Wrong! Wrong! √
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I believe I recall reading the nearby Fortuna Mine produced for many decades, averaging 63.5 grams of gold/tonne. If true, then the Fortuna was able to sustain that average for decades, not just over several years, and at a level of production exceeding cornhuskergold’s low end evaluation target. Of course we will not know what the real numbers are until after the fact but at this time the known fact is that the mountain has a history of sustaining production within Corn’s provided estimates.
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I agree that should be the initial impulse response. It should be the initial response even to Luciano’s number of 34 gpt for 490KOz. They are highly unlikely. But there it is from the lead geo who has been there. Assays are real. The Fortuna mine history is real.
The 58 gpt low end is simply a calculation from Auryn’s numbers with some risks identified as to unknown information as to the consistency of the vein as you traverse the plateau to the other side. It has to be given some credibility even if it is highly unusual.
I agree the high end is much more speculative. On the other hand, they have already announced plans for a second source of production, with more potential beyond that (more veins). So it could be made up elsewhere in part if the highest grades do not persist.
And finally, as seeming outrageous as the bottom line numbers do appear by comparison to other projects, numbers were voiced by Marizio at the meeting, with appropriate warning, which came to similar conclusions. He himself said this mine could put them into a “mid tier producer” category. He clearly was not thinking of 25 KOz in 2017. And this is not Les talking. So my numbers are not without context even if they are, and rightly so, hard to believe.
Relatedly, MG or Doc would have to comment, but I think it is likely the unusual grades are probably related to the very narrow widths of the vein, 0.5m. Related to this, Maurizio mentioned they could only have 7 guys working on a level at a time because of the narrowness of the adit / vein. You don’t want to move any more unnecessary rock than you have to. Their intent is to have 4 levels active at once with 28 miners active. It was not clear, but I assume they have to get to those 4 active levels to get to 5000 tpm.
On the other hand, my own optimism for clawing back is lower than yours but with no real evidence. 2.5B is about as good as I expect. If I had to guess, Les worked less directly with rich individuals for private placements and more with private placements to some of his financial / banking connections. These parties probably iimmediately sold into the open market for a quick buck and thus our falling SP. And thus Les’ constant references to a London group and the games with UBS a year ago, etc. Yeah London was buying all right. And then selling right back into the market for a quick skim. And Les was having a side busting laugh each time London was brought up on TMP … at least right up till Aug 23. All imo.
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As always, CHG, thank you for your valuable insights. Until we get the results from the intra-adit (adit 3/Larissa adit) vertical drilling about to commence then the best we have to estimate the vertical dimensions of the pay zones of the various Merlin and Fortuna Veins is probably the CSAMT profiles given on the AMC website and statistical averages for epithermal systems especially those near us and of similar age i.e. those present in the approximately 91 million year old “Early Cretaceous Porphyry Belt” of the Chilean Coastal Range.
What’s good about the CSAMT profiles over and above the typical IP profile is that they reveal important information down deep. The AMC website profiles suggest that these veins show “continuity” well down into the 450 meter depth level or so. Statistically we know that the bonanza grade veins in these systems, if present, are typically located in the historical “boiling zones” where the energy from the boiling broke the bond between the gold and the sulfates they travel with and used to be bonded to. These “boiling zones” average about 450 meters vertically ranging from about 300 to 600 meters. Similar to how a tree trunk differs in width from the width of an outer branch, the deeper aspects of these veins might be expected to be thicker in width.
The other metric we have to work with is the fact that AMC’s trenching program has increased the lineal dimensions of veins having made it to surface from 400 meters to over 5,000 meters. THIS DOES NOT COUNT THE “BOSSES” AND “PLUGS” VISIBLE ON THE CSAMT THAT DIDN’T MAKE IT TO SURFACE. For me, the take away is that whatever the average grade is within these “sheeted” Merlin and Fortuna Veins we certainly have a large amount of that material present. That new ultra-high grade vein they refer to as being located in between adit levels 2 and 3 (“2A”) is not going to be a one time event. They’re going to find “ore shoots” branching off of these veins all over the place.
When the magma chamber pressures increased and the metal bearing magma blew through the weak spots in the magma chamber roof/carapace and interacted with “meteoric” water from rainfall a process called phreatomagmatism occurs which involves “hydro-fracturing”. The explosivity involved created its own cracks and fissures providing the “plumbing system” needed for these metal bearing fluids to get either closer to surface or to surface and then cool and deposit out their metals.
