Tough call, but I might drop #2 down in the pecking order. I think it is critical for Auryn to get cash flow ASAP to help fund operations and avoid future cash calls. Of course a JV with a major would help that too, but after a presumed upfront payment, it may be a while before the next tranche (assuming a traditional milestone-based JV). I think if Auryn can use the funds to get production up to a more consistent and reliable level, then they can use those revenues to fund drilling the Pegaso Nero porphyry.
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Much appreciation for the commentary this morning MG!
(No Sheldon… this is not sarcasm!)
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Question:
What percentage ownership will a Major require when they buy into a mining venture with a non Major partner. I assume they would want at least 51%?
I admit to being pleasantly surprised to see a closer long-range alignment of AURYN/MASGLAS with Medinah. I had stated earlier, “The next several years will reveal if Medinah is allowed to share in the long term plans of AURYN and AURYN’s majority owned shareholders (i.e. MASGLAS).” With the signing of the announced contract there is an early indication that Medinah may survive until December 31, 2021. Given the uncertainties created by prior management that remain to be solved, this is a good first step in successfully salvaging value for Medinah shareholders. The announcement stated that Auryn plans to capitalize it’s (current?) debt by issuing a capital call to its shareholders. This does not appear to give us $7 million to spend on expansion, but needed to service current debt, possibly for the $10,000,000 line of credit secured from Banco Sabadell in July 2014. Perhaps more detail could be specified or clearly stated. I hope everyone noted:
• Auryn Holdings Corporation will cover the payment of approximately $2,000,000 that Medinah Minerals, Inc. owes to Auryn Mining Chile SpA.
• Medinah Minerals, Inc. will pledge its newly issued shares in Auryn Mining Chile SpA as collateral against the loan.
Do “newly issued shares” refer only to the 645,000 shares received for the 15% interest in NUOCO? If so, the collateral is assigning a value of $3.10 to AURYN shares in the future. If “newly issued shares” includes the 1,706,000 shares returned from Greg Chapin, then AURYN shares may only be valued at $0.85. Perhaps we’ll receive some clarification from Kevin on this. Kevin had noted in his Chile Trip report an intention to strengthen Medinah’s relationship with Auryn. Thankfully, it appears this objective was met.
Although we have not seen the actual contracts that transferred claim titles from MDMN and CDCH to AURYN it is now clear we did not receive an exclusion from sharing in development costs. This is somewhat disappointing considering the news release last year in May announcing:
MEDINAH Minerals, Inc. Announces Completion of Sales Agreement with AURYN Mining Chile, SpA.
AURYN assumes all rights, responsibilities, costs and liabilities of the entire Altos de Lipangue Project. All previous Option Agreement contracts and addendums between the parties have been cancelled.
http://www.otcmarkets.com/stock/MDMN/news/Medinah-Minerals--Inc--Announces-Completion-of-Sales-Agreement-with-AURYN-Mining-Chile--SpA-?id=131937&b=y
This announcement although accurate, is misleading (in retrospect) and came out several months after Okanadian filed it’s lawsuit against Medinah. Apparently, we had no leverage under the circumstances to have an exclusion from future costs in the contract that transferred claim titles in exchange for becoming shareholders in AURYN. Things continue evolving, but given the revelations of the past year, continuing good news is always welcome. Since Kevin came on board as CEO, although not perfect, communication has become much clearer and more reliable. It appears AURYN/MASGLAS is aligning it’s interests in support of Medinah and it’s shareholders at this time. Thank You Kevin!
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I wonder about the term “recently issued” also. It is quite possible it could apply to ALL of our Auryn stock, but that doesn’t mean the collateral can’t be revalued to extend further loans as the inherant value of the project grows. (Per the extension clause)
Collateral is usually worth way more than the loan it secures, I know my home mortgage is that way!
Just guessing, if I was Auryn.
@zotron , It has been indicated that a JV would involve only the open pitting of the copper mining so that would change how they might configure ownership sharing.
There were early indications of a possible JV regarding the PN from the Las Vegas meeting. I believe CHG gave the most thorough answer to such a question when reporting back from the informational meeting:
Continuing the discussion from October 1st, 2016 Informational Meeting News:
Actually the term used was “newly issued”. My assumption (I know - dangerous to assume anything) is that we will receive “new” shares for our contribution of capital, thereby not being diluted in our ownership interest. Any parties not meeting the cash call will retain their current shares, but be diluted in their ownership interest by virtue of the “new” share issuances and a higher total outstanding share count.
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Seashell, nice to see you posting and still tuned in. I too was a little puzzled at the awkward phrasing used:
Any shareholders unable to meet the capital call will retain their current shares but be diluted in their overall position.
I think what was trying to be alluded to in that statement is that there are 3.3 million shares in private hands, quite possibly Les, JJ et al. These “private” shareholders will maintain a position in AURYN via their current ownership status. But because their share of the cash call is proportionately small, most of their ownership will be maintained, with a small portion forfeited (reduction in shares) at some valuation. Unfortunately for CDCH owners, we have heard nothing from the management indicating they are making a similar loan arrangement with AURYN to what MDMN has inked in the way of a loan contract. This type of “clawback” assumedly (again dangerous to assume) would also occur to CDCH’s 5 million shares of AURYN, but the reduction would be small. As a CDCH share holder I would prefer CDCH’s management negotiate with AURYN. The last I had heard around New Years, CDCH management had not contacted AURYN directly to negotiate a solution to their financial difficulties.
