The Mining Play

MDMN - 2016-05-02 Weekly Discussion


#126

I am not questioning whether the porphyry is there. Auryn says it is “highly prospective” of a copper/moly porphyry. That is a pretty strong statement. I have no reason to disagree with it.

Your original question was about grades. The safest bet, until there is more data, is to look at the Singer report and take the average grades of a copper / moly porphyry. But they need drilling to determine the size, the proximity to surface, grades at depth, etc. But the data so far is not enough to push a “dream grade” exceptional porphyry narrative.

IMO the aspect that could end up being ‘most exceptional’ about it is that it may be easily accessible from the side of the mountain, i.e. it is potentially close to surface, rather than having to remove 1/3 of the plateau. So this could lead to a cheaper-to-mine deposit. But to bring money to the table that idea would have to be proven. And that requires a lot of work be done with the drills and the modeling and formal reports. And that’s why we are looking at several years of exploration and why Auryn is bothering to start up short term mining to fund that anticipated exploration period.

If it was obvious to the professionals that there was an at surface 1.2% Cu / 860 ppm of the average 500MT, we would not be here any more. Therefore, it is not obvious.

In addition, the LDM is being “reinterpreted” according to Auryn’s presentation, in a potentially very positive way. But work remains.

Finally they have high grade gold @ 5000 tpm to mine in order to fund say $10M, $15M or more per year in exploration for a few years.

It was clear, imo, that by Aug 2017, not enough would be done to justify the $100M cash payment, so the deal had to be restructured because Auryn was not going to pay. And nobody wanted them to walk. The new deal gives Auryn more time. In compensation, the new deal keeps Auryn working on the mountain and gives MDMN a larger part of the action. Obviously the risk for MDMN is higher than if Auryn had just written a $100M check. Now it’s a waiting game for us and a lots-of-work-to-be-done game for Auryn.

And once that porphyry becomes obvious to the professionals, or the LDM reinterpretation becomes settled in the very positive direction, or a great magnitude of the high grade gold becomes ‘formal reserves’ and easy to mine, then the next stage will come when offers come our way to exit stage left (i.e. a TO), imo. That’s how it works in this industry.


#127

Even if you know there is a porphyry and the grades are also known you still need to know size. The 3 moly mines are located where the Moly porphyry should be. I am simply asking whether the material from the 3 moly mines is porphyry material? No one seems to want to answer. If it is we would have a small sliver of info on grade. Even if the 2% copper and 1% molyr from the moly mines is porphyry material we would still need a ton of drilling to determine tonnage and average grade. Again, is the material from the moly mines material that came from a porphyry???


#128

#129

Does anyone know if AURYN will be setting up modular equipment to concentrate high content surface ore to save on the costs of getting extracted gold ore to the smelter?


#130

Why copper is for the big boys

Rio Tinto PLC has signed off on a $5.3 billion expansion of a Mongolian copper mine that will ease the mining giant’s reliance on iron ore for profits and become one of the world’s biggest sources of the industrial metal.

The planned mine, with its roughly 125 miles of underground tunnels that will track three times as deep as the Empire State Building is tall, will help Rio Tinto and its partners get to the most valuable part of the deposit, which also contains gold and where there has been a open pit mine running since 2013.


#131

How long does it usually take to prove a mountain’s formal reserves? What would be a slow case scenario and a fast case scenario for our situation?


#132

Hi Whatever,

I think it’s a little early to start prognosticating on the average grades we might encounter on the Cu/Mo porphyry prospect underlying the Pegaso Nero. Don Singer’s work will give you a good idea for the average copper, moly and gold grades found in Cu/Mo types of porphyries which are the big daddies in the porphyry world.

You can get a little more specific if you study the work of Zentilli, Maksaev, Moreno, etc. on the “Early Cretaceous Porphyry Belt” of which our deposit represents the southern terminus of. These deposits have in common the underlying Lo Prado formation within the Veta Negro rock formations so the information might be more reliable for our deposit than that found in Singer’s work.

