“Goldcorp’s investment was the single largest transaction by a major into a junior in the last two decades. It revealed the quality of our technical team and the quality and scale of the opportunities we offer.”
Could you tell us about your group’s trajectory in the junior segment?
We started in 2005 as an exploration company called Keegan Resources with the objective of finding 5 million oz of gold. We were successful, and through the acquisition of a neighboring 5 million oz mine, we put the 10 million oz operation into production in what today is Asanko Gold. As Keegan had become a development company, my partner Shawn Wallace and I decided to form a new venture called Cayden Resources, with exploration in Jalisco, Mexico. Again with the objective of finding 5 million oz of gold, we drilled 100 holes into an epithermal system. We assembled a large land position around it, which led to the sale to Agnico-Eagle for C$205 million at the exploration phase. This success allowed us to raise additional funds, and it was a favorable moment in the market for us to assemble Auryn Resources. As a group, we have raised over C$650 million since 2005. Of that, Auryn has raised about C$100 million in the last four years.
How did you build the Auryn portfolio?
In our Keegan days, we met Michael Henrichsen, the former global structural geologist at Newmont, and Dave Smithson, the former global mapper for Newmont. As we built Auryn and worked with them, we decided to take a more aggressive approach with our acquisitions by pursuing larger deposits in order to build a world-class gold and copper portfolio. As a result, we now have seven projects in Canada and Peru. In Canada, Committee Bay represents one of the largest exploration undertakings globally. It is a 300 km greenstone belt with gold occurrences throughout, and over the last four years we’ve spent over C$50 million there. As for our projects in Peru, we were able to acquire them through a gentleman named Miguel Cardozo. He was instrumental in Newmont’s discovery of Yanacocha, and he has helped acquire both copper and gold opportunities: Sombrero, Baños del Indio, Huilacollo and Curibaya.
How important is it for Auryn to have Goldcorp as a strategic shareholder?
Goldcorp’s investment occurred in January 2017 at a 23% premium, and they have maintained their position through additional financings. Goldcorp’s investment was the single largest transaction by a major into a junior in the last two decades. It revealed the quality of our technical team and the quality and scale of the opportunities we offer. It also speaks to the challenge that major mining companies face to find new large-scale discoveries.
What is the role that junior companies play in terms of maintaining a dynamic pipeline of new projects?
Major companies have to replace ounces of gold and pounds of copper, and to do that has become much more difficult. As a group, we have looked at over 200 exploration projects, and it was very challenging to find good ones. I am sure that majors are going through the same difficulty, and we feel new discoveries will be increasingly rare. On the gold side, for instance, the last large discovery made was Amaruq in 2013, near our Committee Bay project in the Arctic, which already has 6 million oz of gold. We believe that the easy, high-quality projects in Canada and South America have already been found, so it is going to take a considerable amount of perseverance, luck and thinking outside the box to find something new.
What attracted you to the Sombrero project?
What attracted us to Sombrero was the high-grade copper and gold numbers we saw on surface. Looking at the regional geology, we quickly identified major indicators of potential skarn and porphyry deposits of a substantial size. Sombrero has the same types of rocks and mineralized intrusions that we see in the Las Bambas-Tintaya belt. Then, we looked at over 7,000 square km with a proprietary methodology for screening sediment samples, and we expanded our land position to 120,000 hectares. Other companies likely missed this opportunity because of the volcanic cover in this part of the belt. The second thing we found at Sombrero was significant sulphide mineralization outcropping in past iron ore producing areas. These sulphides carry as high-grade – or even higher grade – as the oxide zones.
What is the plan for Sombrero in 2019?
We are awaiting our first drilling permit, expected for Q3 or Q4 2019. For this maiden drill program at Sombrero, we will drill 15,000 m at a cost of C$7 million. In terms of communities, we have not rushed anything; we have taken our time to build relationships before presenting them with agreements. Our philosophy is ‘action before words.’ Before we drill our first hole, we treat each project as if it could be a mine; we take long-term approaches towards building long-standing community agreements. So far we have signed an agreement with the Huancasancos community, which has been working out extremely well, and we are working with other communities to expand our access to new areas.
Given your experience across different jurisdictions, how do you compare Peru in terms of exploration potential?
We had the chance to do business in Africa, Canada, Mexico and South America. To us, Peru ranked as the number one opportunity globally in terms of resource endowment, geopolitical favorability, incredible people to work with and very reasonable communities. Even though the permitting has become more complicated, we believe Peru is improving considerably as a global destination for mining investment.