreds of thousands of individual “blocks” all with their own computerized “address” within the 3-D block model.

The fourth phase involves extrapolating the data obtained from outcrop sampling, drilling, adit workings and trenching in order to construct a GRADE MODEL within the 3-D block model. Each “block” is assigned an average grade. This is a highly technical process utilizing a branch of statistics known as GEOSTATISTICAL ESTIMATION usually based on a process called KRIGING. The problem in mineral exploration is that even an exhaustive drilling program only samples perhaps one one-hundredth of 1% of the orebody. The computer software does an awful lot of highly technical extrapolation in order to fill in the blanks and recognize patterns.

“Geostatistics” allows the geologists to roughly estimate the grades of the ore in between the drill holes in a 3-D fashion. In regards to the Caren Mine which involves very high-grade narrow veins that are steeply dipping “bulk sampling” of the ore recovered from adit drifting can be substituted for a lot of the drilling typically needed in more disseminated deposits like porphyries and IOCG deposits. In an epithermal vein setting like at the Caren Mine, “bulk sampling” methodologies provide a much larger and more trustworthy sample to evaluate. At the Caren Mine the first truckload shipped contained 12.4 tonnes of ore. The next four truckloads added another approximately 64 tonnes.

The “grade model” then allows the geoscientists to calculate MINERAL RESOURCES which occurs in the fifth phase. “Mineral Resources” are defined as the portion of a mineral deposit having REASONABLE PROSPECTS for ECONOMIC EXTRACTION (RPEE). Note the subjectivity involved in determining “REASONABLE PROSPECTS”. Calculating Mineral Resources mandates the establishment of a “cut-off grade” below which the ore is not to be counted as a part of the ounces contained in the Mineral Resource. The optimal “cut-off grade” is based on costs and dictates the grade level at which the economics are maximized.

The sixth phase involves acquiring yet more data concerning issues like economics and metallurgy during a PRE-FEASIBILITY STUDY or PFS. The completion of a PFS then allows the team to move on to phase 7 which is the CALCULATION OF MINERAL RESERVES. Reserves are defined as the “ECONOMICALLY MINEABLE” portion of MINERAL RESOURCES based on today’s metals prices and cost structures. The statistical accuracy of “Mineral Reserves” is superior to that of “Mineral Resources” because the ECONOMICS are thoroughly scrutinized.

Phase 8 typically involves the drafting of a BANKABLE FEASIBILITY STUDY or BFS. These can cost several million dollars. A “positive BFS” is often the document dropped on the desk of a banker in conjunction with seeking a financial commitment from that banker to develop the property. A “positive BFS” does NOT represent a guarantee that any given banker will comply with your request for finances. If a bank is not involved, then a “positive production decision” is what signals that the project is a “go” and is deemed by the check writers to be ECONOMIC. In a situation like that at the Caren Mine, a formal BFS might not have been necessary but most of the information contained in a BFS needs to have been accessed in order for a “positive production decision” to have been made by prudent business people.

If money becomes available then phase 9 typically involves yet a deeper delving into engineering issues and more economic and environmental studies. In an open pit scenario, any overburden removal needed to gain access to the ore needs to be engineered. In an underground process, access to the desired ore is done by drifting adits or “declines” and often the sinking of vertical shafts from above or vertical “raises” from below. At the Caren Mine it appears that this phase has been completed no doubt as mandated by SERNAGEOMIN for safety reasons.

Throughout this entire process there are a series of “studies” being conducted. The initial study is referred to as a “Preliminary Economic Assessment” (PEA) or “Scoping study”. This transcends into the “Preliminary Feasibility Study” (PFS) which then transcends into the BFS or “Bankable Feasibility Study”.

In an extremely high-grade prospect like the Caren Mine, some of these “phases” can be circumvented due to the nature of the steeply dipping veins and the thoroughness of the trenching and sampling program already completed to date. In an intermediate sulphidation epithermal vein deposit like this one with narrow veins and the presence of several preexisting adits, extensive (and expensive) drilling often does not represent a prudent allocation of financial resources. The intersections might be too small to offer statistically viable information because of issues like the “nugget effect”.