Yes I’m still here - I have painfully maintained my position over the years!
I guess the good news here is that we will maintain our ownership interest and it appears the collateral will only apply to the newly issued shares.
Once we know how many shares are received for the $2 Million we should get some sense of a valuation of the shares we do own, as well as the valuation we received for the NUOCO sale.
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What some seem to get side tracked from in the above statement is that Medinah Minerals “is” part (27.5%) of AURYN Mining Chile. When someone says AURYN Mining Chile they are talking about a number of shareholders who all together make up AURYN Mining Chile and Medinah Minerals is one of those shareowners.
As a part owner of AURYN Medinah enjoys both the responsibilities and the benefits’ of that ownership. When AURYN Mining Chile spends $1.00 Medinah is responsible for contributing 27.5 cents toward that $1.00 spent.
The good news is that once AURYN Mining Chile begins enjoying net profits Medinah will enjoy a 27.5 cent dividend for every $1.00 of dividend AURYN Mining Chile issues to its shareholders.
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We are certainly blessed to now have Kevin looking after our interests and also to be associated with reputable miners such as Auryn and Masglas.
Thanks Kevin, for your incredible personal contributions, which I am confident has created an immense sea change for MDMN/CDCH shareholders.
Been a long time coming but I really don’t mind. Except for my only reservation that I earnestly want our forensic lawyers/accountants to retrieve our stolen shares from Les,Juan etc.
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Not sure if you can blood from a rock, but Lately I have learned to pray and bless those who make your life miserable. So I will do the same in the name of all shareholders of MDMN, including myself.
The recent news and what Kevin has secured, plus what we all know and think we have a good asset, The Mountain.
I have said this investment was a long term investment into my 60’s, I am 54. My timing on the buy side was the worst, but my sell is TBD.
Have a good Sunday, bless you all.
TDK
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Here are some things I take away from this:
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MDMN is responsible for its portion of costs incurred. It currently has debt of $2,000,000 related to these costs.
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If MDMN’s portion of the costs are $2,000,000 then total expenditures by Auryn are approx. $8,000,000 (2,000,000/.25 = $8,000,000). I know we own 27.5% but our ownership percentage has changed over time, and I am just using rough numbers. For $8,000,000 I would say Auryn has come along way, drilling, trenching, opening audits, etc. We have gained a lot of information and made great progress on understanding the mountain for $8,000,000. This assumes that the capital call will cover all of Auryn’s debt. If that is not the case then obviously they have spent more than the $8,000,000 that they are using the capital call for.
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I find it interesting the capital call is not for future expenditures. Where is that money coming from?
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The wording about newly issued shares is interesting. It almost sounds like Auryn is not expecting all of its shareholders to meet the capital call. If that is the case and certain shareholders are diluted, then MDMN’s ownership interest will increase as it will get it’s pro-rata portion of any ownership position lost by a non-contributing shareholder. (On further thought, this may not be true. In order to gain the ownership lost by non-contributing shareholder you may have to pay their portion of the capital call, which MDMN cannot do. I’m not sure how the Auryn partnership agreement addresses this issue.) On the flip side to this, if Les/JJ are required to return their ownership in Auryn to MDMN they may actually have less ownership percentage to give back if they don’t meet the capital call. Regardless, this move puts pressure on Les and JJ and could be very telling of their plans. If they pay the capital call we know they will defend their ownership in Auryn.
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Auryn Holdings who is loaning MDMN the money is a different entity than Auryn Mining. The terms of the loan are very favorable to MDMN.
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This is a great gesture by Auryn showing its support for MDNN. It makes me wonder if the original contract called for Auryn to cover our costs to a certain point through loans? If not, Auryn is going beyond and above what you would expect from any ordinary business relationship. Was our past management savvy enough to require them to cover our costs, or were they reckless enough to leave us wide open for dilution? I’m thinking they were reckless, and Auryn is going beyond and above.
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What’s going to happen with CDCH? Could this move put pressure on Patrick Day? I would love it if the offer to Patrick is; Auryn Holding will loan CDCH its portion of the capital call if you remove yourself as president and let Kevin take over. Let’s complete our version of “draining the swamp” by getting rid of Patrick.
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I know this is a silly question, but I will ask it anyway. Are we to assume that on or shortly after August 15th, this matter will be cleared up, and we will fully understand the results to our satisfaction? And if it hopefully is, where does that put us in terms of moving forward? Thanks for any speculation…
Thumbs up #7. I’d sink more money into cdch tomorrow if this happened, but not as it stands now…
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Perhaps the timing of this debt resolution suggests that they will be cash flow positive on the Caren very soon so that is where the cash is coming from going forward? It would certainly make sense but does seem like they are not quite there yet unless they have reached the bonanza vein in the production adit already and haven’t announced it yet.
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Hoping you’re right on this. Also the path of putting Kevin in the drivers seat onCDCH would do wonders for renewing confidence among sh and interested onlookers.
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I agree. The timing for the cash call is likely in preparation for filing an F-1 application. Eradicating all debt presently on the books would appear attractive on a prospectus. It will be quite positive if AURYN can show “clean” books with no debt and a positive cash flow from Caren deposits prior to being approved for an IPO.
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I don’t believe that we do not have a copy of the contract between Auryn and MDMN or did I miss something?
It’s not something shareholders should expect to have publicized…IMO.