In the never ending “average grade in the vein systems” determination we have to realize that we’re early on in the process and that all new data is incredibly important. The insanely high 64 gpt gold average mined grade at the Fortuna Mine over 30 years of production all of a sudden is not such an outlier any longer. The adit 2 and 2A grades now play a confirmational role. “Sheeted vein” complexes are supposed to be fairly homogenous in that the dissolved metals found in the underlying magma chamber have had plenty of time to mix when in the molten state.
What’s exciting about all of this new information being incorporated into the GIS Database is that the geoscientists can always go back to earlier data and overlay the new data with the older data. For instance, that adit 2A new data may have had a certain “signature” on a prior geophysical study showing this area as being colored hot pink with white polka dots. Other areas showing hot pink and white polka dots might present with similar findings as to grade.
The original hyperspectral satellite imaging study revealed a 7 Km long SW to NE oriented belt of “about a dozen” intrusives just south of the plateau stretching from just west of the PN to the east. We now know that the PN has insanely high moly grades RIGHT AT SURFACE as well as about 1% Cu. We know that this area is “open to the east”. The satellite image suggested that whatever we have there we certainly have a bunch of it. The surface sampling told us that what we have there AT SURFACE is pretty special stuff. There aren’t very many tourmaline breccias left on this planet.
The work of Lowell and Guilbert tells us that if you have moly present then you’re right on top of the porphyry as its melting point is so high it is the first metal to precipitate out of solution at the site of the core of the porphyry. The “vertical emplacement” of this Cu/Mo porphyry appears to be very favorable as there is such a thing as a porphyry structure located so deep it is not economical. Sillitoe’s work tells us that the average TOP of a copper porphyry system is 1.5 to 3 Km below the surface. Similarly, the average epithermal system has had a fair amount of its 4 constituent vertical layers eroded. This particular epithermal system composed of the Merlin and Fortuna Veins is intact. This overall “porphyry system” is also intact which puts us on more of a “mining district” scale.
As always when studying a mining district like this one it is critical to maintain a sense of CONTEXT. CHG did an admirable job on describing the top 200 meters of one of the 6 or so “sheeted veins” in this well-preserved epithermal system part of which (the Fortuna Centro Vein) has a long production history featuring staggering gold grades. The question arises as to what percentage of the future cash flow or NPV of this district is represented by the top 200 meters of the Merlin 1 Vein.
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Hi CHG,
As far as any shares inappropriately issued I would think that they would fall into one of two categories either yet to be sold or already sold into the market. In the already sold into the market subdivision you might further subdivide it into the private placees being institutional professionals versus private citizens. If a deep-pocketed institutional player was getting ultra-cheap shares and fanning them into the market then I think the chances of rescinding those private placement transactions would be pretty good.
Since you can’t clawback those shares bought by Joe Public in the open market might there be a case made for a mandated buy-in by the institutional folks of those shares? They should have known that something didn’t smell right especially if the checks weren’t being made out to Medinah, NA. Just a thought.
The situation that will no doubt come up is a nice guy private placee being asked by the lawyers to unwind the transaction saying hay if the Medinah BOD was on the ball Les wouldn’t have been able to sell me bogus shares. I could then see a BOD member saying that it is the job of the TA to bring to the attention of the BOD any suspicious activities detected. On Wall Street professionals need to file “SARs” or Suspicious Activity Reports when they detect suspicious activity. I’m not sure if a TA technically has a fiduciary duty of care owing to shareholders or BOD members. Do they have liability coverage?
The discount amount below market prices might be critical information as to whether a private placee was a “bona fide purchaser for value” as our new lawyer/poster Jak 167 has taught us.
I would assume that the forensic lawyers would immediately contact the private placees and warn them that the shares you got may have been the product of criminal behavior and we recommend that you don’t sell them until this mess is figured out. Then if they choose to sell them after that then some form of legally mandated buy-in might be in the cards but who knows. Anybody that bought shares above current market levels I would think would be more than happy to rescind the deal. They wouldn’t probably get their cash back until cash flow permitted it. I wouldn’t want to be a private placee legally forced to return the shares and then told to go after Les for your cash back. The “stop transfer” order at the T/A is going to also be interesting.
