Ivan Bebek on Repeating
the 'Formula for Success'
with Auryn Resources

PEOPLE:

01

Let's start with people, who are the key individuals involved in Auryn? What's management's record? How much of the company do they own? Does the Auryn Resources management team possess the requisite skill sets to conduct the process and effectively solve key problems and answer all of the key questions in your exploration thesis, moving forward?

Ivan Bebek:

Myself and Shawn Wallace are the founding partners and together we assembled three companies, Auryn being the third. We started with Keegan Resources and found a five million ounce gold mine in Ghana. Shortly after, we acquired a gold mine, which also had a five million ounce gold resource, and we created a 10 million ounce company that's now producing, called Asanko Gold.

Our second company was Cayden Resources. We sold it to Agnico Eagle in 2014 for $205M, after drilling one hundred holes, even though there was no public resource on the asset.

When we finally assembled Auryn, we did so with the mindset of repeating the formula for success that we had with Cayden and Keegan. So, we acquired what is arguably the deepest technical team in the business, led by Michael Henrichsen and Dave Smithson as our chief technical operators. These two gentlemen were responsible for adding millions of ounces of gold to a number of Newmont's major deposits, and now they've assembled a team that includes world expert geophysicists, a geochemist, and a quaternary geologist to increase the probability of being able to do the same thing for us.

After establishing our team at Auryn, we continued on the back of Cayden's success and we built a super junior. We took a portfolio approach to avoid putting all our eggs in one basket and we acquired seven projects. Now, in that portfolio we have two flagship projects, Committee Bay in the Arctic and Sombrero in Peru, several mid-tier assets, and then two assets that could help to fund our exploration efforts if we can sell them for the right price (Homestake Ridge in northern British Columbia and Huilacollo in Peru).

Our plan with these projects is to explore them for world-class gold or gold-copper deposits, to then ultimately sell them individually or with the company as a whole. This is what we did with our previous companies at a tremendous premium from the initial share price.

PROPERTIES AND PROJECTS

02

Please tell us more about the properties and projects in general.

Ivan Bebek:

Committee Bay is a 300-kilometer-long greenstone belt –for reference, that’s approximately the distance from Boston to New York. Before we gained access to this project, about $100 million had been spent on it. The majority of that cash went into the ground and the rest went into infrastructure. It's essentially a turn-key operation, we just had to send up people, food and fuel each year.

In addition, over 67 promising holes had been drilled along this greenstone belt, including a deposit of 1.2 million ounces of 7 g/t Au called Three Bluffs. What we're looking for is discoveries that would be comparable to Amaruq, which was discovered by Agnico Eagle in 2011. We're looking for a five to ten million ounce deposit, and we believe there could be several of them along the belt.

Since we've had the project, we've spent about $40 million to date. A lot of that went into R&D, since 95% of the belt is covered in till with very few rocks outcropping, and we had to learn how to find gold under cover. In one of the areas where there’s outcropping, the Three Bluffs deposit exists, which is still open for expansion.

Our other flagship, the Sombrero project, is in Southern Peru. It is about 200 kilometers west of the Las Bambas mine, which sold for $7.3 billion in 2014. It was a development stage project, but there’s significant copper-moly-porphyry as you move south of Las Bambas. There's also a few majorly profitable skarn and porphyry deposits. The region has become known as a very favorable copper-porphyry skarn district.

After acquiring Sombrero, we further screened 8,000 square kilometers to identify the key claims that we would want to stake to build out our district land position. Now, we have over 100,000 hectares very near to where all the major deposits have been found. However – while it’s clear that a lot of people have covered the Los Bambas Belt with claims, nobody came to the Sombrero side of the belt. The reason behind this has to do with volcanic cover, which coats the rocks and prevents obvious outcropping mineralization as you would see on the east side of the belt, where all the major mines occur.

One thing that’s unique about Sombrero is that it has an erosional window. This window acts as a cross-section and gives us a look at what kind of mineralization could be found deep below surface. There has already been some surface sampling at this location, and we heard about it from a gentleman by the name of Miguel Cardozo. He was part of the team that discovered the Yanacocha gold deposit in Peru, a 60 million ounce epithermal deposit.

