Yes, I would think the whole thing will be non-taxable as a reorganization under 26 USCA 368 - that’s the way it usually goes. Your cost basis in the old MDMN shares should carry over, so that if you sell your Auryn shares the excess of the sales price over your old basis will be the gain. And it seems that MDMN’s NOLs should carry over to Auryn, but not sure on that (NOLs can offset future income, rendering it non-taxable).
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When/if the MDMN shares are converted/distributed to AUMC shares where will I receive them now that my MDMN shares are not in my Charles Schwab account?
RTD,
This isn’t the 1st time Schwab has “disappeared” MDMN shares in this manner, but they should still be showing in your account. I don’t know how they are accounting for this on their books, but I see a poster with the moniker “Register” ran into this kind of situation back in August of 2021.
Long-time MDMN holder and lurker here.
I bought a bit more yesterday vis Schwab and had a couple of orders still open as of this morning, which were filled immediately upon market open. I then tried to place a couple more and it looks like the 15c2-11 change has caught up with MDMN on Schwab at least and they’re only allowing transactions to close a position.
I’m guessing this will mean a precipitous drop in price as the demand side evaporates.
Any word on the status of coming into compliance with reporting requirements?
Register, if you’re still around, can you report if things were resolved?
Anyone else dealing with this “anomaly” in a Schwab account? My Fidelity accounts still show a 0.0006 as a valuation even though they are not tradeable.
EZ
Schwab still shows my shares are there, but the value of each share is 0.000001.
BTW, Easy, my previous reading on the IRS website indicated you are correct that the new basis of shares given as a dividend is the price of the shares (AUMC) on the date of distribution. MDMN would be left as an empty shell.
Same here…
mrbubba,
The topic of a Net Operating Loss (NOL) Carryforward has been mentioned from time to over the years. Back in 2020 BB had mentioned the figure of $51M. This would be a huge asset allowing AUMC to deduct the losses from MDMN to future years’ profits applied to AUMC. With the very tight share structure continuing to be maintained in AUMC, this offset would be of great benefit to the value assigned to the PPS as production gets underway.
EZ
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That does not seem correct. The original cost basis has to be preserved. If what you stated above were to happen, you would still have the orginal cost basis in the worthless MDMN shares plus new extra cost basis in the AUMC shares. You could write off the entire cost basis in MDMN plus have new found cost basis. Doubt the IRS will let that happen. If they do, we should all welcome it because thats a very huge tax advantage for all of us.
Also, we are all just assuming MDMN will be worthless after the dividend/conversion. Remember that group that wanted the empty shell stock and ran up the share price? Hurricane Rick remembers, he was smart enough to unload some on that ride up.
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It depends on whether the distribution of AUMC shares is considered a taxable event. See IRS Publication 550.
About Publication 550, Investment Income and Expenses | Internal Revenue Service (irs.gov)
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That’s what corporate tax attorneys are for. Like everything else, we’ll just have to wait and see. That other group was apparently after more than an empty shell at the time, if I remember correctly. There has been a lot of behind the scene intrigues with this stock and far too much speculation. https://youtu.be/pafY6sZt0FE
EZ
HOW ARE THINGS GOING TO BE DIFFERENT AFTER MEDINAH PAYS OFF THEIR EXISTING DEBTS AND ALLOCATES AND DISTRIBUTES THEIR +/-16 MILLION SHARES OF “AUMC”?
In order to assess how things might be different, we might want to characterize how things have been for the last several years.
CHARACTERIZATION OF AURYN/MEDINAH OVER THE LAST SEVERAL YEARS:
-I would suggest that the share price of “AUMC” may have been the “victim” of Medinah’s past and Medinah’s ceasing to trade might bring some welcome relief. I’m going to assume that the tiny percentage of the investing public that has ever heard of Auryn or Medinah, might have a tendency to conflate the two.
-quite a few people know that, based on the relative number of shares outstanding (2.85 Billion for Medinah and only 70 million for Auryn) and Medinah’s 24% ownership in Auryn’s shares, Auryn’s share price should trade at about 200-times that of Medinah/”MDMN” after Medinah pays off its debts.
-despite this benchmark, over the last several years, Medinah’s share price has tended to trade well below that 200-to-1 theoretical metric. This might make sense due to Medinah’s variousl “historical issues” that Auryn does not share. It’s conceivable that the owners of Auryn shares may have been tempted to do some arbitrage and sell their Auryn shares and roll the cash over into the purchase of Medinah shares at levels much cheaper than that 200-to-1 threshold would dictate.