I think what Bents, Alegria and Bocanegra have a better handle on right now is projected SIZE as in very, very large which translates into a very, very long mine life. The enormity of the area showing the surface moly and copper showings when added to Perez’s hyperspectral satellite imaging survey revealing “about a dozen” intrusives making up a 7 Km long swath from SW to NE across the plateau indicates some pretty serious SIZE indications. When you add in the stellar infrastructure then the projected ECONOMICS appear to be very favorable. The NEAR SURFACE aspect also speaks to ECONOMICS. At this stage of development it all boils down to is it LIKELY TO BE ECONOMIC or not. There are no expectations for stellar grades in porphyry deposits. The superior ECONOMICS comes from SIZE and the deposit being amenable to open pit bulk mining exploitation methodologies. The surface grades found to date provide very compelling evidence that the underlying deposit is likely to be ECONOMIC. The Andesitic Cu/Au porphyry discovered by the Nuoco geoscientists shows evidence of “supergene enrichment” via the presence of the high octane forms of copper like chalcocite, malachite and bornite. The distance between these porphyritic findings and the PN surface copper and moly is about 5.7 Km. That’s a long way.

Having said that, I don’t think the average Medinah shareholder should be keying in on the porphyries at this stage of development. The excitement is in the near surface early production opportunities involving GOLD not longer term COPPER AND MOLY opportunities. In the near term, Medinah’s share price is likely going to be more related to proving to the investment world that a clear pathway has been established to significant amounts of cash flow commencing…(fill in the blank) and extending over a very, very long period of time (extended mine life). Medinah shareholders want QUICK CASH from the near surface epithermal gold opportunities. Lots of drilling is going to be needed to both optimize open pit design and block out MR/MR in the longer term but I think Medinah will be long gone when all of that is being done. The high grade epithermal opportunities are the frosting on this cake.

What I’m interested in right now are things like progress on Masglas building an on site processing plant, projected mill head grades, terms and conditions of the new deal, initial cash flow rates, projected increases in allowable production rates at sites currently permitted like the Merlin Mine and projected timing for new sites to be permitted for production. Because of this, I’m hoping for more of a parabolic rise over time in allowable production rates on a TPD basis rather than a linear one. I have no doubts that the AMC team can match allowable production rates. Predictable streams of increasing cash flow are in demand by all kinds of investors and the value of the cash flow “streams” are easily quantifiable. I’m very interested in seeing some type of resolution to the Quijano share block issue and those shares going from a FREE TRADING status to a RESTRICTED status. This should tighten up the “float” of readily sellable shares significantly.


#133

In answer to my own question the material taken from the 3 moly mines is said to be porphyritic. Drilling will give grades and tonnage. If the porphyry is really almost at surface results from a core or two could be quick.but many many many cores will be needed


#134

When I recently discussed the Pegaso Nero with Maurizio I only mentioned the copper as being valuable. Maurizio was quick to point out that the Moly would be valuable as well. This is assuming, of course, that they do the work to prove it up and the grades are what they expect.


#135

Copper is a little over $2.00 per pound and Moly is a little over $6.00 per pound. as I remember. The moly could be a nice bonus.


#136

Seems like all discussion today has been focused far term. Undoubtedly important and the reason AURYN is continuing to move this project forward. What news near term, however, are shareholders expecting to hear next week and in upcoming months that will move PPS on an upward trajectory?


#137

IMO, a nice pop in the share price is imminent. Share price moving news is getting closer.


#138

Have you been speaking with AMC? If not, can’t we work under the assumption, given the past 15 months, that the Medinah side of the ledger doesn’t know much more than the common shareholder when it comes to the timing and content of upcoming announcements?


#139

I’m fairly confident but we shall see. Like I mentioned, a big seller/shorter could continue to keep a lid on things for quite awhile no matter what news Auryn releases or what buyers show up.


#140

Not to state the obvious but the market is looking for new developments. At this point, AMC’s reconfirming our 25% equity, etc. won’t create additional buying. If they decide to provide a roadmap for exploration/near-term production we could see a bump. I don’t think anybody of right mind is still believing an upfront payment or discussion of dividends will be part of the release and the market has discounted the same.


#141

I don’t see alot of downside at this point. Some “official” news and a “wire” release from Auryn, along with some mining updates, would bring some welcome relief. And if the big sellers are through, it should be green skies ahead. Looks like we may even have a little buying at the moment…


#142

Obviously, I’m expecting more than a reconfirmation on what we already have been told.


#143

When does a 300K ask become a 300K sell at the bid? Guess which column that trade will show up in at the end of the day.


#144

Do you actually believe that scheduling Oct 1-2 at the Orleans bodes of nothing new regarding timing and content of upcoming announcements? I’m of the expectation that we will be seeing some early production results and cash flow figures before then.


#145

I’m guessing/hoping you are right but at the same time the scheduling of a shareholder meeting with mdmn means bugger all. Remember 2012…?
However you are probably right about seeing some info from Auryn before then. The info needs to be compelling to move the stock when you look at the other opportunities investors have in the precious metals market to place investment capital.