“Bulk sampling” of the material from adit drifting often takes precedence in conjunction with surface trenching results. At the Merlin 1 Vein/Caren Mine we know that surface trenching revealed gold running at about 3 gpt along a 1.8 Km stretch from north to south. We also know that as the plateau descended onto the northern and southern downslopes of the mountain the grades received were in the 10 gpt gold range. The sampling of adit #2 at about 140 meters below the plateau level revealed the much heralded “bonanza” grades in between 100 and 200 gpt gold. So we’re starting to get a decent look at this sheet of plywood-shaped Merlin 1 Vein in 3 dimensions.

The sources of data to be used in the calculation of mineral reserves/mineral resources (MR/MR) can legally come from any combination of 4 methodologies. They include the direct sampling of any rock that outcrops, surface trenching and sampling, the drifting of adits/tunnels and R/C or diamond drilling. It appears that at the Caren Mine a “positive production decision” was made with or without a formal PFS or BFS in hand.

The days of blocking out MR/MR for the sake of blocking out MR/MR are pretty much over. The markets no longer place a value on MR/MR commensurate with the costs of blocking out an excessive amount of MR/MR especially if those ounces of MR/MR are not going to be mined for many years. Shareholders have made it clear that they would prefer to share directly in the profits as opposed to management plowing all profits back into blocking out more MR/MR. Nowadays miners often block out MR/MR for a couple of years down the line only.

Recall that qualifying as a “MINERAL RESOURCE” mandates the determination that there are REASONABLE PROSPECTS FOR ECONOMIC EXTRACTION. With the “run of mine” ore at the Caren Mine being projected by Bocanegra at averaging 34 gpt gold and with the superior infrastructure present at the ADL and keeping in mind that the average gold operation worldwide is mining 1.6 gpt gold the REASONABLE PROSPECT FOR ECONOMIC EXTRACTION threshold probably wasn’t very tough to meet.

AMC 's Luciano Bocanegra’s work calculated a “MINERAL RESOURCE” of 664,000 ounces of gold in just the top 200 meters of the 1.8 Km long Merlin 1 Vein and an 1,100 meter stretch of the Fortuna Centro Vein also down to 200 meters of depth. These are two of the 6 main veins present in the area. As noted, the projected “run of mine” average grade for the Merlin 1 Vein was projected to be 34 gpt gold and 19.5 gpt gold for the Fortuna Centro Vein. The average projected width was 0.5 meters for each vein. I think it would be wise to review the formula for calculating MR/MR and be ready to plug in any new findings in order to detect if that 664,000 ounce RESOURCE in a portion of the Caren/Fortuna vein complex figure was a bit on the “conservative” side as Bocanegra warned us it was on his PowerPoint slide.

Basically what you do is to first calculate the “volume” of the vein material being studied. This equals the strike length times the average width times the projected depth all measured in meters. The volume will then be projected in cubic meters. Since grades are expressed in grams per tonne we need to convert cubic meters into tonnage. This is done by multiplying the cubic meter figure by the density of the rock (2.5 tonnes per cubic meter in this case) which will give us total in terms of grams of gold. If you divide this figure by 31.1 grams per ounce you’ll have the amount of gold expressed in ounces i.e. 664,000 “ounces” of Mineral Resource.

If the actual depth encountered was twice that 200 meter figure then one would have to double that 664,000 figure to about 1.3 million ounces. If the vein widens with depth (which is the norm)and ends up averaging, let’s say, 1 meter in width then one would have to double that 1.3 million ounce figure to 2.6 million ounces. All of a sudden, the 3.2 million ounce threshold to determine a “world class deposit” figure (Singer) isn’t too far out of sight just for these two veins.

If a large amount of new veins are found during the development/production phase then this too needs to be factored in also. Remember also that Bocanegra only factored in two of the 6 main veins seen at surface. A total of 5,000 meters of veins were detected at surface and remain “open” in all directions. I’d keep an open mind about that admittedly “conservative” 664,000 figure. Use it as a benchmark and as developments proceed keep an eye on how deep the mineralization actually goes, the average width of the veins as a function of depth, the lineal measure of veins in total and, of course, the average grades.

