Medinah Minerals (MDMN) - 2016 Q4- General Discussion

[easymillion]

Speaking of the Pegaso Nero …

@cornhuskergold

Especially since it is certain, as Maurizio stated, that Auryn would not be able to put the PN into production by themselves as it just costs too much money. It could cost $1B+ to put a large copper / moly porphyry into production.

So assume the JV proceeds, and if the property is proven up and is viable. At each stage of the JV Auryn’s ownership percentage decreases but the proven asset value increases greatly. MDMN would own their percentage of this asset.

This continues for 2 or 3 phases of the JV, several years, and if all goes according to plan usually the end game is the senior big partner buys out the remaining ownership of the junior partner, or at least most of it. In this case, Auryn would end up with some kind of buyout event of their ownership of those properties and this would be cash to Auryn a pro rata portion of which could theoretically be distributed to Auryn shareholders. Alternatively, it is possible, as Maurizio spoke about, that Auryn could retain their portion of the properties (15%? ) and Auryn’s portion of the production capital costs could be footed by the major as a loan to be paid back out of production proceeds.

SUMMARY: for the next several years it will be about exploration results, increasing asset value, and the implicit value of having a major associated with Auryn and the mountain. This should bring a credibility boost. And it brings in new shareholders. There are significant PM and commodity investors whose investing strategy is simply to front run a buyout by a major. As a buyout becomes more and more likely you will attract more and more investors like this taking an early position expecting to be bought out by a major. Those guys can not buy Auryn directly. So MDMN / CDCH would be their options.

Copper porphyries are huge. The mid-tier Freeport-McMoRan has been looking into the PN for the past 14 years, but there were impediments to the claims, a few of which are still being ironed out by MASGLAS/AURYN. Speaking of Freeport-McMoRan Maurizio said we may hear something as early as 1st Qtr 2017. As a courtesy, and with Freeport-McMoRan’s approval, Maurizio had informed two majors of their negotiations with Freeport-McMoRan because of their past interest in the deposit. There was a question in my mind whether this deposit if shown to be so large, with such a high CAPEX, that there may be several possible JVs involved in sharing the project.

With regards to the 5,000 tons/month Maurizio said it was not likely they would mine that amount, initially. It’s slow going. Because of the unusually high gold content that is being uncovered, Maurizio was optimistically projecting their 5,000 ounce goal could be met well before the end of the year (did he say 1 month?) and with much less than 5,000 tons of ore mined. Also, they will be testing the 1st three 15-20 ton truckloads to see what method yields the most efficient economical recovery. Although gravimetric concentrators yield 100x ore concentration it is not a given these will be used. Mined ore may simply be shipped for processing. It should not take long to fill three trucks and determine the most efficient recovery method selected.
The big surprise (disappointment?) was that the Fortuna was not that far along in permitting, and that open pit was not a given as some had surmised, including myself. Preliminary projections were disclosed for the Merlin I vein as 491,961 oz averaging more than 1 oz/t. Preliminary estimates on the Fortuna for 5 veins were 172,427 ounces. As previously reported, the preliminary total estimate given was just for Merlin I and the Fortuna - 664,389 ounces, WCD!
As an aside, Maurizio disclosed that MASGLAS had acquired mining properties 11 KM North of the Caren which may be part of the same geological formation. Just thought I’d remind everyone of the size of the ADL with an old graphic posted by MikeG. Maurizio stated the Chuquicamata mine, the largest Chilean open pit copper mine, could fit within the confines of the area encompassed by the Caren/Fortuna mines. Will the PN prove to be of similar size as Chuquicamata? Much too early to tell. It is anticipated that 10,000 M of drilling will be undertaken.