Aurion Resources (TSX-V: AU) – Big Ambitions, Big Grades for this Gold Explorer

Aurion Resources Ltd
  • TSX-V: AU
  • Shares Outstanding: 83M
  • Share price C$1.27 (02.06.2020)
  • Market Cap: C$106M

Interview with Mark Santarossa, VP Corp. Development of Aurion Resources (TSX-V: AU).

Aurion Resources is a Canadian gold prospector turned explorer that is listed on the TSX-V (TSX-V: AU).

The business strategy appears to be to generate/acquire early-stage precious metal assets and advance them via direct exploration or by business partnerships and JVs. Aurion Resources’ primary focus is on exploring its Flagship Risti and Launi projects, in addition to advancing its joint venture arrangements with Kinross Gold Corp., B2 Gold Corp., and Strategic Resources Inc. in Finland.

Matthew Gordon interviews Mark Santarossa, 28th May 2020

Aurion Resources appears to have quite a large amount of gold within its 80,000ha land holding and it is at surface, so the economics could be favourable. The company is currently conducting a light drilling programme and has c. C$13M in the bank, which should see the company through until the end of 2021. I was keen to hear more about the business model.

Santarossa told us that he chose Finland because of the exciting, underexplored geology. The reason Finland is so prospective is that it didn’t open up to foreign investment until 1995, so there is no long-standing history of exploration. The jurisdiction itself is stable with a strong industrial infrastructure and a good mining code.

The company has been in Finland since 2014 and has some high-grade gold showings via the drill bit. in 2014, the strategy was to be prospectors: generate prospects, set up JVs and move forward. Aurion Resources reached an MoU with B2 Gold in 2015, and the first 51% was executed on in 2019. B2 Gold is now moving towards the second stage, which will raise its stake to c. 70%. In the meantime, Aurion Resources has continued to compile a portfolio of gold properties along the shear zone. The strength of the company appears to be in its prospecting model, and Santarossa was candid: he does not see himself as a gold project developer. Aurion Resources seems to know its place and is avoiding biting off more than it can chew.

Aurion Resources ended 2019 with C$16M, and has burnt through C$3M to this point this year. it seems the cash burn rate has been massively dialled down since COVID-19 reared its head, given that the initial plans appears to have been for the company to spend C$1M per month on geophysical/geochemical operations and assay drilling at its many assets. The burn rate is down to “less than half” of what it was as Aurion Resources sensibly hunkers down to ride out the coronavirus storm. The projects are continuing to progress, just more slowly because there are fewer staff members in the field right now.

The company has suffered from a very erratic share price throughout its tenure on the TSX-V. While this is typical of a prospector model, I want to see more clarity of communication when Aurion Resources explains its value proposition to the market. This seems less like shot-in-the-dark exploration, and more like pragmatic, logical exploration. While it’s still high-risk, I’m liking the straight talking Santarossa.

The share registry breaks down into the following: 14% for the management and board, just under 10% for gold mining giant, Kinross Gold Corporation, 6% for RBC Global Asset Management, 5% for Eric Sprott, 4% for Newmont Gold Corp., plus a number of well-known HNWI investors. For a company at this early a stage of exploration, the large market cap and heavily-institutional share registry is unusual. This appears to be partly down to the high-grade, near-surface nature of the deposits, in addition to the exciting nature of Norway as a mining jurisdiction.

What is the end game strategy? Santarossa is keeping his cards close to his chest and will make a decision about when to exit based on where the market it at the time. He is keen to avoid a company forcing his hand; he wants to stay in control.

What did you make of Mark Santarossa and Aurion Resources? I’m a fan of this story; are you? Comment below and we will get back to you with my thoughts.

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