Time will tell us just how “conservative” Bocanegra’s assumptions are. I wouldn’t worry too much about the 2.5 density figure, it’s not going to change much. The grades are just fine if not stellar. However, I feel that the projected depth of 200 meters might be a bit conservative. The “boiling zones” that typically feature these “bonanza” grades in epithermal deposits (found in Adit #2) average about 300 meters in vertical width and most epithermal zones are A LOT thicker than 200 meters. The “average width” figure might also be subject to being upgraded or downgraded. Epithermal veins tend to widen with depth similar to how a tree trunk is thicker than the peripheral branches.

Also we need to keep in mind that the Merlin 1 Vein/Caren Mine features a “lenticular” vein style with dilated “lenses” of vein material being found. Maurizio described this at the Las Vegas “informational meeting” as being like “rosary beads” on a chain. The first “bead/lens” they encountered was 28 meters in length and averaged 11.5 gpt gold and 1.6% copper. This represents $600 per tonne “rock”. You might study some mining press releases in order to gain an appreciation for those grades. Then the vein pinched off for 4 meters and reappeared with the second “bead/lens” being 42-meters in length and of “about twice” the grade of the first lens.

After encountering the second lens Maurizio made the comment to an interviewer that they felt they were within 20 meters of even higher grade vein material. Geologists use “vectors” to guide their efforts. When the quartz hosting the ore converts into “milky” quartz or “cryptocrystalline” quartz wherein you can’t make out individual crystals of quartz this often signifies that you are in an historical “boiling zone” which is where “bonanza grade” ore tends to accumulate. What is atypical of this vein system is that it is very well preserved (non-eroded) and even the carbonate layer is still intact. That’s another reason that I feel that the 200 meter depth level might be extremely “conservative”. I do, however, admire management for their conservatism. I sense that they are clearly from the “underpromise and overdeliver” school of thought.

ACTUALLY ABOUT A YEAR AFTER THAT 664,000 OUNCE FIGURE WAS RELEASE AND CITED AS BEING ADMITTEDLY “CONSERVATIVE”, IN AN INTERVIEW WITH THE MINING JOURNAL “CER” MAURIZIO CITED 1.5 MILLION OUNCES AS BEING THE MORE UP TO DATE MINERAL RESOURCE FIGURE. It is not clear to me if that 1.5 million ounce figure referred to the entire ADL Mining District or just the Caren and Fortuna Mines. That interview is now one year old and Maurizio noted recently that AMC had identified a total of 300 meters of the Larissa Adit within the Caren Mine. At the time of the 1.5 million ounce citation they had only drifted 130 meters of the “Larissa” adit and didn’t intersect the vein for the first 80 meters.

Many years ago Medinah’s Gordon House and ACA Howe’s rep projected the PRELIMINARY MINERAL RESOURCE at the Gordon breccia alone to be about 1.5 million ounces. AMC later stated that they were fine in projecting at least a 1 million ounce MINERAL RESOURCE being present in the brecciated region even though they successfully traced the breccia complex outlined by Medinah and ACA Howe further to the south and west. Again, keep in mind for reference purposes that the standard threshold needing to be met for a deposit to be considered a “World Class Deposit” (WCD) is 3.2 million ounces of gold equivalent (Singer). This puts a deposit into the upper 10th percentile worldwide. Also keep in mind that from a preliminary glance the ounces of gold equivalent to be found in the Pegso Nero will probably (no guarantees) dwarf the ounces found in either the epithermal or brecciated areas. This doesn’t count the contribution from the stratabound deposit over at the LDM.

DON’T BE INTIMIDATED BY A LITTLE BIT OF PHYSICS AND CHEMISTRY!

You’re smarter than you think. Hydrothermal fluids arise and cool and assume the shapes of the cracks that they fill. When metal bearing superheated hydrothermal fluids and gases arise through the cracks and faults within rocks if they hit a dilatation or cavern like space (like a lens in a lenticular vein system) they will RAPIDLY COOL and be able to “boil”. Since gold usually travels in association with sulfur in these things called “thiosulphate” complexes the energy from the boiling frees the gold from the sulfur and allows the gold to precipitate out of solution and park itself in that “cavern”.

