Hi, everyone. I hope everyone is surviving in lockdown mode. I just received a renewal notice for the forum. Ads have dropped off a bit, but should still cover it for the next year.
Is it worth keeping the forum open?
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Yes, thanks.
I canât speak for anyone else, but lockdown mode has been great for me personally. Living in a vacation destination at the peak of the season with this going on is absolutely wonderful! I havenât been able to drive to so many destinations so quickly in 10 years! 
As for the forum, I think its greatest value at this point is for those âstuckholdersâ and still hopefuls to commiserate and do the support group thing. I still like to throw out some charts from time to time, but I donât think itâs worth it if someone has to put any substantial amount of time or money into keeping it going. Of course Baldy may be heartbroken to lose a treasured source of entertainment, but in a pinch he could probably find a forum or two on Ihub to poke at. 
Hope things are well with you.
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Iâm still here, if itâs possible Iâd like to see thing continue⌠(mainly to see Baldyâs sense of humor). Seriously I do enjoy the rundown of many on this board without all the negative bashing âThanksâ
HAPPY EASTER TO EVERYONE!!!
STAY HEALTHY AND SAFE 
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I suggest keeping the forum open for the discussion of other mining stocksâŚpotentially highlighting a new mining play if there is a popular demand for one. A dedicated discussion on Medinah thread should be discontinued indefinitely till the conversion takes place and/or Auryn comes back to live.
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I would like the forum to stay open.
Also, if you have any opinion or info on why the conversion has not taken place and/or when we can expect it, please share.
I also would like to see the forum stay open. Doc is still the man to keep the party going. How about George also, it is nice to hear his happy voice from time to time. Mike with his champagne and goat cheese still in the fridge awaiting the good news. Today is a great day because ⌠He has Risen!
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Yes keep it open! Especially with gold starting to show signs of a rally. We all need to remember to click on those ads to show the advertisers that there is some interest.
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I seldom write but follow regularly. Would miss this considerably if it were to close. Will continue to check the adds of interest too. Please stay with it!
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Iâm still here, too. I missed starting a new quarter, but maybe we should just let it run to the half. I adjusted the topic name.
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Gold ripping today 1725. Our value keeps going up, but would be nice to get some news with it.
Stay open, it will!
Stay safe, and healthy everyone.
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Thanks Wizard!
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Thanks for all your work keeping us informed, even though
Itâs going painfully slow!
Slow is not the right word,⌠they will wait to report on the next downturn in gold price. 5+ years.
TDK
PS - maybe in time to a lead up into retirement
A while back, the discussion on the TMP forum turned to whether or not the ADL has generated interest behind the scenes or not. The point was made that in this particular Medinah/AUMC scenario we probably wouldnât know either way. If you want to delve a little further into this topic you might convert the discussion into an analysis of the SUPPLY OF and DEMAND FOR that which exploration efforts to date suggest is present at the ADL Mining District.
Evidence to date suggests the presence of two relatively high-grade possibly near term gold production opportunities. Those would be the Caren Mine and the Fortuna Mine with the Caren Mine appearing to be the earliest gold production opportunity. At the Pegaso Nero location there is compelling evidence for a Cu-Mo porphyry system. At the LDM, the evidence suggests the existence of a âLacustrine sediment hosted stratabound copperâ (âmantoâ) type of potential deposit. These are typically Copper-silver deposits including the massive El Soldado deposit to the north of the ADL and the Lo Aguirre open pit deposit (mined out) to the ADLâs immediate south literally in the outskirts of Santiago, Chile at Pudahuel.
SUPPLY OF AND DEMAND FOR THESE TYPES OF DEPOSITS
- The mining industry is currently in the midst of a 32-year drought in new discoveries.
- The number of ounces of âMR/MRâ (Mineral Reserves and Mineral Resources) on the balance sheets of the majors is at a 32-year low.
- Ounces of MR/MR in the pipeline of a major or mid-tier miner is not just a good idea; it is existential. In order to survive, a producer has to replace that which it mines as these are depleting assets.
- Todayâs reality: the majors and mid-tiers are digging deeper and deeper in order to unearth lower and lower grade ore in more and more geopolitically risky areas.
