The Mining Play

Cerro/Medinah/Auryn- 2018 Q2 General Discussion ⛰


#409

Hi davis20,

Masglas has their fingers into about 22 different mineral projects right now. They own 100% of 14 different projects and have the ability to earn 100% of three others by making cash payments, honoring work commitments and extending royalties. They either control, manage or are significant shareholders in another 5 discoveries. They own about 70% of the ADL Mining District. Medinah owns about 25% and the original Cerro shareholdes own about 5%. Since Masglas is Medinah’s largest shareholder then that 70% figure gets boosted up a notch. Clearly “AMC” (the majority owner being Masglas) is also still in acquisition mode as they recently added (as “AMC”) another 7,000 hectares half around the ADL and half slightly north of it near Masglas’s Empressa Caballo deposit.

https://www.mccarthy.ca/en/insights/blogs/mining-prospects/chile-releases-new-preliminary-study-its-cobalt-potential-gearing-feed-electric-car-industry

Somebody on the TMP asked me the other day about cobalt production in Chile. Here’s the best recent article I’ve been able to find on the subject. I noticed that Masglas now lists cobalt as one of the metals they are going after in their portfolio of properties. The demand for cobalt is expected to rise by 34% per year until 2026 because of electric vehicles (EVs). Copper, cobalt, lithium, silver and nickel are the “new world hot commodities” (mainly associated with EVs) while platinum which is used primarily for diesel engine catalytic converters is expected to fade away in demand.

Silver is starting to get more recognition after California recently mandated that all new construction from 2020 on must have solar panels which use a lot of silver in paste form within the photovoltaic cells (PVCs).


#410

DOC,
Both MASGLAS and AURYN are private companies.
We “know” AHC is the financing arm behind AURYN.
Are you saying that AHC is also the financing arm behind MASGLAS?
Does this make AURYN and MASGLAS subsidiaries of AHC?
To whom will CDCH (and MDMN) be in debt to for continuing operations until there is a positive cash flow? There is no contract transparency at present.

Does this completely refute what I was proposing as a possibility of how AURYN intends to move forward to the eventual benefit of all current shareholders? Is there another possibility where AURYN/MASGLAS list in the Chile or Peru public exchanges and CDCH (and MDMN) shareholders benefit? Clearly, anyway you look at it there will be no quick monetization of MDMN or CDCH. Look how long it took Fruita del Norte to move forward after the Aurelian fiasco.


#411

I believe Doc’s statement simply restates what Masglas states on their About Us web page:

MASGLAS has several JV mining options and is the controlling owner of AURYN Mining Chile SpA. AURYN Mining Chile SpA owns 95% of the public company Cerro Dorado, Inc. (CDCH), whose sole asset is the prospective Alto de Lipangue Mining district.

Since Masglas is the controlling owner of AMC and AMC owns 95% of Cerro which owns 100% of the ADL claims, Masglas is the controlling entity over the ADL. Further Maurizio Cordova is the founder of MASGLAS Limited and AURYN Mining Chile (AMC) [1]. Maruizio is also CEO of MASGLAS and Cerro. [2]

AHC, on the other hand, has been the source of the loans to Medinah and Cerro to meet their cash call obligations to AMC, which loans were subsequently extinguished. The relationship between AHC and Masglas is unknown as far as I know. But simply from the name “Auryn Holdings” it seems pretty clear the relationship between all three companies is close.

Note that Cerro’s annual filing states:

The Company issued 38,380,936 shares of common stock to an entity in exchange for providing a loan related to the Company’s retention of its 5% interest in Auryn Mining Chile, SpA [3]

The “entity” was not AMC, it was AHC. So those 38M shares went to AHC. Making loans to juniors with low share prices and converting debt to significant equity positions later is a proven tactic. It was probably some subset of Masglas ownership or someone closely associated who wanted in on the action but didn’t make it in on the original Masglas, Medinah, Cerro, LDMC, etc. arrangements.

