Aurion Resources (AU) - Next Abitibi Gold District is Finland

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

We spoke to Santarossa a few months ago and he painted the picture of a promising gold explorer. The share price performance might not have matched up to his level of optimism, but do the business fundamentals of Aurion Resources look like they will provide long-term value for investors?

Matthew Gordon talks to Mark Santarossa, August 2020

The business strategy is quite conventional, and it hinges on generating or acquiring early-stage precious metal assets and advancing them via direct exploration and/or JVs. The focus for this gold explorer right now is on exploring its flagship Finland-based Risti and Launi Projects. In addition, Aurion Resources aims to advance JVs on projects along the shear zone with Kinross Gold, B2 Gold (51% moving to 70%), and Strategic Resources in Finland. These projects total a sizeable 80,000ha land package. It is a neat and tidy gold investment proposition, but it is not yet delivering value where it counts.

We've heard from many CEOs in unfamiliar mining jurisdictions who claim the geology is under-explored and highly-prospective. However, in the case of Finland, Aurion might have a point. Considering it only opened up to foreign investment in 1995, it has missed out on decades of exploration. This appears to be why Santarossa situated his company there in 2014. The strong mining code and industrial infrastructure certainly help matters too. He ranks it in the top 10 for mining investment (ranked "number 2" in 2019) and views it as the "Abitibi 2.0. "It is a major mineral belt... on the same scale" as the Abitibi... should we be getting excited yet? With words like this, why isn't the market responding?

The team didn't have a huge amount of Finland-specific experience before making the shift with Aurion. Mike Basha, the company's President and geologist, was a driving force behind this move, having worked in the mineral exploration industry for 29 years and having been instrumental in the discovery of the Hammerdown Gold deposit in Newfoundland. Finnish national, Matti Talikka, Aurion's CEO, was the real decision maker when it came to this transition. Is he a visionary, or is he actually going to hit targets and deliver pragmatic value to the market? Talk is cheap, and Tallikka will need to draw on his mining experience to start delivering results and show the market how they intend to move the company forward. Investors are likely to be even less forgiving if there is a second hiccup.

The company has around C$10M in the bank today as is "fairly well funded." The burn rate has slowed down because of COVID-19. A rig has just gone back on-site as the company tries to ramp up. It is targeting a new geophysical discovery along a 6km trend. A second rig should come in September to drill some more targets on the company's 100%-owned properties. We appreciate that the company tries to manage its money well, but with no money coming in from its JVs, the company will have to raise money in 2021. Santarossa will be hoping his exploration results give him some pulling power when he has to head to the market.

Most gold explorers, developers and producers are sitting pretty right now, even those that are quite lacklustre. Why is Aurion Resources struggling to get noticed? The company's drilling results for its second flagship project were a "technical successful," but the numbers were disappointing, and a lot of investors bailed out at the start of the year having seen enough.

In an attempt to add value and excitement to the market, much of the C$10M will be allocated to Risti, drilling on an extension from an already-known discovery. Based on 130 historical holes, the company is confident there is extremely high-grade, at-surface gold here. Let's hope so! Aurion Resources will need to hit big soon to get the market back interested, especially if it wants to make the most of this gold cycle.

Interestingly, for a story that has struggled to gain traction in the market, there is a large institutional holding within the company's share structure. It breaks down as:

• 14% for the management and board
• c. 10% for gold mining giant, Kinross Gold Corporation
• 6% for RBC Global Asset Management
• 5% for Eric Sprott
• 4% for Newmont Gold Corporation
• A number of well-known HNWI investors sitting on an undisclosed percentage

This is really rare for a company at this early a stage, but Santarossa thinks it represents the scale of the opportunity at hand. These institutions see the opportunity to get involved with a major emerging mining camp similar to the Abitibi.

Let's hope some good news is delivered through the drill bit in the next few months.

What did you make of Mark Santarossa and Aurion Resources?

Company Website: https://www.aurionresources.com/