A minority shareholder in a company does not have much power to influence its management and, therefore, sometimes their interests are disregarded. Should they need to protect their position, a minority shareholder can do so in a number of ways, eg, they may bring an unfair prejudice claim, pursue a derivative action or seek a winding-up petition. For a quick guide, see Practice Note: Protection of minority shareholders.
A minority shareholder in a private company generally has to accept the decisions of the directors and the majority shareholders. He does, however, have rights to information and protection from certain conduct. These are set out in the Companies Act. The articles of association of a company also confer further rights to a minority shareholder and it is usual for an investor taking a significant minority stake in a company to negotiate for specific rights (for instance, veto rights on any new issuance of shares) to be included in the articles.
The most important right under the Companies Act is the right to attend and vote at general meetings. A company is required to hold a general meeting annually and the directors are required to lay the company’s financial statements before the shareholders. The financial statements comprise a profit and loss account accompanied by a balance sheet. As they provide critical information about a company’s profits or losses, liquidity and debt leverage, a shareholder should try to understand them. It is commonly accepted that the inability of a company to lay its accounts before its shareholders within the prescribed timeframe without providing any explanation is a “red flag” that warrants shareholders to pay close attention to the company.
Yes it is very odd as if Auryn has done nothing with this property over the years they held it. Our ownership is in Auryn and not CDCH, So where is Auryn’s balance sheet, where is the money from our loan, I what to see where all the money went and why it was not transferred to CDCH. CDCH should have acquired Auryn and not just the title to the property. I vote that we do not accept the assignment without full accounting of transfer of everything, not just the title to the properties. Yes as minority shareholder we are still entitled to a full accounting from Auryn.
This eventually may well be what happens, but the expectation is premature until MDMN shareholders have their pro rata shares of CDCH in their individual accounts. This is a multi-step process where the first step, resolving MDMN’s debt to AURYN has been resolved and revealed in the MDMN’s updated Annual report. I expect the Q1 will show that AURYN has transferred the pro rata shares of CDCH to MDMN (the corporatation, not individual shareholder accounts). The next step has yet to been revealed. The eventual outcome will come together once CDCH consolidates it’s capital structure (RS) and undergoes a name change.
I totally disagree since we own at present Auryn stock and not CDCH. Believe me we have rights too, even if we are a minority holder in a private company!
The corporation had an equity interest in AURYN, a private company. Now that the debt has been resolved Medinah, the corporation, has to receive it’s pro rata share of CDCH stock which will allow it to do what is necessary to distribute CDCH shares to individual shareholder accounts.
Karl. I believe the company “tried” to do something with the property, failed to achieve a cash flow neutral/positive opportunity and have been stuck in a capital constrained limbo ever since. Any justification of this being a fair deal falls back on the “we had no other choice” narrative (a counter with flimsy substance). If Auryn had reached a CF positive scenario a lot of these problems would have been less obvious. As it stands, the lack of financial disclosure is an issue as any 2017 efforts/dilution remain a mystery. Yes, the Les situation was “remedied” but, IMHO, I would have rather committed more money/time/dilution in ensuring Les went to jail vs. handing it to Auryn. Both scenarios are indicating a zero for the investment but Les behind bars would have at least had a “Pyrrhic” victory attached to the ending.
I would also remind folks that the first capital call where AMC “graciously” accepted shares as collateral instead of a dilutive event. This was obviously reversed (shares were subsequently issued and our ownership decreased). One could argue that this was technically necessary before the private and public (MDMN, CDCH) entities were consolidated but I sure as sh*t would have preferred issuing shares when the capital call was initially issued vs. when prices were 90% lower. We are essentially in a death spiral situation but you’re lazy or stupid if you don’t think it’s a great deal. I’m almost starting to feel nostalgic.
Auryn really needs to find a non-equity financing alternative but they have no true incentives to advance these assets until they own even mooooore of the pie. Given how easy it’s been for them to shift the equity structure, I can’t see why they won’t continue down this path (with the support of some shareholders) UNLESS they care about the equity position friends and family made at the 7 cent level. There has been no evidence, thus far, that there’s any concern for the share price.
You may want to lookup minority shareholder rights in a Chilean SpA company and let me know what position Medinah was in last October to challenge the move. (a good move for mdmn shareholders, imo)
It is not that difficult to understand. . Say MDMN own 50% of Auryn and Auryn owns 100% of all the properties and CDCH owns nothing to make things simple and say those properties have a book valve of save $5M. Then Auryn invest $10 Million into the company of which 80% has been spent on capital improvements and has $2.0 M cash on hand, of which our ownership is reduce our to 25% to fund. Then Auryn agreeing to transfer the assets to third party CDCH . So what should be transferred its $10M asset, plus capital improvements of $8M and cash on Hand of $2.0 M or 15M in total on to the books of to the new company CDCH of which we now own 25 % . We should get 25% of the original $10 m plus 25% of the $8M capital in improvement Plus 25% of the cash on hand. The way this deal is structure it appear only the title in the properties have been transfer and not the contribution we made to the capital of AURYN…
This makes absolutely no sense at all except for Auryn as why would MDMN agree to this transfer without transferring the capital structure of Auryn. MDMN and CDCH are not being dealt fairly in giving up its ownship in Auryn. JMO
Does not make it right or fair and you as CEO should never have agreed to it . BE is right!!! I guess that is why they never shared the agreement as they promised. I never seen such a crock of BS.
You can say all you want but minority interests should always getting an accounting of their interest even in a private company. BTW I thought Auryn was a Italian SPA?