Cardozo took a series of samples at surface at Sombrero that ranged from a gram to five or six grams gold and from one percent to up to about 9% copper. Another great indication on the property is that the host rocks appear to be identical or at least parallel to what you could see at Las Bambas. For example, at Las Bambas the Ferrobamba limestone and major intrusive, and the contacts that host these deposits, are occurring on the skarn porphyry belt –and it seems they are all occurring at Sombrero within the same layer.

We’ve since done an abundance of sampling and we’ve found that the gold grades range from 0 up to 193 grams per ton. It is a tremendous gold budget and copper grades range from 0 up to 17% copper. As a whole, we're seeing a massive amount of gold and copper, not only in surface samples but also in trenches that have an average of 0.46% gold-copper equivalent and 0.3% over 100 plus meters in a couple areas.

Both Committee Bay and Sombrero rank as potential world-class discoveries. Committee Bay being pure gold and Sombrero being possibly copper-gold skarns and porphyry, but the infrastructure at Sombrero is spectacular. There's high-tension power lines on the property. There's a paved road to the property, and there's a town nearby, which is great in the event that a mine is discovered.

Our Homestake Ridge project in BC has a deposit with about 1.3 million ounces of 7.5 grams gold and silver equivalent. This project has seen about 80,000 meters of drilling over its lifetime and there's still a lot of room to expand it.

The Huilacollo project in Southern Peru has an oxide resource that's not 43 101, but there's an oxide deposit at the top of a hill that has a lot of expansion potential, and it's next to the lowest cost producing mine in the world. Pucamarca is owned and operated by Minsur, which is within toll milling distance in the event that one was to consider mining both Pucamarca and Huilacollo as one complex.

Our mandate is to find at least one five to 20 million ounce discoveries up north or maybe porphyry skarns in Peru that would make the world scale. In a perfect world, we mature the value of our mid-level assets, and they work for mid-tier or neighboring mining companies, and we carry on by using those funds to advance and explore our major projects.

The Huilacollo project in Southern Peru has an oxide resource that's not 43 101, but there's an oxide deposit at the top of a hill that has a lot of expansion potential, and it's next to the lowest cost producing mine in the world. Pucamarca is owned and operated by Minsur, which is within toll milling distance in the event that one was to consider mining both Pucamarca and Huilacollo as one complex.

Our mandate is to find at least one five to 20 million ounce discoveries up north or maybe porphyry skarns in Peru that would make the world scale. In a perfect world, we mature the value of our mid-level assets, and they work for mid-tier or neighboring mining companies, and we carry on by using those funds to advance and explore our major projects.

FINANCING

03

How about the financing side; does the company have the money to move forward with key efforts, and can the company easily acquire more money without hurting existing shareholders? What's the share structure, how's the liquidity?

Ivan Bebek:

We raised $7.3 million to finance our 2018 drilling programs at Committee Bay and Homestake Ridge, but because we used flow-through and charity flow-through mechanisms, our dilution price was $1.75 per share even though we're trading at $1.40 per share. At this point, we have enough to take us into June 2019 and we will be drill-ready with our Sombrero project in Peru with the current budget.

Goldcorp did maintain a pro rata percentage of 12.4% ownership in Auryn. They made an original invest of about $36 million in January of 2017. This was the largest investment by a major into a junior and it was also Goldcorp's largest investment into a junior during this low cycle of the market.

Currently, the company does not need to raise money and it's in a highly financeable state. As a team, we’ve raised over $600 million as needed for our companies so we have very little concern about raising capital to move our projects forward. In addition, a possible asset sale could create a self-funding mechanism for the company for the next four or five years.

CATALYSTS

04

Please tell us about the catalysts; what efforts are being made to get this company's story out to prospective investors? Are there any noteworthy endorsements? Who else is saying it's a good deal? Who else is involved and what catalysts should we be watching for that are going to move the stock?

Ivan Bebek:

The number one catalyst that any shareholder could look forward to is drill results. We have results coming back from our drill programs at Committee Bay and Homestake Ridge in fall of 2018. They could have the most impactful overnight reaction because they could mean a big shift in the value of a project if a discovery is made or if additional discoveries are made.

