The Mining Play

October 1st, 2016 Informational Meeting News


#107

Cornhuskergold game summary Part 2:

The afternoon presentation was by Auryn esp. Maurizio (and Kevin). Lots of good stuff. Lots of things to be excited about.

A. Most important is that production started yesterday! They are 71m into the mountain, progressing 8 m / day now. They are working in Adit #3. But recall the recent discovery of what is now called Adit #2a. Production tonnage will be slow at first. But their initial grades are 150g/t, 10 times what was originally forecasted. They have seen grades over 200 g/t or over 6 Oz / t. That’s pretty sick. They are still working on the “mine plan” in light of adit #2a, that is, which adit to focus on first, etc. He did say that there are presently 7 people working full time on the mountain (I think this is production guys) and that’s as many as you can do because of the narrow vein. But he stated they had in mind eventually getting to 4 operating levels and having 28 guys working at once. It was not stated how much tonnage per month per level they could do with 7 guys. So I don’t know how that exactly relates to 5000 tonnes per month. Anyway, the exact plan is still under development.

They are going to do 3 truckloads (3 weeks?) and do metallurgical tests to decide what the best way to process the ore is. They are still considering a. building their own processing facilities, b. just trucking to a third party. They are also considering using concentration machines before shipping.

The most important point is that at a rate of 5000 tpd, if the grades hold up anything like that, then the gold production will be significantly greater than the 5,000 Oz in 2016 and 25,000 Oz in 2017 previously forecasted.

B. They have estimates, made in Jan 2016, of 664 KOz of gold in the top 200 meters of the Merlin 1 and Fortuna veins. Note these veins could go deeper than that. Also the grades experienced so far could very well not be average. So there are plenty of unknowns. They have three or four geologists’ opinions on what the veins will look like at depth. Some think they could go down to 1000m and if anything improve in size and perhaps even grade. Others think that they are not likely to go that deep and possibly not improve with depth. So Auryn will be doing some drilling just to test these ideas. But right now the 664 KOz is considered conservative. It assumes about 32 g / t. It assumes 200m of depth. And it only considers the two veins. There is considerable potential upside to that estimate and considerable positive data that has been collected since January. If all the variables turn out for the positive it could become a “world class” gold deposit - that’s without the PN, the LDM, the Gordon etc.

There is no permitting in place for the Fortuna yet. They are still considering ‘open pit’ versus underground. This seems definitely like a second half of 2017 thing.

C. The Pegaso Nero has the interest of 3 major companies, one of them being Freeport McMoran (the other 2 being “as big or bigger” than FM, but remained unnamed). Auryn expects / hopes to negotiate a JV deal for the PN hopefully as soon as Q1 2017. It will be a “standard” deal where the JV partner spends money to gain percentage of ownership, probably in 2 or 3 stages ending potentially in a PFS for the PN. Altogether it could be 7 to 10 years from JV to production should the PN be economic.

D. Auryn is not satisfied with the historical “dream holes” on the LDM and the interpretation of the LDM. They are re-interpreting what is going on there as they have previously stated publicly. Obviously the LDM is not front and center as we thought it might once be. However Auryn seems quite optimistic about it in the longer term. Maurizio said there is plenty of work and plenty of unknowns and risk there but it not impossible that Auryn could eventually put the LDM in to production themselves.


Medinah Minerals (MDMN) - 2017 Q1General Discussion
Medinah Minerals (MDMN) - 2017 Q1General Discussion
#108

CHG 1st and for all thank you for being there and taking the time to share what you learned! Is Auryn going to put a press release on what you just shared on the grades and what’s happening?


#109

You nailed it


#110

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#111

There was reference to a public update “possibly as soon as next week.” One would assume it would contain some of the same information we received today. Since production literally just started (we got to see a couple of brief videos from drilling in the adit from yesterday) and they had this show to put on etc. I would give them a little space - but there was repeated commitment to regular public updates


#113

CHG do you know why Letts was not there and how he did not catch the shares discrepancy when he was on Medinah board?


#114

No. I heard no mention of Letts. But he has no formal connection to Medinah now. There is no reason for him to be here. And if Greg did not know, and that is the claim, then Letts would never have known. Maurizio explicitly stated Masglas / Auryn did not know.

If you think about it, would Juan have ever sold his 49% for 350M shares if he knew there were 2B or 3B shares? No way. So that is strong implicit evidence, imo, that Juan didn’t know.

The most suspicious to me, and this is just my opinion, is how could the TA not know of discrepancies between their numbers and the financial reports? And what about the CPA and attorney for the financials? That is all part of peeling the onion.

The hounds have been loosed. They will track it all down.


#115

Thank you CHG! Very sad that someone like les with his history can out smart these guys. I hope he pays a great price!


#116

The question is, how did Les ever think he would get away with this? Or, how did he think he would come out on top financially at the end? Maybe he will?


#117

Lean was calling it along time ago. It just never made sense how big blocks just kept coming up when Auryn was moving forward.


#118

I had a couple questions from today that were not very clear to me.

