I realize that we Medinah/Cerro shareholders have become used to operating in the dark but the new revelations about the recent acquisitions of pedimentos and manifestaciones made by “AMC”, especially those 15 or so groups contiguous with the ADL Mining District, could POSSIBLY reveal information that we previously didn’t have access to including WHY management finds it prudent to operate in stealth mode. The new acquisitions that Mike Gold (thankfully) discovered via learning how to navigate Chile’s “boletin oficial de minera” website,
http://www.boletinoficialdemineria.cl/?date=07-05-2018&edition=42050
reveal two areas of extremely recent (May 7,10 and 14 of 2018) activity by “AMC”.
To the immediate north of the ADL Mining District there are a group of new AMC acquisitions most of them named “chancho de oro” (golden pig) in close proximity to Masglas’s Empressa Caballo property. To the South are the new acquisitions contiguous with the ADL. Each area involved the addition of about 3,500 hectares or a minimum of 7,000 in total that Mike was able to corroborate. This brings the landholdings at the ADL, IMO, to about 14,000 hectares (up 33% from the previous 10,500 ha figure). Mike Gold’s research efforts went back about 5 months so the current size of the ADL Mining District could be larger and future acquisitions certainly can’t be ruled out.
The question that arises might be what other websites might there be out there to tell shareholders more about what’s going on behind the scenes i.e. permits applied for, design plans submitted for any mineral "processing facilities, nondisclosure agreements entered into, etc. From what I understand, in Chile, a large amount of mining activities are a matter of public record.
THE POTENTIAL SIGNIFICANCE OF THESE NEW ACQUISITIONS
We Medinah/Cerro shareholders have been operating in the dark within what might be construed by some as an informational vacuum for quite some time now. IMO, this is not atypical at this stage of development of an aggressively expanding “district scale” mining project but it’s not very fun UNLESS you receive at least a periodic glimpse into reality and behind the scenes developments.
I personally sense that these recent developments have provided us with this glimpse but may (according to history anyways) have zero effect on the share price which is the only thing most of us concentrate on. The rewards in the long term will, IMO, probably be larger due to this secrecy policy but no doubt about it, the rewards tend to get postponed with the lack of the revelation of share price supporting positive news as it develops. For those of us who have already been through the stress-filled ringer from a delay of investment rewards point of view that’s difficult to accept. However, it is what it is.
If AMC management would have told us every single detail about progress within the Larrissa Adit or on the surface of the mountain and where the ore is trending I don’t think they could have scooped up another combined 7,000 hectares of strategically placed concessions at whatever price they paid or against whatever competition they faced in procuring them. Many have been postulating that nothing is going on behind the scenes or AMC would have communicated as much. Others postulated that management ran out of funds. I think the most important takeaways here with these new developments are manifold. Firstly, Mike’s actions in opening up the door a crack clearly indicates that the lack of news IN NO WAY SUGGESTS THAT NOTHING IS GOING ON BEHIND THE SCENES. Secondly, this secrecy can actually be very productive when it comes to acquiring neighboring concessions of strategic value. Thirdly, somebody not only has a vision but appears to have or perhaps has gained access to deep enough pockets to make it a reality. Fourthly, the size or potential ounces of gold equivalent threshold needed to attract the majors appears to have been met. Fifthly, if the dozen or so Masglas assets acquired indirectly through Inmet via First Quantum as well as the Caballo Empressa assets somehow become part of this overall ADL package then this overall play moves from a “district scale” play to a “regional play” that could be of significant importance to Chile itself.
If you have time to refamiliarize yourself with the process involved in acquiring mining concessions in Chile you might do so. The logistics of QUIETLY acquiring 7,000 hectares of new pedimentos and manifestaciones in areas with previous robust staking activity is actually somewhat remarkable. To me the implications are that there is some serious monetary and technical resources behind the scenes available to explore/develop both the new and older mining concessions. What rings in my ears is Maurizio’s recent citing of a planned “massive” exploration effort apparently to be executed by “specialists in the deposit types found at the ADL”.
I think we need to keep in mind that in this particular development, management still didn’t reveal anything to us and the cone of silence is still in place. Maybe it’s management’s point of view that in regards to matters of public record like this, which they DO want to keep secret for obvious reasons but can’t, it’s our job to do the digging as it’s right there in front of our noses. Mike forced the door open a crack by learning to navigate that website. CHG’s mapping of the location of about 20 of the 29 new acquisitions helped us localize them and perhaps indirectly gave us a hint at developments within the mountain. The assumption would be that management would tie down concessions with strategic value in the direction where they had positive previous results or where the developing geomodel suggested the location of high grade ore to be found.
