Why don’t they just issue more shares its not that they have a bloated share count. Personally I prefer issuance of shares than R/S, time to stand up to these ass@@@les , they are just going to take your shares and the R/S will take the SP back down to pre split price .
right you are. so much for making quickie calcs on the way out the door.
$1.75M @ 15% for 3 years
the bigger point: the admittedly small revenue / sums involved still amount to something significant to cdch given its current low market cap and fairly decent capital structure - should it occur as presented in the release.
and it is another example of at least a proposed self-boot through small scale production - in this case the grade is not so high but tailings are trivial to access so that makes up for it to a large degree.
one can assume the proposal will pass. so cdch should be in production apparently “3 to 4” months after funding is received, or perhaps around August to September. The PAYBACK period is 10 months indicating the $1.5M in funding should be made back in profits in 10 mos. It’s not clear how long it would take to get through the 1.5M tonne resource but it looks like it is probably several years. Perhaps they can step up the tonnes per day over time.
CHG
I’m confused as to people’s problem with a reverse split. A reverse split doesn’t alter market cap or dilute shareholder equity. A share issuance would dilute shareholder equity. I assumed a reverse split is on the table due to the fact that a rights offering would reduce the share price to possibly under a penny (although it shouldn’t dilute shareholder equity in those who take part in the offering?)
You aren’t confused. They are.
I vote for no R/S. Almost every R/S I have witnessed ends up with the stock price going down much faster after the R/S than before a R/S. JMO
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Why in the hell would they do this?
I agree Karl. While I’m sure there examples, I have never experienced a positive outcome from any R/S.
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What’s the benefit to stockholders of a R/S? If the goal is to increase share price, why not just take whatever revenue we get from Auryn and buy back then retire the shares.
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Or issue dividends
I wouldn’t be surprised if MDMN proposes the same thing. RS can be seen as a negative when a company is simply trying to stay listed on an index or is preparing to do a “smoke and mirror raise at higher levels” or is already in a decelerating growth cycle. None of these are the case with CDCH and MDMN. CDCH, in particular, trades by appointment. There is no reason to assume that there’s going to be some sort of short agenda to knock the stock down after a RS.
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I seem to recall the terms of the Days 500,000 preferred shares were convertible to common only after CDCH reached 10cents. Could this be the reason for the reverse split?
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No. The conversion will now be $1.00. However, this may be why the Days have chosen to pursue other projects. If they relied on the 5% of AMC to drive CDCH North of 10 cents they could theoretically be zero’d out if a TO for 9.5 cents was offered. They are increasing the likelihood that they can get paid be expanding the portfolio. The problem with a tailings project, there really is no exploration upside, so you can’t assign a valuation metric (P/S, P/E) as the cash flow is not recurring beyond a couple years. I have no idea why our 30 year old transfer agents were given majority voting rights on CDCH but they are clearly being advised.
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Thanks John. I recall at the time that everyone was very concerned that JJ was still going to be able to control decisions at CDCH due to his shareholdings. I’m sure the Days were concerned as well and demanded controlling interest…
Seems like a pretty good guess. But I would press it farther with “being advised” by Auryn or Auryn associates. Who else could have suggested a project like this in Chile? Certainly not Quijanos.
For the moment, until there is more clarity I would look at it like a mini-AMC which AMC may eventually be interested in absorbing via TO. Notice they mention iron but the majority of the revenue is in gold. Another gold play. You believe the market is at a low. You get properties you can get put into early production. You get some cash flow. The market improves, you make money.
They don’t have exploration upside but they discuss their expansion upside in terms of nearby similar projects they are already in talks with. In the end the cash flow will be limited either by how fast they can deliver or their processing plant can accept their material.
It’s a micro project with potential more micro-projects. But it could be the way Auryn suggested to make them more appealing to a 10 cent+ TO in the future. It aligns them with Auryn’s approach with a small project hardly worth Auryn’s time, but if they can get it up and running and keep the front loader driver and the truck driver on the job it could add some incremental revenue/profit to Auryn with a TO which they will have plenty of use for. And Auryn probably is not concerned with much beyond 3 to 5 years. They plan on their own exit by then.
If this is not the case, and this is all just a wild South American adventure, then it seems much less appealing.
Also, they clearly have known they were going to do this for some time. They “reserved the right” to pursue other projects earlier, etc. It now aligns very rapid-fire just after Cerro exchanged Fortuna for AMC shares and just as MDMN is about to exchange their property for AMC shares. It seems at least a decent first guess, Auryn/Masglas is the force behind all these developments.
LP brought this deal to them. Two months ago he told two other shareholders I know that CDCH would be going this direction (if my recollection is correct.)
It’s now time to keep MDMN and CDCH on separate threads again. I don’t think MDMN will be getting into any more deals in Chile. I’m done here as soon as I see the right trade.
I’m with @TradeRich. Apologies to all I ever mentioned these stocks to. And shoot me if I ever invest in this market again.
I’m not going to second guess Les’ involvement but I would say that the BOD who’s “attached” to this deal are known entities. I have yet to see JJ/Les bring legitimate players to the table. AMC, after 20 years, seems to be the lone exception. So, before jumping to any conclusion, I’m not going to dismiss AMC’s advisement.
Candidly, based on what we know, the deal looks very average and I’m hoping there are other elements of why it’s being pursued. Maybe they are buying the BOD along with this near term cash generator? As long as the “equity kicker” translates into minimum dilution this deal COULD be a net positive.
Not sure how Les benefits from this but there’s no arguing that his involvement with any investment is a net negative. I would add that a guy like George Young wouldn’t typically associate himself with a scumbag like Les but I’ll follow up with an answer to that question
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I appreciate the level-headed approach John. Perhaps I over reacted initially, although considering who we’re dealing with you can’t really blame me.
I do see and agree with your take on the R/S. They CAN be beneficial when done by a competent management that has a genuine interest in creating a real revenue producing company. I have yet to see anything that inspires me to sway from the dark side, but I don’t really have much of a choice anyway.
Regardless, “never again” still stands.
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Here is what I think is happening. It’s opinion only. I have no knowledge about CDCH or this deal other than I know it was brought to them by LP.
I think this is the opportunity to pump up the stock and get it to $1 post RS. That will let the Days convert and get out. It also lets some people participate in the eventual 5% of AMC.
There’s no way CDCH can support that price in the short term. It can after AMC actually delivers cash flow to shareholders (at least 12-18 months out imo.) So in the short term I’m looking at this as an opportunity to profit.
I’ve been in too many of LP’s “moves” to not get out this time. I’ll be out at as it approaches $1+ (post RS) and won’t be buying back in after it comes back down to earth.
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so your saying there is hope to break even…LOL after 10 years break even is a god send right now