The other issue is was the proper restriction period attached to any private placement shares via a restrictive legend. I would think that these would be relatively easy to rescind because no corporate lawyer would sign off on a legal opinion. Was there a crooked lawyer involved inappropriately removing restrictive legends? I’m squarely in the camp that feels that we’re going to get a lot of shares clawed back via one route or another BUT ALL OF THIS SIDE SHOW MALARKEY WILL BE OVERWHELMED BY THE MINING DEVELOPMENTS MAKING IT CRITICAL TO FOCUS IN ON THAT WHICH REALLY COUNTS.
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Averaging 50 gpt over a sustainable period would be unprecedented. The highest grade project going into production is aiming for 15-17 gpt (Brucejack). Yes, they have found over 1000 gpt but that’s totally irrelevant to the average grams they expect to see over the next ten years of production. To reiterate, a sustainable 50 gpt would be unprecedented, meaning, it’s never happened before. Fortuna averaging 60 gpt for decades? Given the total amount of ounces produced that would be a highly misleading number.
To be clear, even 20 gpt would attract a large amount of eyeballs and be a BIG positive catalyst but extracting numbers from a narrow sample of a few veins at this stage of the game leads can lead to untenable expectations. I have no doubt we can reach the 5000 TPM goals in relatively short-order but 50-100 gpt and anywhere near 100koz annually is going to take awhile (and obviously require adding the Fortuna, etc.) IMHO
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Doc, Help me out here a little. As per the update Agen IBCBET : Situs Judi Bola Online Terpercaya Pada Link Daftar IBCBET I read that around 8/23/16 CEDE & Co: reports holding 2,179,197,709 shares and I believe those would be in street name. I believe that indicates that was in possession of over 800,000 shares than before this time we believed had been issued by the TA. This would be around a billion shares in street name more that previously thought to be.
Wouldn’t or couldn’t this billion additional street shares likely fall into that category of shares now very possibly bought by Joe Public in the open market and beyond any simple clawback. Or have I missed or misunderstood something here.
Hulk, just remember that Baldy has issued numerous disclaimers on his knowledge of geology in general, and geology of the mountain, specifically, so take his comments at the value he himself has placed on them.
No evidence can be found at this time but a 2B share count when it’s all said and done would probably be the best case. However, if we assume that we get the AMC percentage NUOCO stole from the company returned to MDMN that wouldn’t be a bad outcome. I was originally attacked by even suggesting that Vittal’s 75M shares was suspect (even by one of the guy’s on this board who I respect: HR). Guess what, he gave them all back. An innocent man with legit shares would not have done this. I’m expecting Greg and Vittal’s action should set a precedent for the scores of other unsavory direct and indirect insiders who received “discounted” shares to the detriment of the common shareholders. There’s a lot of swell guys who will inevitably be in an uncomfortable position (including guys like Jim O with 150M+ shares) who were issued shares via Les. Many of these folks have no assets to their name but whatever is there should go towards buying back stock. As I said from the beginning, the LDM was essentially stolen from the company. Remember the discussion of the need for one of those “expensive” fairness opinions? With the company under the microscope I wouldn’t be surprised if guys like Kleen, as nice as he seems to be will end up having to cough up the remainder of the 5% in AMC. Some of this will happen in the short-term, some people will hold out but, at the end of the day, when you shine a light on a company who’s been run like MDMN over the past decade, the cockroaches will scramble. With this in mind, I believe the clawback of shares and NUOCO will exceed many of our expectations. Time will tell.
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Jim. I hate to put a dent in your unflappable track record for making predictions. But the “asterisk” argument you offered prior to the latest meeting (in reference to the importance of the capital structure vs. the fundamentals) has clearly been shown to be erroneous (read: share price is down following the meeting which included some unarguably awesome fundamental progress. The capital structure issue is clearly NOT a “sideshow.” While you and the “market” have been in disagreement for the better part of two decades, it’s painfully clear what investors need to be focusing on. Once distributions are used to buy back shares you will be spot on.
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I doesn’t take much more than a precursory knowledge of mining/the sector to recognize that my comments/opinions have validity. When I compare my knowledge of geology and investing in this sector I’m referring to actual geologists and professional metals & mining investors. Nobody on this board represent either category so try to keep things in perspective.
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While I do recall reading the above statement I can not find it. What I did find was the following at http://www.otcmarkets.com/financialReportViewer?symbol=CDCH&id=129465 so my referenced above post is amended/corrected.