Likewise when silicates like QUARTZ rapidly cool in one of these caverns/lenses/“rosary beads” it crystallizes QUICKLY and doesn’t have the time to be laid down in fancy layers which exhibit their crystalline structure. This flash cooling results in chalcedony or “milky quartz” without any crystals to observe. Thus high grade gold and milky quartz are found in the same area i.e. “boiling zones” where rapid cooling took place. When Maurizio told the interviewer from that mining trade journal that he felt that they were within 20 meters of higher grade gold I assume that it was because the quartz in that adit was starting to convert from crystalline/“dog tooth” quartz to “milky quartz”. These “boiling zones” range from around 200 meters to a maximum of 850 meters in vertical thickness worldwide. I threw in the number 300 meters to be conservative. MOTHER NATURE REALLY DOES FOLLOW PATTERNS AND SHE FOLLOWS THE RULES OF PHYSICS AND CHEMISTRY. Is it AMC’s job to teach us this stuff? No, it’s our job when we knowingly invest in what’s probably the most ultra-high risk offset by ultra-high reward industry on the planet.


#468

MDMN is the only penny stock I am invested in and I too was taken in by Les and JJ, but I agree that every public company as well as private company has an obligation to the shareholders. Yes Auryn could have allowed both MDMN and CDCH to go down the tubes, but they did not and repeating that does not negate their obligations to shareholders. That too is in the past and we do not need to be reminded about that just like we do not need to be reminded what JJ and Les did to all the shareholders including some Auryn executives and Masglas investors.

All Auryn/CDCH needs to do is provide updates to the information they already provided. They were more forth coming with information in the early days and now that everything is close to being all settle and we can put the past behind us we should be hearing more and not less news, especially since CDCH is public and the new vehicle for Auryn. All we have to go on now is information from the real authorities in the mining business and that is a good thing! So let them teach us not as how to invest, but as responsible owners and operators of this company how things are being done right, today.

What we have now is no information and that is a bad thing for any investor sophisticated or not!!! JMO


#469

Follow up post over on Ihub. I sure hope that this is Not True! Be nice if someone Auryn can answer this question

A lot of discussion from posters regarding the “grace” period available to pay the taxes on a mining property in Chile. Obviously Maurizio has already depleted the grace period for the Alto properties because it is now listed for auction. If the taxes are not paid by the prescribed date for payment, and the property goes to auction, then the property can be rescued from the auction only by paying twice the amount of the assessed tax liability.
For the Alto it would amount to about $300,000.
This from a “Official Journal Analyst” with the Ministry of Interior and Security. “once the mining property goes to auction, it can be rescued from the auction by its owner paying twice the original value of the debt.”

So I am called a “basher” because I have brought this to the attention of shareholders. If the main and only asset of a public company like CDCH is at jeopardy of being lost, that is a material fact that I feel must be brought to the attention of the shareholders. I seriously doubt that Maurizio will allow the property to go to auction and will pay the taxes prior to March 27, 2018. If he failed to do so, I cannot begin to imagine the problems he would face legally.

I did real what he had to say, Doc knows a lot, and I respect him for his knowledge, but he is not the final source of all information. I stand by what I posted today. Believe it or not, the information came from the official government agency that is responsible for the properties that will be subject for judicial tax sale. I contacted them today to be sure my information is correct.


#470

Like I posted before I always pay my property taxes on the last day before it is late and accumulates interest . When your cashflow is tight why would anyone pay their taxes before any penalty is incurred? You pay them on the last possible date before any penalty.


#471

Last year there was some concern when it was reported Cerro’s business registration in Nevada was in default. At least we now know the new list of officers was apparently filed with Nevada:

Also, Karl’s quite correct, Maurizio, as a normal business practice,
will pay a large tax bill just before a penalty is incurred.


#472

Thank you Karl! I’m just posting a follow up from my previous post. Let’s hope this will be taken care of here shortly and we get our answers on everything else when our financials come out.