- Many juniors are having a difficult time in raising money to explore and many majors have shut down their own exploration efforts in order to conserve cash.
- Statistics indicate that a junior explorer has about a 1-in-1,000 chance of making an economic discovery that makes it all of the way into production. Many analysts suggest it is closer to 1-in-5,000.
- The World Gold Council tells us that even for that lucky junior explorer with a discovery in hand it still takes over an average of 20 years from the commencement of exploration efforts until the commencement of production. That is an insane amount of time. So, what happens during that time period that takes so long? How long did it take Medinah to consolidate all of those individual mining concessions that comprise the ADL? About 20 years. More importantly, how much would it cost a major, in terms of time and money, to accomplish that same task if they started tomorrow morning if it were even possible? How long did it take Auryn to consolidate the surrounding concessions that they contributed into the pot? Another 4 years. How long did it take Auryn to drift the Larrissa Adit into the belly of the mountain in order to access the ore found in the 28- and 42-meter intersections? A couple of years. How long has it been since Auryn thought they were about to commence production only to find out that they had to fabricate three new âventilation/safetyâ raises (shafts) prior to getting the final, final, final production permitting? Another 3 years.
- The Covid-19 virus pandemic has resulted in the shut down of many mines worldwide.
- The response to the Covid-19 virus by Central Banks has resulted in massive amounts of monetary stimulus destined to debase the value of fiat currencies worldwide. The main beneficiary will be gold and perhaps to a lesser extent silver after these economies are allowed to get back on track.
- The drop in the price of oil should prop up margins for the gold producers. Getting into production quickly would be important in this regard as oil is not going to stay this low for very long in this inflation promoting setting. WTI recently dropped below $20 per barrel.
- New polymetallic discoveries on a district scale with near term high-grade gold production opportunities will be highly sought after. Based on the above 10 factors, it would be difficult to imagine a more fortuitous timing for commencing the production of very high-grade gold. The ideal scenario would be that the junior explorer with this type of discovery has access to the finances and technical expertise needed to go it alone. In the case of the Caren Mine, the Larrissa Adit (Adit #3) has already accessed the high-grade ore. I found the press release from management odd when they explained that the Larrissa Adit intentionally skirted the ore to the west and they periodically drilled horizontal holes to confirm the location and existence of the ore.
From the 1/30/17 press release:
âWe have spent the last two weeks advancing the adit toward the southeast keeping the vein on the east side of the adit. We have left the vein mostly unexposed so that we can define the boundaries of this section of the vein without having to extract, sort, and stockpile the mineralized sections of ore. Every several meters we have been taking samples and verifying that the vein is still on the east side of the adit. Sample results indicate the grades are HIGHER (emphasis added) than the test production runs which were sent to ENAMI.â
HIGHER than what grades? âOn January 13, 2017, AURYN received a liquidation from ENAMI for its first test shipment. ENAMI received the shipment of approximately 12.4 tons of ore on December 26, 2016. The ore returned grades of 11.5 gpt of gold, 31 gpt of silver, and 1.62% copper.â
This PR went on to say:
âThese initial shipments of ore were extracted from a 28- meter section of the vein between LC-3 going south toward LC-6. Although the results are slightly below the modeled grade of 15 gpt gold equivalent, they are economical (NOTE: The price of gold is up $532 per ounce since this time period i.e. $1,190 versus $1,712 and the price of oil is down about $30 per barrel) and very encouraging given our stage in the project development.
AURYN opens a 42m section of high grade vein in the Larissa Adit
Ore was extracted from the Larissa Adit until the LC-6 vicinity. At that point the vein disappeared and reappeared approximately 4m later. Itâs reappearance visually appeared to indicate an increased level of mineralization.â
From the point of view of interpreting whether or not this project is âshovel readyâ, clearly some very high-grade ore has already been accessed. In fact, production was scheduled to commence about three years ago until SERNAGEOMIN mandated the construction of three new âventilation/safetyâ raises. The most convincing way to CONFIRM the bona fides of a new discovery during a timeframe in which new discoveries are at a 31-year low is to put it into production.