“Previous work on the property consisted of 853 meters of underground development, 156 meters of shafts, 162 meters of chimneys, and 535 meters of drifting and access levels. Production averaged 17 to 20 grams of gold per tonne and direct ore shipments of 2,000 tonnes in 1955 returned 63.9 grams/tonne gold, 51.2 grams/tonne silver and 0.2% copper.”
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“Records for small scale production in the 1940´s and 1950´s gave an average grade of 59 g/t gold and 104.1 g/t silver.”
2000 tonnes (if we assume these records to be accurate) of small scale, high grade artisinal mining in 1955 has no relevancy to this conversation.
A sustainable 15-20 gpt seems more realistic and would be PHENOMENAL if achievable (and very constructive for significant long-term appreciation in our share price).
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It has relevancy to me because I made a statement that quoted something that I had read that was incorrect and I wanted to correct it before someone picked it up and ran with it.
Point well taken…I think most of us are more than willing to let the mountain do the talking…it could very well be an ‘outlier’ in the sector that sets a new bar…we won’t know till we know.
Brucejack? Apples and Oranges, again. Mighty fine company be put in. Growing to a point where a formal Tech Report, providing a feasibility study with extensive drilling and modeling makes no sense at this point. Starting out small scale and self-funding development is what the mining experts on site know to be the right course. Will growing and proving up the various targets/projects take considerable time? Of course it will, as will clawing back and settling legal entanglements. Eventually, there will be a focus to provide a PFE for each target. Even though 5000 t/m is permitted, the expectation is that far less tonnage is necessary to meet the 5,000 ounce production goal for the 1st Qtr, and that’s only on the Merlin 1. Undoubtedly once formal reserves are delineated the ADL will have a lower overall grade delineated than 50 gpt as you state. However, 50 gpt is purely a near term estimate. Lower overall grade is more than acceptable if tonnage is more in line with the 2,700 tpd of the Brucejack mine. If in time the ADL is shown to be a WCD, putting it more in line with other successful mid and major miners is not only possible, but probable, IMO. What market Cap would be assigned with initial production figures growing several times the estimates provided (25,000 oz AU 1st year) for the Merlin 1? Check some of the real statistics:
Brucejack’s daily production capacity is about 2,700 tonnes.
A feasibility study completed in June 2014 has outlined Proven and Probable mineral reserves in the Valley of the Kings of 6.9 million ounces of gold (13.6 million tonnes grading 15.7 grams per tonne gold).
http://www.pretivm.com/projects/brucejack/overview/default.aspx
Kirkland Lake Gold Inc
Macassa Mine Complex
The Company owns the five former high-grade mines that produced 22 million ounces of gold at an average grade of 15.1 grams per tonne.
• Market Cap: $452,379,419.88
• P&P Reserve (troy oz.): 1,463,000
• Grade – g/t (P&P): 19.20
• Operating/Cash Costs (2014): $825
Barrick Gold Corp
The Company operates in segments: eight individual gold mines, Acacia and Pascua-Lama project. The remaining operating segments have been grouped into two other categories: its remaining gold mines and its two copper mines.
• Market Cap: $11,460,350,418.72
• P&P Reserve (troy oz.): 4,458,000
• Grade – g/t (P&P): 16.91
Operating/Cash Costs (2014): $473
Kinross Gold Corp
Dvoinoye
The Company’s segments include Fort Knox, Round Mountain, Kettle River-Buckhorn, Kupol, Paracatu, Maricunga, Tasiast and Chirano.
• Market Cap: $3,164,026,201.80
• P&P Reserve (troy oz.): 1,028,000
• Grade – g/t (P&P): 14.97
Operating/Cash Costs (2014): $507
OK, your more recent comment I can agree with.
If you will note, brecciaboy’s ‘asterisk’ statements ARE all written in the future tense. He never implied the shareprice would jump right after the meeting.
“BUT ALL OF THIS SIDE SHOW MALARKEY WILL BE OVERWHELMED BY THE MINING DEVELOPMENTS MAKING IT CRITICAL TO FOCUS IN ON THAT WHICH REALLY COUNTS.”
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I think you will see that my main and only point/comment, directed at CHG, was that 50gpt was not sustainable and therefore assigning PE multiple based on that grade might not be appropriate. But, as is usually the case, I can’t make a simple point without having the peanut gallery shouting “Wrong, Wrong” without a substantive rebuttal.