The additions around the ADL were mainly to the south and west with a smaller addition to the north (the 200 ha suisui concessions). If you circumnavigate the mountain there are about 30 ridge crests that descend from the 2,000 meter in elevation plateau to the valley floors. To date the best studied one is probably the ridge crest extending from the plateau near the “Gordon breccia” area and Merlin 1 Vein southwards to the valley floor. This area is near the “South Road” and AMC’s surface sampling (not trenching due to the steepness) revealed a N to S oriented swath of 3.6 Km length and 1.2 Km width of high grade moly and copper including a tourmaline breccia and an intrusive breccia. Note that a distance of 3.6 Km down the downslope of a 2 Km in elevation plateau places you at a very low elevation probably amenable to year-round mining. This is in very close proximity to the “South Road”.
The “road cuts” made during the construction of the “South Road” offered a view of the bedrock under the surface soils similar to what trenching provides. This view revealed 2-plus kilometers of “veinlets and stockworks of veinlets” along the course of the road. When the roof of a magma chamber explodes and releases its metal-bearing hydrothermal fluids the micro-cracks caused by the explosion in the nearby rock often fill up with these hydrothermal fluids which are then allowed to cool and become these “veinlets and stockworks of veinlets”. The relict magma chamber and the area above its previous roof/carapace becomes what is referred to as a “porphyry” which is composed of these metal-bearing and closely spaced “veinlets and stockworks of veinlets”.
After coming up with the stellar results on the first ridge crest sampled, management noted at the time that they were going to work eastwards to sample the ridge crests along the 7 Km long swath of about a dozen intrusives that the hyperspectral satellite imaging survey already revealed. Sure enough, several of the newly acquired concessions occur in the area of the next two ridge crests towards the east. There is no guarantee but perhaps similar positive findings were found on those two ridge crests (also within that same 7 Km swath of surface alteration) which led to the desire to tie down those concessions. Recall that it is the hydrothermal fluids coming out of magma chambers that induced that 7 Km of surface alteration and it is the explosive release of those hydrothermal fluids that causes the micro-cracks which fill up with mineralized fluids to form these porphyritic “veinlets and stockworks of veinlets”. Since these magma chambers are gigantic, it might stand to reason that surface sampling results might be similar along the 7 Km swath of surface alteration.
One point I think we need to keep in mind is that as the amount of information contained within the GIS database (many layers of all historical information put into an easily retrievable computerized format) grows and the geomodel becomes more defined the more strategic might be the new mineral concessions being acquired. By having access to the historical GIS database and the knowledge of what is being found within the mountain management has an ECONOMIC ADVANTAGE over competitive miners and acquiring new concessions is a way to lever that advantage. One might appreciate the levels of of secrecy needed to most effectively lever this advantage. The massive number of these new acquisitions might explain to frustrated shareholders the need for secrecy as well as the positive results attainable while operating in a stealth mode.
BUT IS THERE ANY GUARANTEE THAT MEDINAH SHAREHOLDERS WILL BENEFIT FROM THESE 3,500 HECTARES OF NEW CONCESSIONS AT THE ADL, AFTER ALL THEY WERE MADE IN THE NAME OF “AMC”?
The short answer is no, no “guarantee”, but let’s walk through some logic. First of all, if the Cerro transaction hasn’t officially “closed” yet then Medinah continues to hold a 25.3% stake in “AMC” (this includes Medinah’s 10% ownership in Cerro and their 5% stake in AMC) and therefore one might suppose that Medinah will own a similar 25.3% stake in the new “AMC” acquisitions. They would probably be on the hook for their perecentage of the acquisition costs. Similarly, as 5% owner of “AMC” the “old Cerro” would also theoretically participate in these new acquisitions if the transaction hasn’t closed. So if the Cerro purchase transaction hadn’t closed then Medinah shareholders probably would be sitting just fine as benefitting by those new concessions.
If on the other hand, the Cerro purchase agreement had already closed and if the “AMC” private entity survived this purchase transaction, which they must have if they were out making new acquisitions AFTER the closing, then Medinah shareholders would be sitting pretty as far as these acquisitions. (I am not a lawyer so tread lightly on these suppositions). I do recall from prior contract law studies (admittedly written on papyrus) that in order for there to be a valid contract the “consideration” being offered by the purchaser, in this case Cerro which is tendering shares, must be “in good form”. I don’t think restricted shares which may have complications in removing the restrictive legends, are considered “in good form”. My guess is that the official closing of the transaction would be tied to the removal of the restrictive legends but that’s only a guess. In studying Cerro’s recent financials, it appears that Cerro DID NOT own the ADL Mining District’s original 10,500 hectare as late as at the end of Q 1 of 2018. Their assets only totalled $570,000 at year end 2017. Perhaps TMP forum member “Jak” could weigh in on this matter. I’ve noticed that the new acquisitions being made in the name of “AMC” induced a little anxiety amongst Medinah shareholders but I don’t think we have anything to worry about for a variety of reasons.
