Medinah Minerals (MDMN)

[Hurricane_Rick]

For an underground mine, 1 g/t is not considered economical. However, ADL is not intended to be an underground mine (aside from LDM), it will be an open pit whereby the size of the deposit provides economies of scale over lower grades. Generally speaking, 1 g/t is often considered economical for larger open pits that do not have a lot of overburden (i.e. the mineralization is near surface). For even larger porphyry deposits, more overburden can be acceptable if the overall tonnage of the deposit is large enough to makes it economical.

Excerpts from The 12 Guidelines for Buying Gold Stocks:

"Size is very important. The larger the deposit or potential resource the better. Small mines are not worth your trouble as there are few institutions that will finance them and fewer companies that will ever acquire them. With gold mines try and look for 2-3 million ounce and above possibilities. Mining giant Goldfields, only targets projects with 2 million reserve ounces. With silver, 100 million ounces should be your minimum. But the above still has to be qualified. If the resource is too deep under the surface, of very low grade (richness), or has one of many other negative reasons it may not ever be economic to mine."

Tonnage is important. Big tonnage operations create economies of scale that can make some low metal values economic to mine. Three hundred million tonnes (a tonne is 2204.62 pounds, not to be confused with a ton which is 2000 pounds) for an open pit gold mine is big. Ten million tonnes open pit is small. For an underground operation, tonnage can vary dramatically and grade and mining widths become more important (we will discuss this below), but one million tonnes would be small. For a base metal open pit deposit, one billion tonnes would be huge, while 20 million tonnes would be small. So remember in this business – Big is Beautiful.

Grade (richness) is crucial. How much bang for the buck are you getting per tonne of rock. If the grades are high enough the above tonnage discussion becomes less relevant. With a near surface potential open pit gold deposit, 2 grams per tonne (a gram is .03215 of an ounce) would be excellent. 1 gram would be fair as long as you don’t have to remove too much waste rock to get at the ore.

With underground mines, everything changes: depth, the continuity and mining widths of the ore and the vertical or horizontal plane of the ore all comes into play as well as many other factors. Generally, to be on the safe side, if you can find gold grades of 10 grams (about a third of an oz.) or more per tonne across mineralized sections averaging 3-4 meters or more in width, then you are looking at good potential. Lower grades across wider widths also work (i.e. 6-7 grams across 10 meters) Keep in mind these are rough guidelines and subject to many other factors, like depth, vein continuity, overall tonnage and much more. But the sweet spot in this industry is high grades across wide zones of mineralization.

http://www.kengerbino.com/articles/12guidelines.html

Keep in mind that ADL first and foremost is envisioned to be a copper/gold porphyry and copper/moly porphyry deposit. Auryn has not hit the porphyry yet with drilling, and they are currently defining the size and depth of this new gold zone that was discovered during trenching as being economically viable. So the surrounding gold mineralization, while not earth-shattering or price-moving, does contribute to the overall economic viability of the deposit. Hole L15-27 had a 17 meter section averaging 1.0 at a relatively shallow depth of only 35 meters. The other hole didn't provide and noteworthy results. The previous holes were similarly unspectacular, but fair in the context of size of the deposit and all contribute to the expansion of the overall resource comprising the Gordon Breccia.

For a matter of comparative perspective, consider Exeter's Caspiche deposit in Chile's Maricunga Belt. It is a near-40 million oz gold equivalent deposit - one of the largest deposits in South America. However, the average gold grade is just 0.58 g/t. The copper grade is just 0.24%. So you see it isn't so much the grade that makes this deposit world class, but rather the overall tonnage.

Auryn is methodically defining the overall resources surrounding the Gordon Breccia. They've temporarily abandoned the pursuit to hit the porphyry as drilling into the porphyry zone had become challenging due to the fractured nature of the fault zone believed to be just above the porphyry. IMO, the share price won't move based on drill results until Auryn hits the porphyry or hits another LDM-like high grade structure. In the meantime, the drilling of the gold zone is contributing to the overall resource estimate that will come later this summer when the drill season ends.