Over the past eighteen years, since the low of gold at $252 in August of 1999, management teams in the junior resource industry have had all the opportunity in the world to prove their competence. Or lack thereof. For the first time in history, probably driven by demand for everything from China, every commodity was in shortage and exploded higher. I've never heard of that before.
Companies with good technical teams and smart management all hit home runs in the past fifteen years. But, as in baseball, there were a few home runs and a lot more strikeouts or whiffed catches.
Keegan Resources in Ghana proved to be a home run, going from $0.49 to $9+ with 10 million ounces of gold. The same management and technical team went from success in Africa to advancing a major gold district in Mexico when you couldn't give gold away from 2011 until 2015. When I went to see them four years ago the stock was $0.67 and the company got no attention. My only disagreement with them was that they were underestimating the size of the project. In my eyes it was a lot bigger than they thought. Now they agree I got it right.
That brilliant technical and management team sold the company a year later in the depths of a dismal market for $3.67 a share to Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE). Those who held onto the shares saw the price go to $6.50 a share; a 900% increase while everyone else was declining up to 99%.
The team is back. Now they are thinking really, really big. Auryn Resources Inc. (AUG:TSX: AUG:NYSE) owns seven major exploration properties at various stages. The only requirement was the project had to be high grade, oxide gold or have district scale. All three would be even better.
I am no more a fan of big resource companies than I am of big government. The further either gets away from the people on the ground, the dumber the decisions become.
However, for a young geologist, working for a large and stupid mining company may be a great way to begin a career. Large companies have large staffs spread across a variety of specialties. Learning what tools are available can be handy for the neophyte employee.
Auryn management proved to be in sync with the overall gold market. They picked up their prime Committee Bay deposit with a high-grade resource of just under 1 million ounces of gold in late September of 2015, only three months before the low and start of the rocket ship higher in gold prices. They paid a tiny $18.4 million. The district scale (think Boston-New York in distance) property carries a 1% NSR.
But while they were scarfing up major prime gold projects for pennies on the dollar during the downturn, they also raided Newmont Mining Corp. (NEM:NYSE). The company assembled a team of eight experts in their own fields of geology. Within the group, they have participated in the discovery and exploitation of some of the largest gold projects in the world.
Auryn has built Committee Bay up to about 1.2 million ounces at 7.5 g/t gold. The project had had over $100 million spent on it during the last twenty years with over sixty-five individual discoveries. Auryn just began a world-class, 25,000-meter drill program on the property. Look for results to be coming out for months, and perhaps years. Twelve targets are being shot at. All have seen prior work.
Agnico Eagle, the company that bought Cayden Resources three years ago, is operating at the southern end of the belt that contains Committee Bay. They have defined seven million ounces of gold and the number is still growing. Each of the dozen targets of Auryn at Committee Bay has the same potential.
Also located in Nunavut is Auryn's Gibson MacQuoid gold project, in a 75-mile long greenstone belt. With previous high-grade showings at surface, Auryn is planning a summer long surface sampling study to determine high potential drill targets.
At Homestake Ridge in British Columbia, Auryn begins a 15,000-meter drill program this month. The property has an identified 1 million ounces of gold at 9 g/t. Previous drilling has shown intercepts of as high as 73 meters of 21 g/t gold. They hope to double that resource with this year's program.
Down south in Peru, Auryn has a stable of four major projects in their portfolio designed by one of the discovery team that found Yanaccocha with +60 million ounces of gold. In 2017 they plan on drilling as many of the projects as they can. Some are drill ready but some need surface work prior to drilling. Their most advanced and drill-ready property is the Huilacollo gold project, which already has a non-NI-43-101 historic resource of about 150,000 ounces of gold.
Drilling will begin in October in Peru. This year's budget calls for 15,000 meters of drilling spread among the four projects in Peru.
In short, the Auryn team has put together a dream team on the technical side and a dream team of projects with world-class potential. They have the money in the bank to begin a world-class drill program. I think they are going to hit something somewhere or maybe hit something everywhere.
In a brilliant stroke of genius, the company applied for and got a New York Stock Exchange listing. They will now trade in New York under the same AUG symbol. That is far more than just symbolic. You see, stockbrokers in the U.S. are not allowed to recommend or trade the penny dreadfuls.
By listing in the U.S. and having a share price above $3 Auryn has opened up an entire world of new investors. They are perfect positioned to ride the wave of investing higher as gold goes up.
Auryn is an advertiser. Do your own due diligence.
AUG-T $3.05 (July 17, 2017)
AUG-NYSE 76.9 million shares
Auryn Resources website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
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1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. Auryn Resources is an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
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