From a timing point of view, Auryn management made a PR in December of 2018 citing that the three mandated âsafety/ventilationâ raises were nearing completion. If the checking off of these 3 raises was the last task needing completion prior to the granting of final production permitting, could âAUMCâ even make a press release as critical as the commence of gold production with only 5% of its shares in a free-trading status? Wouldnât the miniscule âfloatâ that AUMC currently has result in the share price rising to levels far beyond what an appropriate market cap (when multiplied by 70 million shares âoutstandingâ) could justify? Wouldnât Finra immediately accuse âAUMCâ of orchestrating a âpump and dumpâ.
Might the Medinah shareholders whose indirect individual ownership percentages in the ADL was still packaged in a train wreck of a corporate vehicle (âMDMNâ) retarding share price performance have a cause of action against management? Until proven otherwise, Iâm going to assume that the unrestricting, allocation and distribution of the âAUMCâ shares must PRECEDE any announcement of any imminent high-grade gold production at the Caren Mine. Might the distribution process itself represent the breaking of the logjam needed prior to going into production after all that December of 2018 PR was a while back and those raises should clearly be done by now and ready to be checked off?
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I agree with everything in your long and informative post, but not your conclusion or this last statement! I hope you are definitely proven otherwise!
My opinion only, unrestricting shares without valuations and progress on the Caren Veins (Larissa adit), the Fortuna, and/or the Pegaso Nero is disastrous. How low can we go? Unrestricting and allocating AUMC shares is strategically senseless without further drilling, exploration resulting in exploitation, or JVs assigned to the claim areas. I agree that timing is important, especially with POG at current levels. The last thing shareholders need is one or two PRs stating that the lifting of restrictions has occurred and will be distributed to owners of MDMN on some specified date. I would envision a smarter corporate strategy that would have AUMC request a trading halt pending news. Of course the news would be the unrestricting and allocation of all AUMC shares. On the same day these AUMC shares are allocated to individual accounts there would need to be some rather stupendous pre-market news regarding the Larissa adit and Fortuna, or positive news from Hochschild, and/or an additional JV partner for the ADL/Pegaso.
What would be the consequences of unrestricting 95% ownership of AUMC shares with the current share structure and price? We know there are only 5M in the âfloatâ (actually only 2.5M in the âpublic floatâ). AUMC has 100M shares authorized. Are the unassigned 30M âreserve sharesâ there to fund future operations once there is significant value proven, even if on a speculative basis? Treasury shares need to have value! This is not a trading stock and wonât be based on past speculation. There must be results and news that bring value.
There is nothing but very risky speculative value to the mountain at this time, and a very unhappy past history. There is the Hochschild option agreement. Is the LDM worth $7M for 51%, or will it be worth $30M for 60% of the LDM, only if the option is fully exercised? If all shares are unrestricted now without news, does anyone think AUMC will remain at current prices? What happens after an additional minimum of 16.3M free trading shares are added to the current 2.5M freely trading AUMC shares? Will this have an effect on price? Where will the share price go? Will AUMCâs 30M shares of âtreasury stockâ be worth $8.25M based on AUMCâs current market price of 0.275, or more like $12,180 of MDMNâs current trading price after conversion ($0.0007 x 0.558 x 30,000,000 = $11,718) if added to the float? Management knows how much progress is being made and makes decisions based on what can be publicly presented. I prefer to let management decide what is possible and fair to all shareholders at a time of their choosing. I have my shares in a sock drawer for a reason!
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Hi EZ,
You made some excellent points but I think you need to incorporate Rule 144 of the 1933 Securities Act into your analysis of the âAUMCâ share structure post-distribution of the shares. This rule protects small shareholders like you and I when a major distribution of shares occurs to âaffiliatesâ of an issuing corporation as is the case here.
As per Rule 144: âControl securities are those held by an affiliate of the issuing company. An affiliate is a person, such as an executive officer, a director or large shareholder, in a relationship of control with the issuer which means the power to direct the management and policies of the company in question, whether through the ownership of voting securities, by contract, or otherwise.â
The shares being distributed to us Medinah shareholders will indeed be âunrestrictedâ and free-trading. The shares being distributed to Maurizio and his wife as well as any other âaffiliatesâ, whether they be from their ownership of Medinah shares which is significant or from their ownership of Auryn Mining Chile (privateco) shares, will be technically be unrestricted and free trading but they will become âcontrol securitiesâ for the purpose of Rule 144.
