The Mining Play

CDCH - Discussion


#600

It is convoluted. It depends on a couple of things regarding share structure of AURYN’s IPO. If they remain private (AURYN isn’t though), then it would simply be a “buyout” of Cerro shareholders using the 5% (5,000,000) shares of the 100M in AURYN’s private share structure. It would be a share-swap deal and AURYN would issue pro rata certificates for shares. This would vastly shortchange existing shareholders unless there was much more to it.

A dividend situation where CDCH shareholders remain in both companies, still holding CDCH shares and the AURYN dividend shares, is what I envision. I am just throwing out my ideas also. Thanks for pointing out that Cerro’s earlier posted information is quite imprecise and lacking in details. We’ll just have to await and see what the details of AURYN’s shareholder and AHC’s oral offer to provide a longer-term solution to the issue of the cash call. We won’t really know what occurs thereafter until AURYN IPOs and we can see all the details.

What I would anticipate is that Cerro does not change it’s share structure and just issues a dividend declaration pro rata of AURYN’s new IPO shares to current shareholders. AURYN maintains it’s 100M control share structure, but issues say 300,000,000 IPO free trading shares at an initial offering of 0.20 ($ 60 M total). Cerro shareholders would be issued initially a total dividend to be distributed of $3M (5% of the intial $60 M offering) worth of AURYN shares pro rata ( a reduction of 1 AURYN share for 20 or 25 CDCH shares in the form of an AURYN dividend). AURYN would have about $40M of working capital to further exploration, and fund exploitation.

Initially, this would be free trading AURYN stock for Cerro holders to do as they please, sell or hold. If/when AURYN is successful the shares would grow in value as AURYN slowly becomes profitable through production. The 5% control shares would be the shares still held by Cerro that have no liquid value, only minority voting power. Later, as the claims are proven up and developed by AURYN there will be incentive for a “buy out” of the 5% equity still held in AURYN.

Anything less than this arrangement would be paramount to Cerro shareholders only receiving $0.01 for each share of Cerro. Shareholders would have to wait for AURYN to grow in value and the benefit gained would primarily be liquidity. Eventually, once the 5% Control (read ownership) shares are on the Auction block for sale back to AURYN, or possibly a JV partner, a cash deal would be in order.

Also, after the dividend distribution, the Cerro shell would be available for a reverse merger of some kind using something like the the 1-for-15 split that was approved in May 2016, and/or debt financing to pursue other opportunities. One such possibility may be available with one or more of the MASGLAS projects. This would be a double bonus to existing shareholders. A closeout of all shares into AURYN stock alone at this time would be very pre-mature until such time AURYN has proven Market value.


#601

Wow! Thats a lot of complicated hypotheticals from a simple straight forward description of what the plan is

[quote=“cornhuskergold, post:599, topic:928”]
Once that occurs, it is the current intent of Cerro and Auryn to issue Auryn shares to the Cerro shareholders, in exchange for their Cerro shares."

I see it like this, I will own shares in a publicly traded company controlled by very intelligent wealthy mining experts. As they develop the company to enhance their wealth, I get to tag along ( if I choose to ) and reap the benefit as well.


#602

Seriously who would of thought otherwise?? :joy:


#603

I love the conviction behind this quote…and then the subsequent rambling posts that clearly show you have no idea on how this is actually going to play out…I agree with CHG it’s a fool’s errand to try to literalize any of the PRs coming from this company but the wording undeniably keeps the possibility open that CDCH will indeed be used as a shell for Auryn.

For those who understand the market, they also understand that the “reputation risk” is a non-factor. It really doesn’t matter how this plays out if you’re a CDCH shareholder. We either receive a dividend and the company is wound down. Or we become the public vehicle of Auryn. Neither scenario will impact the return profile.

However, I have to laugh when I read about people buying shares of MDMN when CDCH has such an massive advantage from a simple value arbitrage standpoint. Yes, CDCH has been the better relative investment over the past year (s) but that doesn’t say much given the essential race to the bottom. I can understand not adding to either but either MDMN has to go down another 50% or CDCH needs to go up 300% for the gap to narrow.


#604

… or all can go up 300% based on AURYN’s release of material information in the prospectus accompanying an IPO. :smiling_imp:
There will definitely be an impact on all 3 stocks when the offer price for AURYN’s IPO debuts.

I understand your disappointment and that you would have preferred a spinout as you had rather strongly suggested over the past year, but we will all be hoping for a successful and profitable path forward for all shareholders.