Whether or not we reach 100koz annually as production is scaled to other claims wasn’t the point of the conversation. If you assume hyper numbers like 50-100gpt the cost to produce drops like a rock which again goes back to CHG’s model. Corn already knows I have respect for his input and analysis which is why he can make a measured response to my differing opinion. The “wrong, wrong” chorus and “challenges” to my depth of geo knowledge, are the typical emotional responses adding noise to what would otherwise be a normal exchange.
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I can appreciate that. Unfortunately, you were too late:
The insanely high 64 gpt gold average mined grade at the Fortuna Mine over 30 years of production all of a sudden is not such an outlier any longer.
At least now I know that I did read it and it was not a dream.
Summary Geological Evaluation and Exploration Report By Terrance Smithson (P Geo.)
In April 2006, Terrance Smithson (P. Geo) for Tera Ex Engineering was commissioned to perform a summary geological evaluation on the “Lobo Solitario Project” (Cerro Dorado’s properties on Alto de Lipangue) and the Lipangue Breccia Property for Medinah Minerals. According to the report, “Tera Ex Engineering Corp. was commissioned to research, evaluate, update and recommend a new exploration project based on A.C.A. Howe Limitada 43-101 statute reports 1999-2001 by Robert Cinits P.Geo. On the Lobo Solitario project for Cerro Dorado, Inc. and the adjoining Altos Lipangue project of Medinah Mining, Inc., the 2006 program included the planning of a new road system access to the south on newly attained staked claims including the Carrizo and Concordia molybdenum deposits were being constructed to the south highway at Lampa. A new regional exploration model is being proposed and new recommendations and exploration budget 2006 is presented in this Summary report.”
The following are some excepts from Smithson’s report:
NEW GEOLOGICAL EXPLORATION PROGRAM USING A PORPHYRY STYLE MODEL
1.New Breccia occurrence on Cerro Dorado, Inc. The surface outcrop mapped from 1,300-1,700 meters. a.The assay grades may mirror that of the “Gordon Breccia”. (Geochemical samples tend to indicate values higher in copper, lower in gold due to the lower elevation).
2.Significant evidence seems to indicate that an underlying porphyry was the progenitor for the Dos Marias skarn, the Gordon Breccia pipe, the new Breccia occurrence at Lobo, the epithermal veins at the Fortuna Mine and the molybdenum deposit at Concordia and Corizon.
3.With the presence of shear structurem related molybdenum deposits, the size of any porphyry, may tend to be a larger gold/copper/ molybdenum porphyry system.
4.Fortuna Mine produced sporatically for many decades, averaging 63.5 grams of gold/tonne with an elevated arsenic content that formed at the highest elevation in the system.
5.When studied together, all the occurances are almost a textbook version of the “Sillitoe”* model. The zones of alteration that drilling and sampling encountered (propylitic, phyllic, sericitic, hydrothermal, …) were all found in the correct sequence, demonstating corresponding geochemical elevational control within the system. The arsenopyrites present in the epithermal veins on surface at the Fortuna Mine’s highest level (2,000 meters) as well as the copper, gold, and molybdenum in the breccia and Dos Maria skarn values observed at lower elevations, also tend to fit the model (see Sillitoe diagram).
6.The sericitic alteration at the bottom of deeper holes 15 and 18 on the Gordon Breccia was so intense as to hint at a possible close proximity of a heat source. This might suggest that a porphyry system may be at an economically feasible distance or depth from the known breccias.
7.The placer properties at the bottom of the mountain confirm the historical weathering/erosion of a large gold copper mineralized source rock.
8.The bowl-shaped depression straddling both properties near the airstrip might be indicative of another breccia pipe, or proximity to a system with similar heat and fluid sources that caused alteration. Several geologists have noted the geochemical similarities to the Gordon Breccia. There is plenty of limonitic quartz float alteration. Geochemical sampling by Hopley found an interesting correlation, but more follow-up trenching is required.
9.There remains some debate as to where a porphyry structure might be centered and how much deep drilling would be required.
10.The deposit appears to be open-pittable and free-milling ore that is relatively economic to mine.
11.The mining infrastructure is excellent with the proximity to Lampa and Santiago. Chile is one of the most mining-friendly countries in the world.
12.“If this discovery is so significant then why wasn’t it found before now?” The answer is that, until recently, it was very well hidden by the effects of small competing land positions and the region has been geologically obscured by erousional features through time. Lipangue is located to the south at a lower elevation than the prolific copper porphyry belt which is located in the Andes.