This involves a separate level of âpseudo-restrictionâ. Maurizio and his wife will end up owning about 73% of the âAUMCâ shares under a âcontrol securitiesâ format. They can only sell small dribs and drabs on a quarterly basis as per a formula. THEY CAN ONLY SELL THESE AFTER FILING A FORM 144 DECLARING THEIR INTENT TO SELL SOME SECURITIES. We will have a very high level of visibility of 73% of the shares which can only be sold in quarterly dribs and drabs. In 40 years of investing in the junior explorers, Iâve never seen such a high ownership ratio by management. To say that their financial goals are aligned nicely with ours is an understatement. Remember that they bought a lot of Medinah shares at 100-times the current share price.
I donât think that you or I have ever seen a share structure like this. Furthermore, most of the Medinah and Cerro shares held by those of us refusing to take our losses need about a 10-bagger in order to just break even. My assumption is that if a shareholder hasnât sold yet then she or he is probably looking to break even or get a heck of a lot closer to breaking even. When the logjam is finally broken, I donât foresee much of a âsupplyâ of shares being sold into the market but this is just my guess. I think that an initial âair pocketâ might be experienced.
If cash is flowing from gold production, a management team that holds 73% of the shares in a âcontrol securitiesâ format might be expected to do two things. If the share price sucks, theyâll buy back and cancel ridiculously priced shares with any cash flow. This will prime the pump to make subsequent cash dividends more generous on a per share basis since there will be less shares outstanding. This is not to say that âAUMCââs outstanding share count will stay at 70 million shares ad infinitum.
The generosity of cash dividends will drive the share price to the correct level. If it didnât, you and I could simply take our cash dividends and buy more super cheap shares which would allow us to expose greater shareholdings to subsequent cash dividends. This could set up a positive feedback process for us.
Until a junior explorer becomes cash flow positive from production, SHAREHOLDER REWARDS are dictated by a very fickle market. Once positive cash flow commences, SHAREHOLDER REWARDS become more of a guarantee because âthe marketâ can be taken out of the equation. In fact, a market in a security with positive cash flow that refuses to provide the appropriate SHAREHOLDER REWARDS can be a good thing in the longer term.
Just like Rule 144 in the case of control securities, positive earnings also provides visibility. All you have to do is multiply the earnings per share by the appropriate EPS multiple to get a ballpark number as to where the share price should be trading. This is a heck of a lot easier than trying to estimate a value for something like the Caren Mine. The Caren or Fortuna mines are âworthâ whatever they can crank out in earnings over the course of the mine life.
This Medinah/AUMC deal is one of the most complex scenarios Iâve ever tried to get my arms around. At first glance, one would think that the share price of an issuer that is about to go from 5% of its shares in an âunrestrictedâ format to 100% of its shares in an âunrestrictedâ format was destined to fall out of bed. Yet one could make just the opposite argument that the share structure is actually going to be not only super-tight (because of everybody being down a 10-bagger plus Rule 144) but also open to a tremendous amount of visibility.
Many moons ago, management articulated that they would evaluate the potential to do share buy backs as well as issue cash dividends after the first quarter of production. This resonates a lot louder when you keep in mind that they hold âcontrol securitiesâ which do participate fully in cash dividend distributions. KEEP YOUR FOCUS ON THE DIFFERENTIAL BETWEEN MEDINAHâS ABILITY AND AUMCâS ABILITY TO PROVIDE SHAREHOLDER REWARDS. WHETHER YOU BUY MEDINAH OR AUMC SHARES YOUâRE BUYING TINY OWNERSHIP PERCENTAGES OF THE ADL MINING DISTRICT AND ITS ABILITY TO SUSTAIN CASH DIVIDEND DISTRIBUTIONS OR PERHAPS TO BE TAKEN OUT BY A SUITOR. MEDINAH TRADING AT ABOUT $0.0007 AND CURRENTLY NOT FILING FINANCIALS AND NOT IN COMPLIANCE WITH THE SECRETARY OF STATE OF NEVADA APPEARS TO SOME TO BE ON ITS DEATHBED. I DONâT BLAME PEOPLE FOR FEELING THAT WAY. BECAUSE OF THIS AND CONCERNS ABOUT 95% OF AUMC SHARES ABOUT TO BECOMING âUNRESTRICTEDâ MEDINAH IS TRADING AT A âPOTENTIAL DEATHBEDâ DISCOUNT PARTLY BECAUSE IT IS DIFFICULT TO ESTIMATE THE VALUE OF A 24% STAKE IN THE ADL. WHAT I AM SIMPLY DOING IS BUYING TINY PERCENTAGES OF THE ADL AT THIS âPOTENTIAL DEATHBEDâ DISCOUNTED PRICE BECAUSE I FEEL THAT THE ABILITY FOR MANAGEMENT TO PROVIDE âSHAREHOLDER REWARDSâ IS ABOUT TO MARKEDLY INCREASE.