The mine has a plant, power, water and permits in place and the potential for the discovery of a further 200,000 ozs. It is being offered for US $ 5M, which Mr. Borquez has been negotiating to a US$ 500,000 down payment with subsequent payments coming out of the mine’s cashflow. We have had initial discussions with Mr. Menzies about having his investment group consider assisting with funding larger opportunities, and will be discussing the Andacollo opportunity in more detail in the near future.

This path was a non-factor considering the cash call and the financial condition of Cerro.


#605

Actually that is not mathematically feasible. We are dealing with simple ratios here. The ending OS shares for CDCH and MDMN aren’t set but we have ballpark numbers to work with. Let’s assume 2.7 billion shares for MDMN and 300M for CDCH (assumes some clawback, debt settlement etc.). There’s a real possibility that CDCH ends up with a number closer to 250M if Chapin/Les/etc give up their shares but we can use 300M to be conservative:

CDCH…300M shares @.004 = $1.2M Market Cap = $240,000 per 1% of AMC (or a $24M market cap for AMC)

MDMN…2.7B shares @.005 = $13.5M Market Cap= $482,000 per 1% of AMC (or a $48M market cap for AMC)

I have no idea what AMC should be valued at but $50M is pretty generous given how little we know. There are dozens of more advanced miners out there that can’t even support a $30M market cap given the challenging environment. There’s no doubt the Alto offers the POTENTIAL for a ton of upside but that’s only speculation until we start seeing concrete, consistent data supporting a WCD.

Either way, either MDMN has to go down 50% or CDCH has to double before there is parity. The gap used to be a lot larger but CDCH’s relative outperformance has narrowed it.


#606

Well, it’s possible the conversations here are all part of the solution that AURYN comes up with. The forum would be rather dull if differing ideas aren’t presented for consideration. I agree with your ratios, but not the premise you are using for arriving at your figures. The PPS determined by the market is not a static figure.

Let’s say for simplicity the 100M share structure is what AURYN stays with and debuts at $1 per share. This is just a hypothetical. Using your same figures, CDCH ends up worth 0.0167 ($5M/300M shares) and MDMN gets 0.009 ($25M/2.8B shares) per share. Of course, these aren’t the figures that are actually going to occur. What the market is valuing both of these stocks currently does not necessarily represent what occurs when a prospectus or registration statement outlines the current status and future prospects for AURYN. Add to that, Medinah’s eventual resolution of legal matters reducing uncertainity. Suppose the path of last resort (perhaps the easiest, but not best) occurs and AURYN uses the CDCH vehicle to become publicly trading. What premium should/could CDCH shareholders receive for use of “the shell” company with a new ticker assigned? No one here has been 100% in predicting any of the last few years.

It is not written in stone how AURYN becomes free-trading or what future factors will be revealed to determine market value of AURYN when it debuts. What happens when AURYN debuts is TBD … do we end up with 2 stocks or 3? Does all trading stop with a buyout (doubtful) of both stocks, or will there be a transition with dividends as CDCH and MDMN or absorbed into AURYN?


Medinah Minerals (MDMN) - 2017 Q3 General Discussion
#607

“Auryn intends to access the U.S. Capital Markets by filing an F-1 with
the U.S. Securities and Exchange Commission and be listed as a fully
reporting company. If its registration is accepted, it anticipates an
initial public offering of shares on the OTCQB tier of OTC Markets
sometime in the fourth quarter of 2017. Once that occurs, it is the
current intent of Cerro and Auryn to issue Auryn shares to the Cerro
shareholders, in exchange for their Cerro shares.”

This is the statement from the Cerro website which was updated since the new BOD took over. Why would we not accept this statement for what is says:

  1. a new public entity is approved

  2. Cerro shareholders receive new shares of the new public entity

  3. Cerro shareholders relinquish their existing shares.

I would assume that once the MDMN share structure is resolved, the above will apply to them as well.

We end up with shares in one public entity AMC, and no further interest in CDCH or MDMN.


#608

I agree 100%. As I and others have stated the ONLY thing that matters is what Auryn is/will be valued at. The current share price of CDCH and MDMN are only relevant if one is looking to ultimately receive a greater number of Auryn shares. However, my point is that those who are buying a share of CDCH today are receiving twice the amount of Auryn shares at a later date.

Now can Auryn support a $100M valuation? Today, I would say no way. Unless they are withholding a substantial amount of VERY impressive results/progressions, there is still a long road to achieving $100M. The market and MDMN/CDCH’s share prices aren’t as irrational or manipulated as many would like to assume. Could Auryn ultimately support a $500M valuation (before getting bought out)? It’s certainly possible if this turns out to be a WCD and they ramp production but any attempts to monetize the porphyries will require a JV with a major (which is great but also massively diluted).