(1) Marizio very clearly stated that Auryn did not own any MDMN. However, MASGLAS was shown to have 218,783,318 shares held in certificate form. Was it also confirmed that MASGLAS also owned some 150M shares in street name? Or was that someone’s speculation.
(2) Was Maurizio serious when he said JJCF was his father in law or was that a joke? I was in the restroom when this comment allegedly came out.
(3) To me, it sounded like Goodin said shares are capped at 3B and essentially we are at that cap (shares issued) currently and then inferred that preferred shares cannot be exercised as it would take us over the maximum 3B. He then went on to say that any recovered shares would strictly reduced the maximum authorized shares. I.E the shares would be cancelled. Is this some kind of a plan to screw the remaining preferred shareholders? I say this because it sounds like remaining preferreds could never be exercised because we have no available share issuance headroom and we never plan to have any future headroom either (that is to say that shares issued will always equal maximum permissible on a go forward basis).

Any insight/confirmation/denial/correction would be appreciated from those that attended.


#119

(1) ANS: The original 150M which were purchased when the original purchase agreement was announced and Letts came on the Medinah BOD - these are in street name: http://aurynmining.com/auryn-holdings-corporation-proposes-major-increase-in-ownership-of-medinah-minerals-inc/

Of 350M Quijano shares to be purchased about 280M were purchased: http://aurynmining.com/auryn-holdings-corporation-proposes-major-increase-in-ownership-of-medinah-minerals-inc/ These are in cert form. Of course the “20%” remark in the PR no longer applies.

(2) ANS: The lady at the front desk (I assume since she was not introduced but sat by Maurizio) is Amparo Quijano Claro, Juan’s daughter and Maurizio’s wife. This is not new information. It has been discussed previously. As a side: I just randomly came across this site just now via Google: http://gw.geneanet.org/epuelma?lang=en&pz=tadeo&nz=puelma&ocz=0&p=amparo&n=quijano+claro

(3) ANS: I think your description of the current status is correct. I would not characterize it as a “plan to screw the remaining preferred shareholders” however. They need to freeze everything and clean everything up they can. Eventually after the process if there are still legitimate outstanding preferred shares outstanding they will have to create a way for them to be converted.


#120

A few additional comments about cash flow, distributions / dividends:

I was interested in this topic in general because “dividends” have been a working idea with MDMN forever going back years. I have always had some concern that this is a legacy MDMN idea from the old Medinah that was being bantered about without much actual substance. Related to this has been lots of discussion about Auryn’s production cash flow, their expenses related to operations and putting “cash back into the ground” via exploration, and whether / how much there would be left for any distributions etc.

In general I would summarize after yesterday:

  1. It is clear that this is not just a legacy idea. Everyone is working with “distributions” as a working assumption including Masglas / Auryn.

  2. High grades in the Caren will make this even more likely should they continue. The cost to extract one tonne of rock is pretty much the same whether it contains 5 grams or 5 ounces of gold. Obviously it is much more profitable to mine 5 ounce rock (which hardly anyone gets a chance to do any more). Let’s say at 50 g/t (1.6 Oz / tonne) and 5000 tonnes per month, at current PoG, annual revenue for Auryn is $100M !! That’s just the potential of the Caren / Merlin 1.

ASIDE: Did you note Maurizio stated that if the good things happen (grades hold up, production hits 5000 tpm on Caren and they get the Fortuna vein into production, etc.) that even with this very modest amount of mining tonnage they could approach a “mid-tier” producer level of ounces of gold. That explains their high level of excitement.

  1. A JV on the Pegaso Nero will reduce Auryn’s direct exploration expenses compared to if they did all that work on their own

  2. They are not planning on doing lots of expensive drilling on the Merlin / Fortuna / Caren vein system to come up with complete resource / reserve numbers. This is typical of vein systems. It is not cost effective to drill tens of thousands of Km to map out the veins all the way across the mountain. You drill as you must in front of you or around you to map out your path for mining for a few years out but to try and map the complexities of the entire system would cost too much. As a result, this too will reduce potential exploration expenses.

  3. There is still plenty that can be spent on exploring the LDM, the Gordon, etc. But these will not be emergency paced projects. They can spend $5M to $10M per year on exploration and keep the geos plenty busy and happy with information, mine the high grade gold for many years, let the PN JV play out for 7 to 10 years, and generate lots of free cash in the meantime. And you still have the LDM, the Gordon, etc. in your back pocket at that point.

  4. On the downside, the share mess of MDMN has to be cleared up to some degree before any distributions are possible. But it was explicitly stated that this is one reason why MDMN has a motivation to pay this legal team and get the investigation underway and completed as soon as possible. The SEC / FINRA / DOJ / RCMP stuff can play out with Les (and whoever) for years after that.

So 2017 looks like a production startup / legal investigation year. There is plenty of potential for good developments out of the mountain though during 2017, including a JV with a major for the PN. After that, 2018 and beyond it seems quite reasonable to be thinking that distributions / dividends could occur if the mountain continues to give off these good vibrations.

Time to get out of here and get back to Husker Nation.