#473

If anyone is really concerned about the property taxes I suggest they email CDCH info@cerrodorado.com and get their response to whether there is an issue and/or if the taxes will be paid on time.


#474

I have. Haven’t gotten anything back yet. I will share once I receive if they reply.


#475

It does not make sense that there is a one year grace period for paying the mensura taxes but there is a 100% interest penalty for opting to do so. In years past it has always been that you could take a year off on paying your property taxes as long as you pay for both years (the initial year and the grace period year) by the end of the second/grace period year. You have to play “catch up” every two years. It’s basically a 2-year cycle but the government probably wouldn’t mind if you paid annually.

Presenting this information as AMC being broke, forgetful or irresponsible enough to pay 100% interest seems a bit disingenuous. They have their own in-house “mining claims advisor” named Patricia del Carmen Opazo. Nobody’s asleep at the wheel.

A little common sense goes a long way. The Caren Mine has a head grade of 34 gpt gold. AMC just put together a management dream team and a very impressive BOD.


#476

It seems to me that paying 2 years at once, the current and the grace year is what was implied by the paying double comment. The interpretation of paying double for the one year was the intended representation which while technically correct regarding the amount was inaccurate as to the tax years. MOO


#477

A little distraction from today’s current discussion … How large is the ADL complex compared to the Bingham Canyon Mine, Utah?

from Popular Mechanics:

Wasn’t it MG who posted a few years ago the map shown below that compares the size of the ALTO claims area to the Chuquicamata open pit mine?


#478

It is worth the visit if you are in the area, I believe they said rather than going any deeper open pit, they are now going to tunnel in from the side somehow shoring up under the pit and expect to keep getting more production out of it.


#479

And I think I remember Mr. Gold saying the Chiquicimanta is the LARGEST in the world.


#480

Mine size is ambiguously defined. Reportedly, Chuquicamata is the largest open-pit. It seems the claim for the Kennecott mine is in terms of production for an open pit.

The world’s largest open-pit mine, Chuquicamata has been in operation for over a century producing refined copper and molybdenum.

The the Bingham Canyon Mine (Kennecott mine) claims to be “the largest in terms of production, reportedly has produced more copper ore, 19 million tons, than any mine in the world.”

Every year, Kennecott produces approximately 300,000 tons of copper, 500,000 ounces of gold, 4 million ounces of silver, 30 million pounds of molybdenum,


#481

Doc, can you point me to the 43-101 that supports the resource (664koz) you refer to you in your post? This is not a matter of being intimated by physics/chemistry but rather the need to have industry standard data to support a valuation where investors might start seeing some returns. The “spin” on the potential of the mountain has always been exciting but the investment side of the ledger (capital structure, resources/reserves, mine plan, competent management, etc.) continues to deteriorate. If this board was made up of a group of geologists your points might be constructive but most of the folk around here are, and continue to be, focused on making money.

Most people invested here knowing of the ultra-high risk but, IMO, the risk profile was diluted because of the incessant, glowing, “gold at the end of the rainbow” post by the hobby geos posting on this board who defended a BOD while they were fleecing the company/shareholders.

There’s no doubt that a very valuable resource may ultimately result in a higher share price but let’s try to keep expectations in check while Auryn scrambles to find the money to advance the project (incrementally). This is a very tough market for juniors. If investors aren’t willing to give this opportunity several years to pan out, they should consider moving on.


#482

Kudos on this bottom line best advice for anyone still invested in the potential of the ALTO.

OT: As clarification to the earlier post regarding the Bingham Canyon Mine (Kennecott mine) claiming to be “the largest man-made excavation" one should look carefully at the use of wording and terminology used. One needs to keep in mind that whoever put the wording together had in mind the volume of earth that was removed from the mountain above the present hole in the ground when they used that description. I’d give them a little lee-way in the use of their description as the “the largest man-made excavation" in the Kennecott historical library. Chuquicamata is still likely the largest open-pit “excavation” when looking at the hole in the ground.


#483

Move on from what? There’s hardly anything left.