WHY THE “NEW CERRO” MAY NOT HAVE BEEN IN A POSITION TO PURCHASE THESE NEW CONCESSIONS IN ITS OWN NAME AND THEREFORE THE ACQUISITION WAS MADE IN THE NAME OF “AMC” PERHAPS FOR CONVENIENCE
- The “New Cerro” is not funded currently and their outstanding share count is bumping up against the authorized count. Why not continue to house these assets within “AMC”? Of interest is that the nominal owner of the new concessions, both the north and south groupings, IS NOT MASGLAS WHICH OWNS THE EMPRESSA CABALLO TO THE NORTH. Instead it was “AMC”. I would have thought that the northern block might have been purchased in Masglas’s name. Might this portend to a future amalgamation of all of these concessions under one roof? Who knows?
- Furthermore, Patricia del Carmen Opazo, the “Mining Claims Advisor” for AMC is now a member of the “senior staff” of the management team of the “NewCerro”.
As noted, on the recent Cerro financials dated year end of 2017 it appeared to me that the value of the ADL mining assets were NOT reflected as being “owned” by Cerro yet. Cerro’s Chilean mining assets were valued at a mere $570,000. I would assume that the “historical expenditures” on the overall ADL Mining District over the years is north of $30 million. To my knowledge, both the IASB and the IFRS suggest valuing mineral deposits at “historical expenditures” until a bankable feasibility study is available. (I am not a professional accountant) Cerro management also stated that in Q-1 of 2018 there were no significant changes to the year end filings through April 26 of 2018 which suggests to me that the transaction didn’t officially “close” in Q-1 of 2018 either.
It appears to me that there might be a clause within the sales contract that states that legal ownership of the mining assets (probably the original 10,500 ha and any new additions within “X” Km of the perimeter of that block) will change hands when the “consideration” paid by Cerro i.e. restricted shares, become free trading or “in good form”. This is only a guess that appears to make sense. Otherwise you’d have a mess if there were some type of hiccup in removing those restrictive legends on the new Cerro shares. (I don’t anticipate this in any way, shape or form.)
Until final “closing” (if indeed it hasn’t occurred yet) it would make sense that new acquisitions be made by and held by “AMC”. The recent acquisitions up near the Empressa Caballo mine in Colliguay might be a different matter but don’t be surprised if some major miner insists on the consolidation of those Colliguay assets into the other ADL package of assets. If not, any processing plant at the ADL might be able to process any ore from the Empressa Caballo deposit on a tolling basis.
This might explain both why the Cerro financials say what they do and why “AMC” currently appears as the nominal owner of the new concessions probably FBO “New Cerro” upon official closure of the deal. AMC and its non-Cerro co-owners i.e. Medinah and Maurizio and friends need to cover their butts in case of a hiccup within the Cerro acquisition transaction. Of course this is pretty much a moot point with Maurizio and friends controlling all of these entities but lawyers will be lawyers and fiduciary duties owed to shareholders are what they are even if a conflict of interest appears.
Perhaps we should prepare ourselves now for any JV agreements Cerro enters into after the deal officially “closes” (if it hasn’t already). As Maurizio outlined at the information meeting, any JVs will probably be set up as a series of OPTIONS. A major miner may be given the OPTION to fulfill a work commitment costing “X” amount of money in order to earn “Y” percent of the action on perhaps the Pegaso Nero or the LDM stratabound deposit. Phase 2 might include a second OPTION to earn another “Y” percent of the action by fulfilling a work commitment of perhaps 1.3"X" amount of money. Another work commitment as well as the production of a bankable feasibility study might be part of any phase 3 deal.
IMO, as the owner of somewhere around 600 million Medinah shares (which IMO is accurate and many owned by his personal friends) Maurizio is not about to screw over friends and family in regards to any of these activities. They bought “Medinah” shares and a lot of them. Not that it’s legally binding any longer, the original agreement between Medinah and AMC during the $100 million option period, did indeed have a clause that stated that any concessions acquired by AMC within 5 Km of the perimeter of the Medinah concession block would be thrown into the package and be subject to the deal. We’re now in the midst of another “holding period” this time associated with SEC rule (# 144) pertaining to Cerro, a non-fully reporting issuer paying restricted shares for an asset. The holding period is 12 months by law. If they happened to be fully reporting (which, IMO, would have been insane under the circumstances) then the restriction period would have been 6 months.
The question arises as to did the “value” of Medinah go up recently when they (probably) transitioned from being a 25.3% owner of 10,500 hectares to being a 25.3% owner of 14,000 hectares. I guess it would depend on what was perceived to be contained in that new hectarage. The more important point might be that management probably wouldn’t be on an acquisition binge like this unless they already had lined up the financial wherewithal to explore and develop these claims.
Mike and CHG’s very informative posts on TMP were numbers 263, 264, 266 and 269 dated May 14 and 15. If you have time to familiarize yourself with the “boletin…” website it might be well worth your while. You’ll notice most of the acquiring of concessions activity occurring in the Atacama Desert and in The Andes. When you see how AMC dominates the acquiring of mineral concessions in Region 13 (Metropolitan Santiago) you get a reminder of the infrastructural advantages of the ADL Mining District.