What is the way forward for this company and shareholders? Pointing fingers is unproductive and does not show the best way forward.
It is still possible things may work out for the long time shareholders here eventually. I still believe that AURYN is not ready to promote exploitation of the Caren adit veins and the rest of the properties until all 7B shares are consolidated. It will be necessary for a portion of the AS being free trading and some held in reserve for treasury shares. This was outlined by HR and me quite sometime ago. Shareholders need to know that until CDCH shares are free trading (and treasury shares are available to fund the mining), there is unlikely to be cash flow from exploitation. Shareholders expectations of much news before shares become unrestricted to promote and focus upon the activities on the mountain moving forward are unrealistic.
LOL it is not about what they can and can not do, it is all about what is fair an equitable. I guess I was wrong about you being CEO but I guess it also does matter since I was also wrong about Auryn being fair and equitable as well!
Trust me, you don’t want fair and equitable. Medinah dealt fraudulently with AURYN and its shareholders, in my opinion. The largest shareholder of Medinah bought shares and entered an agreement based on misrepresentation by Medinah’s appointed Chilean representative and by extension, its BOD.
You want fair and equitable? You’ll have nothing left. The property was never controlled by MDMN USA or its shareholders – all of whom were poorly served and represented by the previous parties.
Medinah never had any money, and for all appearances, was kept cash poor on purpose.
That is all water under the bridge at this point. It appears that everything will be consolidated into CDCH with MDMN shareholders getting shares of CDCH, CDCH being consolidated, and AURYN coming public through CDCH. This was all written and explained.
Kevin, what do you view “Auryn coming public through CDCH” to consist of? The properties are in CDCH already. Employees can change companies at will and managers are already listed on Cerro’s web page, obviously without salaries at this point. CDCH isn’t going to hire actual miners on the ground in Chile if there is an attempt at Caren production as Auryn has claimed there will be. So obviously that will be done with a contract mining company and the only thing that makes sense is to build on the work already done by Auryn potentially with Auryn being the working / mining arm of Cerro in Chile (many public mining companies that own properties make use of local contract mining companies for their labor just like they may rent much of their equipment from heavy equipment rental companies).
So beyond this, what else is there to “becoming public” in your view?
20/20 hindsight is wonderful! MDMN was broke and AURYN was not mining with a cash flow. I think we got that! AURYN is doing what it can to move forward on the property:
These shares have a one-year restriction on them. AURYN will work with its shareholders to convert their AURYN stock to CDCH stock.
As the majority owner of Cerro, we look forward to working with current Cerro management. This includes the following:
• Creating a management team and Board of Directors suitable for an exploration company intent on becoming a junior and major mining company.
• Launching a massive exploration program on the Altos de Lipangue mining district including entering JV agreements with companies that have the specific expertise necessary for exploring and mining the variety of targets we believe we have in the district.
• Focusing our resources on becoming an active gold producer by reopening the Fortuna gold mine and actively exploring and mining the gold veins found in the Larissa tunnel.
• Subject to regulatory approval, consolidating the capital structure, changing the name of the company, and moving to a higher exchange or tier on the OTC.
From what I see, AURYN has completely outlined what it intends to do to bring liquidity back and restore what value it can to shareholders. All shareholders will have to wait until shares are unrestricted to allow promotion and news to begin again. Not singling out BE when I say, venting is one thing, complaining post after post is something else. Posters should realize that no shareholders are pleased with the events that have transpired over the years. If AURYN cannot do what it has set out to do we all lose here, so why keep beating the same dead horse?
Nobody is pointing any fingers at you. If they are, it’s a poor read on the situation. Not sure original holders in MDMN/CDCH will ever realize any value by the time the mountain is monetized but it’s better than a 100% guarantee of a 100% loss. However, the sooner shareholders understand the realities of this investment, the better. IMO, viewing AMC as a white knight isn’t exactly accurate either but those are the cards we’ve been dealt.
If you don’t mind addressing one question that’s been bothering me ever since the MDMN financials came out: Why has JJ been able to exercise his remaining preferreds? There’s 100% chance he took those shares and sold them into the market. He seems to be the only individual who’s managed to make a dime in MDMN yet, in my mind, he’s as culpable as Les. Thanks in advance.
Easy. Unfortunately the horse I’ve been beating has been, for the most part, the right horse (or wrong depending on how you look at it). As events unfold (like the CDCH financials) I comment on them. When I disagree with statements made (we “got a great deal with AMC,” expect an IPO, there is pending news but it won’t be made until the shares are consolidated, etc, etc, etc) I express those views.
It’s becoming clear, even when I make a factual post (CDCH pro forma market cap = $50M) you feel the need to respond. I’m uncomfortably flattered but you’ll have some extra time on your hands to cut and paste previous posts or company PRs not worth the digital paper they’re printed on for many months. I’m going into hibernation until December.
I’ve never seen a share consolidation (reverse split) of 1000 to 1 but I guess that would be cool.
Maybe Auryn can pull off a JV. Common shareholders will be diluted (on the % ownership in the asset) into oblivion but, if we can negotiate some $$ up front there may be the possibility to monetize some of the smaller mines while the partner goes after the Alto, etc. This would be our best option by faaaar.
Maybe a stream could be negotiated but, in this market, it would be hard to envision.
Doc’s book on the MDMN saga: “Unicorns Without Wings” could make the NYTimes best seller list?
Easy. I’m relying on you to keep me informed until the end of the year.