-the share structure of “AUMC” is/was so tight and because of this the “spread” in between the highest bid and lowest offer so wide, that investors interested in purchasing a stake in the ADL Mining District weren’t too interested in buying “AUMC” shares. Medinah’s superior liquidity, better “bang for the buck” from a ratio point of view, and smaller “spreads” would naturally tend to route buy orders away from “AUMC” and in the direction of “MDMN”. Investors are basically buying percentage ownership stakes in the ADL Mining District at the end of the day.
-since many knew that the proper share price ratio between “AUMC” and “MDMN” was about 200-to-1, the lack of buying interest for “AUMC” inadvertently may have put downward share price pressure on Medinah also, because of the 200-to-1 reality since the 2 were basically joined at the hip.
-many broker/dealers refused to take buy orders for “MDMN” because its share price was in the “triple zeros” i.e. $0.000X. This was due to it having 2.85 Billion shares issued and outstanding. This in turn was partially due to Les’s extracurricular “activities” of about a decade ago. It had NOTHING to do with the value of Medinah’s assets. Medinah still owned 24% of the entire ADL Mining District. THAT LOW OF A SHARE PRICE AND THAT MANY SHARES OUTSTANIDNG, AS WELL AS THE REFUSAL OF MANY BROKER/DEALERS TO TAKE MEDINAH BUY ORDERS, PROBABLY PRESENTED A “NON-STARTER” FOR MANY INVESTORS REGARDLESS OF THE MERITS OF THE ADL ASSETS. Note the DISCONNECT between perceived value of Medinah’s assets (24% of the ADL) and their share price.
-the resultant share price depression of Medinah’s share price, due to the above realities, in turn had a downward effect on Auryn’s share price because of that 200-to-1 reality. 200-times Medinah’s share price, which was put “in the toilet” due to this DISCONNECT, which had nothing to do with the merits of Medinah’s assets, artificially put Auryn’s share price into the same toilet due to the 200-to-1 reality. Medinah shared their DISCONNECT with Auryn even though Auryn only had 70 million shares outstanding (versus Medinah’s 2.85 Billion).
-with all of these confusing side issues in play, the actual merits of the mineral assets took a back seat. Why do any due diligence in a dust storm like this?
-Auryn’s share price getting punished because 1 of its shareholders, Medinah, had past issues, made no sense but Auryn’s credibility got tied to Medinah’s lack thereof. How could one be 100% sure that the old guard from Medinah really was gone from the scene?
-this toxic effect/”contagion” of Medinah could only be dealt with if Medinah were to somehow disappear and stop competing for “AUMC” buy orders.
-those of us well aware of these rather atypical realities have been buying ultra-cheap shares of Medinah for several years knowing that upon the allocation and distribution of Medinah’s 16+ million shares, ALL OF THESE VARIOUS MALADIES WERE GOING TO EVAPORATE AS WOULD THE “DISCONNECT”. We have been buying percentage interest stakes in the ADL Mining District as “soon to become Auryn shares”, trading at a DISCOUNT due to the DISCONNECT. We weren’t buying “Medinah” shares per se, although our brokerage accounts temporarily referenced them as “Medinah”. The “CONVERTIBILITY” option was the key to this “arbitrage”.
-one question that arises is how can investors in a company with 2.85 billion shares outstanding, all of a sudden become owners of a company with an ultra-tight share structure just because of its CONVERSION PRIVILEGE. In fact, the Auryn share structure was arguably “too tight”, which scared away investors due to the large “spreads” and resultant illiquidity.
-during these years, a lot of seeds have been planted in the minds of Auryn and Medinah shareholders, suggesting that the mineral assets are questionable and that Medinah and Auryn were actually “overvalued” despite Medinah having lost 99% of its market cap. These seeds were watered for many years on a regular basis. I believe that the single most important due diligence project for studying an investment in Medinah or Auryn TODAY would be to put these criticisms under a microscope in order to test their merits. I’d start with the assertion made dozens of times that Auryn was going to have to ship their ore 462 Km to the north to a town called Ovalle, Chile.
BUT WON’T THE ADDITION OF 16 MILLION NEW “AUMC” SHARES CAUSE SHARE PRICE DEPRESSION IN THE SHARES OF “AUMC”?
Common sense might suggest so, until a deep dive is performed on this enigma known as “Auryn/Medinah”. Here’s the issue, those “NEW” AUMC shares aren’t “NEW” at all. Even though they have been “parked” in a safe deposit box owned by Medinah in a “RESTRICTED FROM RESALE” fashion, these “about to become AUMC shares” have been trading as “MDMN” shares for a long time. Medinah is a simple “holding company”. It has no operations of its own. The reason that these 16 million “AUMC” shares have not already been allocated and distributed is because of the anticipation of a significant increase in the value of these AUMC shares and the ability of Medinah to pay off its existing debt via selling a lesser amount of its AUMC holdings which would allow each Medinah shareholder to obtain that many more AUMC shares during the allocation process. Medinah’s debt was interest free and there was no interest clock ticking which might force a quicker allocation process. Medinah had the luxury of allowing Auryn’s corporate developments to play out on their own timeframe.