We will also be educating investors on the details of the prospective nature of the Sombrero project in Peru. We have about six different press releases that we anticipate distributing throughout the fall of 2018, and then potentially more, but there's a lot of activity that's taken place this summer with respect to sampling at both of our northern and southern projects, and all of those results are due to come out.

RISKS

05

How about risks? Are there any political risks that you face? How about how things should be handled with say a 50% drop in the gold price and the copper price? What sort of things are on your radar?

Ivan Bebek:

We look at the point of the cycle we're in and the exploration market, and we feel we're at the bottom 20% of where this market could go. We have mechanisms that we could put into place to cut back on our expenditures and to give more longevity to our working capital so that we wouldn't need to do a financing if we did see a drastic drop in the gold price.

Our projects in Canada are very high-grade, which will also insulate us from a dramatic drop in the gold price. High-grade projects generally survive better during lower gold prices.

EXPLORATION TIMELINE

06

Can you give us a high-level exploration timeline; everything that investors should be watching for going forward?

Ivan Bebek:

Drill results from Committee Bay may be the most exciting we've seen over the last three years, based on what we’re recognizing in the core.

The drill results from Homestake Ridge are based on very aggressive drilling last summer and a lot of learning. We feel that there's very low risk for additional ounces, meaning full gold ounces to be made.

On the back of these two programs, we are preparing to get a drill permit for our Sombrero project, which I'd argue is a lot lower risk than the projects in the north because of the amount of out-cropping mineralization that we see on the project. What investors should look forward to in the next six months is a plethora of drill results from two projects in the north, and the data leading up to the drill program that will take place in Peru in Q1 of next year.

STRATEGY

07

Lastly, what else should investors know about Auryn? What question should have been asked?

Ivan Bebek:

I think a great question would be what happens if both of your flagships, Committee Bay and Sombrero, both hit at the same time, would you guys consider spinning them out or butterflying the company? The other question I might ask would be about the tough markets; how has insider participation been over the last two years with the declining markets?

So firstly, if we hit at both Committee Bay and Sombrero, we would have a high degree of optionality to keep projects, sell projects, butterfly the company or spin projects. Being in two jurisdictions, northern Canada as well as Peru, allows us to eliminate the seasonality impact that only working in northern Canada has, and it also helps to ensure success. But if we make a discovery in Committee Bay, the value that potentially gets created would be enough that the asset could survive on its own, which would allow us to possibly drill ten or more months of the year to further advance it.

We would also consider potentially splitting the company into two entities, which would then give shareholders an extra shareholding in Peruvian assets, and the Canadian assets would be held in two different shares versus one share, as it is right now.

We have interested parties for all of our projects but some specifically like Canada and some specifically like Peru. Butterflying might create a more opportunistic scenario to potentially transact on one of them in the event that it becomes a major discovery.

As for insider participation in this tough market, I can only speak to what’s been going on within our company, and we've been pretty significant buyers. I've bought over $4 million worth of Auryn shares, $3 million of those dollars out of the open market and $1 million through financings we've done.

We have been extremely supportive in a public sense with our insider purchases and we feel that we really have to take advantage of this opportunity with the low market to make the world's next major gold or copper, or gold and copper discovery.

Company Press Releases

Auryn Closes $6 Million Bridge Loan

VANCOUVER, CANADA / ACCESSWIRE / September 13, 2019 / Auryn Resources Inc. (TSX:AUG), (NYSE American:AUG) ("Auryn" or the "Company") is pleased to announce that it has closed the previously announced bridge loan facility (the "Bridge Loan") for up to CAD $6 million. The first tranche of $3 m...

VANCOUVER, CANADA / ACCESSWIRE / September 6, 2019 / Auryn Resources Inc. (TSX:AUG)(NYSE AMERICAN:AUG) ("Auryn" or the "Company") is pleased to announce that it has arranged a bridge loan commitment (the "Bridge Loan") for up to CAD $6 million to fund the Company's near term corporate and wo...

VANCOUVER, BC / ACCESSWIRE / August 7, 2019 / Auryn Resources Inc. (TSX: AUG, NYSE American: AUG) ("Auryn" or the "Company") is pleased to announce that it has acquired a 100% interest, subject to certain historical NSR royalties, in the Sambalay and Salvador concessions which are adjacent t...

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