IN ESSENCE:
- I feel that Medinahâs appearing to be on its corporate deathbed is a result of prudent money saving measures i.e. not filing expensive to file quarterlies and not staying in compliance with the SOS of Nevada.
- I feel that the share structure of âAUMCâ after the share distribution is actually going to be super-tight instead of super-bloated like most assume for very good reasons. This is because of Rule 144 and the fact that current Medinah and Cerro shareholders are down about a 10-bagger from breaking even.
- I feel that VISIBILITY whether it be due to Rule 144 or potential upcoming positive cash flow will be greatly enhanced AFTER MANY, MANY YEARS OF EXISTING IN AN INFORMATIONAL VACUUM.
- STAY SAFE AND GO WASH YOUR HANDS!
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DOC,
⌠Again you make some very valid points for consideration and discussion.
Over the years, I had nearly equal dollar amounts allocated to purchasing CDCH and MDMN shares and managed to acquire significantly large positions in each. IRA and ROTH accounts are not the type of accounts one would take advantage of tax loss selling, so I havenât been selling and acquiring shares on the cheap. Personally, Iâd need much better than a 10 bagger to come close to breaking even. I would assume there are other shareholders in similar situations that would like to be made whole.
Every shareholder is unique in the particular trading style that is employed and must consider investing as risk and financial position allows. Fidelity does not allow buying shares of âDark or Defunctâ companies. I do not have the choice to purchase additional shares of MDMN, even if I wanted to. Fortunately, there are what I consider much better speculative plays mentioned occasionally on the âOther Mining Stocksâ thread. Additionally, the other forum thread has the âsaferâ major producing and streaming companies in the mining sector that are discussed as alternatives to the more speculative plays. I have mentioned quite a few positions I favor the past couple of years. I have nothing against those who are able to average down buying MDMN or take advantage of tax loss selling. It is just not for me at this time with either MDMN or AUMC.
For brevity, I neglected to mention that there are only 16,274,200 MDMN shares that would eventually be converted to AUMC shares; sorry if that was somewhat misrepresented or misunderstood. The annual report for MDMN as of December 31, 2018 states there is an unknown number of beneficial shareholders that own their shares via the DTC. You are quite correct regarding Rule 144, as far as I understand. A relatively smaller and unspecified portion of those âbeneficial shareholdersâ would be apportioned to AURYN insiders from the time they were reportedly purchasing shares. Those MDMN shares owned by âbeneficial insidersâ would not be part of the AUMC float when they become unrestricted. Presumably those âinsider sharesâ of MDMN have not already been disposed of.
So in total, there would be somewhere in the neighborhood of 18.8 million free trading shares in the float, or maybe likely even fewer; Iâd estimate around 16.5 million as reasonable. With that said, releasing MDMNâs pro rata shares to AUMC without a âblockbuster good newsâ announcement would amount to another deathblow to the PPS of AUMC, IMO. It is up to the management of AUMC, at a time beneficial to all shareholders, to perform and release information that allows progress on mountain to continue and be PRâd. Fortunately, shareholders already have a good idea of what mineralization is contained within the ADL. This is not enough to assign a reasonable valuation based on industry standards. What I expect to see is AUMC allocating unrestricted shares to individual shareholder accounts not just on speculation, but on tangible results that add value.
Now where did you hide the tank? Never mind, I have my own bunker. 
Bank of America put a price target of $3000 on gold yesterday. Kinda interesting! 
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