The owners of these “about to become AUMC shares” have had plenty of liquidity to sell these shares (out of frustration usually) and many took the opportunity to do just that. So, how might we characterize the CURRENT MEDINAH SHAREHOLDERS that opted NOT to sell their shares to end their misery? What’s left are the shareholders that want to either get back to even or a lot closer to being even, prior to selling.
These shareholders are not likely to become sellers on the first uptick in the share price of Auryn shares. Their shares, for the most part, do not constitute the “SUPPLY” of readily sellable shares that are likely to be sold soon. Contrast this situation with a situation in which these 16 million shares had an average COST BASIS of 1% of where Auryn is trading at today and they just suddenly all became free-trading. This type of situation would indeed be something to be concerned about but just the opposite is the reality. AGAIN, THE “SUPPLY” OF SHARES LIKELY TO BE SOLD IN THE NEAR TERM IS NOT GOING UP BY 16 MILLION SHARES.
Many of those previous Medinah shareholders who are left at the time of the allocation/distribution, still need a “5-bagger” or a “10-bagger” in the share price of “AUMC”, to get back to even. Just like they weren’t sellers of “MDMN” shares before the allocation/distribution, they’re not likely to become sellers of their new “AUMC” shares UNTIL the share price of “AUMC” appreciates significantly. Their “COST BASIS” simply got transferred into AUMC shares and their broker/dealers will do the math needed to straighten out the tax implications. If an investor bought $10,000 worth of Medinah shares, his or her new COST BASIS PER SHARE will be that same $10,000 divided now by the number of “AUMC” shares they were allocated. They still need a “5-bagger” or a “10-bagger” in the AUMC share price to break even. The share structure of “AUMC” is still going to be “extremely tight” but just not painfully “ultra-tight” as in the past. The “spreads” between the highest bid and lowest offer should come into alignment with other corporations with extremely tight share structures. Auryn management is the largest shareholder in Medinah and they will obtain a large percentage of those 16 million shares and they will STAY “semi-restricted” because of Rule 144. Only the shares of the smaller Medinah shareholders, and not those of management, will become fully “free-trading”. Since “RESTRICTED” shares still earn cash dividends, you can see why Auryn management might be predisposed to distributing CASH DIVIDENDS as a means of rewarding shareholders for their loyalty.
If most of the past selling of “Medinah” shares was naturally due to FRUSTRATION levels, what’s going to happen when the DISCONNECT between the actual VALUE of the mineral assets and share prices will be RECONNECTED? The FRUSTRATION levels were associated with the Medinah issues and their share price plummeting by 99%. The past selling of Medinah shares was very understandable. The actual VALUE of the mineral assets were almost invisible to most because of all of the other issues. Medinah’s share price was seemingly on a one-way elevator ride straight to the basement NO MATTER WHAT POSITIVE DEVELOPMENTS WERE BEING MADE BY AURYN.
ON THE DAY AFTER OUR BROKERAGE STATEMENTS REFLECT OUR PAST OWNERSHIP OF “MDMN” SHARES AS NOW REFLECTING THE OWNERSHIP OF “AUMC” SHARES, WHAT EXACTLY IS GOING TO CHANGE? WHAT IS GOING TO BE GONE?
-gone will be the association with a corporation (Medinah) with a tainted past dating back about a decade. TIME did not erase all of those memories.
-gone will be the embarrassment from having 2.85 Billion shares outstanding.
-gone will the embarrassment of having many broker/dealers not being willing to take buy orders in your stock.
-gone will be the embarrassment of trading in the “triple 0’s”.
-gone will be the “guilt by association” that the Auryn share price has been suffering from.
-gone will be the huge “spreads” in the AUMC quotes driving away investors.
-gone will be the resultant ILLIQUIDITY once suffered by Auryn.
-gone will be the competitor with superior liquidity siphoning off buying interest in the ADL Mining District. All buying interest will now be funneled into the shares of Auryn.
-gone will be the distractions from focusing in on what really matters i.e. the bona fides of the mineral assets.
-if Auryn does complete their transition to becoming “fully reporting” to the SEC and starts filing audited financials, and starts trading on a more respectable “listing”, their appeal to institutional investors will be greatly enhanced as will their credibility.
-Auryn will gain approximately 3,400 new (previously Medinah) shareholders that they can market to. Auryn will now have finally developed an AUDIENCE for promotional purposes. A lot of the older Medinah shareholders have no idea who Auryn is or what developments have been made over the years.
-gone will be the “Expert Market” and the illiquidity and frustration that it brought during the transition.
