Aurcana Silver Corp (fka AUNFF)

[basserdan]

Posted by Matt on Friday at the Aurcana board at SH:

As for this new resource we can all read and see the metrics used by this GM are far more accurate and wildly conservative when comparing to the resource Lenic had constructed.

There is a huge divide created in the grades being used to calculate the resource and as Freddy has already stated,the new GM used far more conservative $$ amounts when applied to the resource. Mind you,we are now in the mid-teens and not coming off of $49 silver.

Drover used 25% of the drill holes and 35% of the channel samples Rodriguez used.
Rodriguez applied silver prices 25% higher than Drover in estimating the value of his resource.
Drover used lower silver,lead and zinc grades in his measured calculations.Copper grades were higher.
Drover used SUBSTANTIALLY LOWER silver,lead and zinc grades in his indicated calculations.
Drover classified 642,000 tonnes into the inferred category.
Rodriguez only had 50,000 tonnes in the inferred category.

2012 estimate:
The Estimate is based on 16,422 diamond drill holes, 22,289 channel samples collected by Minera La Negra S.A. de C.V. (a subsidiary of Aurcana Corp.) during the period 2006 - February 2012, and by Industriales Peñoles S.A. de C.V. from 1967 to 2000.

2014 estimate:
The Estimate is based on 14,578 assays comprised of 4,074 drillhole samples, 8,674 channel samples, and 1,829 longhole samples obtained by Minera La Negra S.A. de C.V. (a subsidiary of Aurcana) during the period from 2006 through to 2014, and by Industriales Peñoles S.A. de C.V. from 1967 to 2000

2012 inferred resource:
Metal prices and recoveries used are as follows:

Silver - $28.29/84.87%; Copper - $3.33/81.02%; Lead - $0.88/74.62%; Zinc - $0.84/70.66%.

2014 inferred resource
Metal prices and recoveries used for value and silver equivalent estimates are:

Silver - $21.50/83%; Copper - $3.10/75%; Lead - $0.95/78%; Zinc - $1.00/80%.

Drover is being very accurate here and that is a sign of competence and professionalism.
They do not give details of each block but I believe this estimate provides geologists with the information that AUN's former geologists failed to recognise when developing their mine plan strategy.
Drover has six years of mine life accurately outlined and has also explained his near term and potential drill targets.

25 million oz conservatively measured,indicate and inferred with precise working models and a streamlined operation that is operating at $7.79 per oz cash costs is impressive.

It has been 2.5 years since the last resource. AUN has produced 6.5 million oz eq of ore since that time, or thereabouts. That is a total resource of 32 million oz eq.

"The Company’s management believes that the opportunity to find and develop new zones of mineralization at La Negra is excellent. Thus far five exploration targets have been flagged for further drilling, all within 200 metres of existing underground workings. These near-term targets mesh well with La Negra’s large, 82,000 hectare property position in the region, known to host similar rock types and structures as are found at La Negra. As metal prices and operating margins improve these brownfields and greenfields exploration opportunities will allow the resumption of aggressive exploration."

I have recently contacted the company.
Their near term and ultimate goal is an AISC target of $12.50 per oz at LN. The AISC right now is in the $15-$16 range.
With the $6m they just put in the kitty their AISC goal should be met long before the loan repayment capital they have just raised is gone.
That level of operation is remarkable and I challenge any investor reading this to give a lower AISC on any junior ,mid-tier or even the healthiest senior. Maybe Hecla has an operating level that low.
AUN sold off infrastructure at Shafter that was ramp related.The company will not use it in their future mine plan as they will go in at the resource that is most drill tested by Gold Fields. That is where the old shafts exist and they will use those in the new mine plan.

With the $40 million loan outstanding on Shafter we are talking 3.5 years of payments.
There is a minimum of 5+ years of resource outlined at 4 million oz per year Ag Eq production.
There is no valuation being placed upon Shafter and the old Gold Fields resource estimate provides the guide of a basic resource outline.
What AUN have going for themselves now is responsible management and that should bode well going forward.

With these metals prices AUN would be toast if it were not for Drover streamlining operations back to this level of viability. The company has regained some much needed respectability.

http://www.stockhouse.com/companies/bullboard/v.aun/aurcana-corporation?postid=23198192