#121

@cornhuskergold @madmen Thank you so much for filling in the discussion details. Just getting the slides posted was keeping me pretty busy. Was great to meet you guys and all the other great folks we had discussions with or formed friendships with over drinks and/or dinner!
@easymillion @Threetrees @MrBigstuff @B94903 @Dentman @brecciaboy and spouses.
Maurizio, Raul, Gary and others
And thanks to our extremely underpaid (volunteer) communications director, @wizard . I heard he did a LOT of the legwork getting the meeting, facilities, refreshments, presentations and slides prepared.
-Cabezon and hubby.


#122

Not sure that I read this anywhere yet. None of the directors or officers are taking any compensation in cash or stock right now. That probably will change when revenues start. Our communications director gets $1.00.

Also, the miners working the mountain are expats (assumed from Peru). It was stated they have more experience with what is needed right now.


#123

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#124

It is very likely there is much more gold lower than ttoo. Also important to note this is just 1 vein.
They were being very conservative and although actual production may start slower, $s coming back will likely be higher than expected due to average grades bring about 10 times higher than originally thought
Can’t wait for Docs input on this
Cabezon, nice meeting you and appreciate the info you’ve been posting from meeting!!


#125

That is the source of the excitement - the very high potential. And thus all the admonishments regarding forward statements and keeping ones feet on the ground etc.

If the grade continues to be that high, at least on the Merlin 1, a very important question will be how deep the veins go as this will speak to mine life, that is, how long they could keep up that production rate and revenue. And thus why they are going to do some drilling to test the depth and grade at depth of the Merlin 1 / Caren.

Keep in mind this still does not account for the Fortuna or Merlin 2, 3, and however many more are at depth and not at surface. It is the question of overall tonnage (depth, grade at depth etc) and the question of consistency between the veins which will determine whether this is going to be known as an exciting high grade deposit of limited tonnage and lifetime or whether this is a stunning WCD (just the gold portion).

It must be stated that it is entirely possible that the high grade gold could end up being the major ADL story. Even if the high grade gold lives up to all this potential it does not mean that the PN or the LDM or the Gordon will be equally exciting. Each target will have to earn its own way. But we probably won’t care if the high grade gold veins live up to maximum potential. On the other hand if they are limited to 200m and grades fall off greatly on the other veins (recall the Fortuna averaged something like 60 g/t at relatively shallow depths) there is still plenty of revenue here for multiple years to drive all the other exploration - 600 KOz is nothing to sneeze at.

And imagine all those years ago, pre-MDMN Juan dug those trenches right in the middle of all this high grade gold. He drove right over the top of it and it was basically at surface. And they had Howe etc. on the mountain in 1999 - 2001 and they didn’t figure this out.

At some point I want to hear the story / explanation of how there were these 3 Spanish adits on the north side of the mountain and that old Caren mine and no one figured out the Merlin 1 was there. I still haven’t heard who owed the Caren claims before Auryn picked them up. There has to be a story there.


#126

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#127

SOBERING

There was an extraordinary amount of information conveyed in a relatively short period of time yesterday (the morning session was just two hours, the afternoon session about two and a half). Even if you were there, it was probably impossible (especially for someone like me, with no business, legal, or mining background) to absorb it all or to tell what was important or what threads to follow or even think about. Whackamole comes to mind. Snippets from the meeting kept popping into my mind on the flight home, and during my restless sleep.

Perhaps the most important thing that I don’t see reported on this site was that the newly-hired lawyers have said (and this was emphasized repeatedly) that this share mess (the Les Price bombshell) will not get resolved quickly. “This will not be over in six months!” That assertion was made repeatedly. Wizard and Goodin said that on Friday the lawyers said (repeatedly) that it would take “a minimum of 18 months” before any sort of conclusion might be reached. A time frame of “18 to 24 months” was (repeatedly) referred to as being perhaps the best case scenario. But every discussion of time-frame was always followed by the observation that there was no way to tell — the investigation has barely begun, and there is no way to tell where it will go or what further entanglements might be uncovered along the way. Plus, Medinah needs to figure out how to pay all the many hundreds of thousands of dollars in legal fees — or perhaps millions! (And Maurizio was clear — this is not Auryn’s job, it is Medinah’s job.)

Bottom line: Even if the mountain blows us away in good ways, even if money does start to flow in to Medinah from Auryn distributions, no one is expecting this share mess to sort itself out until at the earliest sometime in 2018.

I found that sobering. And I’m not sure (and no one at the meeting was speculating) about what implications this has for Medinah’s stock price. But no one at the meeting was calling this a “buying opportunity” or was recommending loading up. Everyone was excited by the geology reports, but everyone was also, it seemed to me, advising that we go into hunker-down mode in our expectations of any upward movement in the stock price any time soon.

Again, it was a relief to have Les, finally, so completely exposed, and the news from the mountain was euphoric, but I found the share mess details absolutely sobering (and far, far, far from resolved), and I do not think I was the only one.

— madmen (brad)

PS — I predicted several weeks ago that this shareholder informational session would be canceled. I’m glad I was wrong, but I definitely was wrong.