However, even if $500M would be several years away in a best case scenario, we’re talking about 8.5 cents for CDCH and 5 cents for MDMN. A 20 and 10 bagger respectively from these levels isn’t a terrible risk/reward.

I empathize with anyone who thinks we will retake the old highs. Remember the people on this board who didn’t care about the massive upfront payment b/c we were getting more equity in Auryn in lieu?? That was the ultimate sea change in this investment.


#609

Because the final documentation has not been completed.
Where has AURYN released a detailed statement?
Did you read the preliminary Cerro shareholder Annual meeting announcement?
How much of that did everyone take at face value?

Cerro’s shareholders unanimously accepted the offer. AHC expects the due diligence to be completed and a contract signed on or before June 30, 2017.
Furthermore, Cerro appointed Italo Volante Gomez, Raul Del Solar, Kevin Tupper and Gary Goodin as directors, and accepted the resignations of Cerro’s present directors subject to completion of the contract with AHC.
http://aurynmining.com/summary-auryns-attendance-cdch-shareholder-meeting/

I have learned with Cerro and Medinah things can change.
I have yet to see a a new public entity that is AURYN/AHC.
What is the share structure and what will it be trading at?
I’ll believe what is printed when I have shares of AURYN in hand or in my account.:neutral_face:
We may have a paper contract before the 4th quarter, but until AURYN is public and trading we have what the market says we have.


#610

The Cerro website reflects the new BOD. It does not state that these positions are pending further due dilligence. I doubt that these professionals would go to the effort to make forward looking statements on Cerros behalf if they were not official officers of the company!

Until a statement to the contrary is presented, I will accept the public statement that has been presented on the company website.


#611

I hope you are right. As far as I know there has not been an announcement of the date new BOD members have officially taken on duties and accepted the resignations of the former BOD. So far as Cerro shareholders relinquishing their existing shares and receiving shares of the new public entity, when does this occur? This is simply stated as an outline to the steps going forward. Generally, at some future date, it is very likely to happen, but there will be a time frame within which it occurs. It is wise to keep in mind that the 2 year time frame for the cash call loan has relevance for both companies (CDCH & MDMN). I’m all for things transpiring for Cerro quicker than for Medinah, but I’ll wait to see all the official announcements from AURYN/AHC first.


#612

There is nothing about “due diligence.” But in the 2017 AGM meeting notes [1] it states re the new directors:

subject to approval of the transaction and the definitive documents for the $300,000 loan discussed above

So the new BOD is subject to the completion of the $300K loan agreement which includes the transfer of the preferred 1000:1 voting shares to Auryn. Obviously by posting the new BOD and associated information to their website Cerro considers this transaction as being complete (or pending). But they have not posted any official notice of closing / completion yet.

in Resolution 1 of the meeting notes it states:

Auryn Holding agrees to finalize prior to the June 15, 2017 deadline for the cash call of Auryn Mining or such later date as will be negotiated by Auryn Holding and Auryn Mining;

Obviously we are past June 15. In response to an inquiry on progress, Labertew recently mentioned via e-mail that the cash call date had been extended by Auryn to June 30 so everything could be finalized. So, on the basis of last week’s website update I would expect to hear some official notice of completion this week or soon thereafter from Auryn to follow up on their previous two recent Cerro updates.

CHG

=================

  1. http://cerrodorado.com/?p=533 - see Resolution 2 near the bottom.

#613

From Auryn’s website regarding the update on the CDCH annual meeting:

“Cerro’s shareholders unanimously accepted the offer. AHC expects the
due diligence to be completed and a contract signed on or before June
30, 2017.”


#614

Actually I have been assured that this is not the case.
As has already been inferred from all available information already posted by CHG (and me), the new BOD has not yet officially taken over in any capacity.
Signing of the new contract will be officially announced.
What is written there on the Cerro website was not approved by the soon to be directors. Cerro did recently obtain a new webmaster in order to post the most recent information, whose duties will soon be turned over to Kevin. I think we’ll hear about that in an official capacity when it happens, as well as official AURYN announcements.


#615

Thats a critical mistake. People are making investment decisions based on website information. They better quickly remove all that information or hope that it all works out!!!

Not very reassuring that they cannot even control their own website. Geeeez!!


#616

AHC expects the due diligence to be completed and a contract signed on or before June 30, 2017.


Service Temporarily Unavailable

News any day now?


#617

Auryn update on Cerro:

http://aurynmining.com/notifications/


#618

This may explain why the Cerro website has gone dark. They jumped the gun assuming the deal would be done by 6/30.


#619

New Deadline 7/21/17.

Any reason to be a little nervous that this may not happen and we’re going to be shareholders of a medical supply company in the future?