OTHER ISSUES TO CONSIDER
-will Medinah’s “NET OPERATING LOSSES” or “TAX LOSS CARRYFORWARDS” (estimated to be over $40 million) be transferred to Auryn or will they remain with the Medinah shell representing value to some party.
THOUGHTS
As we stand today, June 13, 2024, we are still in the somewhat frustrating “Expert Market” phase of the transition. I don’t think most of us have a very good vision of how things are going to be different in the future. A mining corporation physically GOING INTO EXTREMELY HIGH-GRADE GOLD PRODUCTION represents a breakthrough few mining corporations will ever accomplish. Accomplishing this when the price of gold is trading at nearly all-time-highs, should make things very interesting in the future. There is still a lot of work to do but the environment is definitely going to change compared to what you folks have been through. Best of luck to all!
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BB,
What another book in the offing? 
Really, excellent walkthrough of the thinking of many investors.
I for one have significant paper losses due to many MDMN shares held in an IRA or ROTH with out the possibility of arbitraging a tax loss write off. I’ll hold this “'til *ELL freezes over!”
As long as some speculative random thoughts are allowed here, how about:
For more than a year Auryn has been proactively engaged in structuring a financing solution vital for the implementation of our processing plant. The arrangement is valued at up to $4 million with the first 10 months a grace period, in monthly payments over the next 5 years, no less. Not all of the other $3 million “loan” (equity arrangement ) structure are necessarily included, only if needed. It’s not clear just how this innovative loan and equity arrangement, worth up to a total of $4M can be repaid through dividends capped at $20M. Maybe it’s too simplistic, but I look at this entire structured financing as equivalent to a 4 Million dollar loan if, exercised in full, and capped at $20M in monthly preferred dividend installments over 5 years. This should be quite manageable to get this project off the ground.
I noted this remark from the Oct 24 update, “additional mining plan from Freiberg University, under the guidance of the esteemed Prof. Dr. Helmut Mischo. Prof. Mischo and his team of experts are currently reviewing an extensive array of data, not only from Fortuna but across the entire Altos de Lipangue mining district.” This part of MC’s team is an ambitious future plan of expanding the mining operation across the ADL and moving to a higher tier on the OTC, and possibly the Nasdaq. This leads me to believe they will be looking to pick up where they left off at the Larissa adit and the Las Dos Marias, tailoring the FF circuit to each deposit’s unique mineralogy as the project expands. Maybe another JV to include the Pegaso?
Taxwise, what if this distribution is structured as a SPINCO for MDMN instead of a dividend. Who really knows? Is that a possibility allowing the NOL to be captured as a development cost for Auryn? It will be interesting to see how this pans out.
EZ
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I sent mdmn mgt explaining shareholders are concerned with recent activity and could they explain what is happening.
This is what I got back fwiw
hi Daniel, an update will come soon, thanks,
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Could be in July update
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I would expect that if they have closed the financing deal they need to disclose it to the public - which I believe they would do immediately. These guys have a good record of doing what they say they will do, very impressive in today’s day and age.
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They don’t have to wait for quarterly update for change of status notification.
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Mister Breeciaboy,
You’ve testified in front of the US Congress about abusive short-selling.
I’ve been pondering the upcoming conversion of MDMN stock into AUMC stock, and the expected dissolution of Medinah Minerals, the holding company.
I wonder: Will any (all) naked short-sellers then be off the hook? Or…?
Will appreciate any thoughts about that, as well as this whole general topic of a possible short squeeze here, given AUMC’s extremely tight share structure…
Thank you.
– madmen
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Back in 2021 a number of shareholders received Medinah certs. Does anyone here have any ideas as to how we should handle these? Thank you, John
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I believe that you would mail them to the Transfer Agent and they would send you the new certificates ( i.e. MDMN to AURYN) when they are distibuted. This might entail a cost (?)
The easiest way is to give the certs to your broker. They will do this process for you & they keep the actual certs and record your shares on your account.
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I talked with the transfer agent a few weeks ago and was told they will not know how this will be handled until they are given specific instructions by Medinah about the distribution.
Also, I don’t think my broker will accept the certificates on this sub-sub penny stock.
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Hi Ktown. My favorite brother down in Alabama has MDMN certs also. He is miles from me, I live in MI. He said he doesn’t know what to do with them. So I called my broker to find out. I was told that he needs to take them to the Schwab headquarters in Nashville, TN (closer to him). He can open account there with his certs. His daughter lives in a nice suburb of Nashville so that should be easy for him.
Now he says that Nashville’s crime rate is extremely high and doesn’t want to go there. 
My big brother is sort of a big baby, but I love him anyways.
I think the certs can be taken to any physical Schwab office. I can’t imagine Nashville is the only one.
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