Also note that it is AHC that received the 500,000 preferred shares with 1000:1 voting rights. This was approved in June 2017 but not completed until Q1 2018 after or simultaneous with the sale of the ADL claims raised the outstanding CDCH shares to 7B. These overwhelmed the voting rights of those preferred shares. Note that the preferred shares were not delivered to AHC until the sale of the claims from AMC to Cerro in exchange for 6,650,000,000 CDCH shares, both in Q1 2018. Thus AMC never lost control of the ADL claims to AHC and Masglas by extension never lost control being the controlling owner of AMC. All highly coordinated (and rather confusing) to be sure.

In any future consolidation, that is, reduction of shares outstanding, it’s worth watching to see what happens with those preferred shares. They are sort of out there hiding behind the fig leaves for the moment.

CHG

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

  1. https://cerrodorado.com/directors/

  2. See Cerro’s webpage and for Masglas several sources, for example, http://www.reveloresources.com/content/696/RVL_NR16_LosAzules_2017-11-27_Final.pdf

  3. https://backend.otcmarkets.com/otcapi/company/financial-report/190138/content, page 4.


#412

Thanks. I agree fully with what you stated and it does raise as many questions as it answers.

The way I read that statement “controlling owner” means that the “management” in MASGLAS is essentially the same as the management of AURYN. To go a step further, AURYN is the controlling management in CDCH and MDMN. No doubt there is a close relationship between all four entities, but it is the corporate structure that will determine the next step in bringing MDMN into CDCH and eventually giving CDCH a direct ownership in the underlying asset, i.e. AURYN and exploitation of the claims held in the name of Cerro. What happens after that event and after all shares become free trading is the big question. How will Cerro/AURYN move forward to gain enough capital to fund mining and exploring the Larissa Adit (Caren) and Fortuna claims area?

AURYN Mining Chile SpA (AURYN) is a private company that owns and controls over 10,500 hectares of mining claims in the Altos de Lipangue mining district.

As Maurizio said at the end of the year, “… we now finally turn the page on the old and look forward to a very bright future for those who have invested in the Altos de Lipangue mining district.” It is well worth watching to see how CDCH states it’s Q1 financials and see what happens regarding the converting of MDMN’s AURYN stock to CDCH stock.


#413

Is there something wrong with my email, or has nobody written anything on Cerro/Medinah/Auryn discussion board for 3 days?
Thanks, ldras


#414

Sometimes there is simply nothing to write about.


#415

Okay, thank you HR. I have been in since 2009; not much of a contributor, but I sure do enjoy reading everybody else’s comments and ideas. I have always been a believer, and just hope management has some great plans in mind so I can KEEP believing.
Thanks to all of you; ldras


#416

Well, just thinking out loud here … and for Idras:
Medinah/Cerro shareholders have been operating in the dark within what might be described in various terms as an “informational vacuum” or “cone of silence” for quite some time now. This is not fictional, it is merely a description of being in the dark, which may or may not be of strategic value for any number of reasons. The multiple reasons offered are all speculation. This is not atypical at this stage of development with an aggressively expanding “district scale” mining project that AURYN has initiated. There is no dispute in stating this is distressing for any long shareholder. There is little optimism unless shareholders receive at least a periodic glimpse into what is actually happening behind the scenes with progress and developments. This forum attempts to provide a glimpse at any DD that has been revealed by shareholders or the companies involved. The forum allows shareholders/posters to speculate what it all means to their investment here. It is not investment advice!

The arbitrage value for the conversion between MDMN and CDCH shares is meaningless without information of what is actually going on. Shareholders have pondered not only the silence, but why CDCH has ended up with all the claim titles that initially AURYN had “purchased” with a percentage equity interest in AURYN. Now, why are there no actual shares of the mining company Cerro and Medinah shareholders had all been led to believe we were getting in return? Whether we use the term “cone of silence” or “informational vacuum” as we are operating in the dark is also just as meaningless. Personally I prefer to use the description of “being in the dark” over other descriptions. Because of the way AURYN has structured the initial stages of going public, I think selling control of the mining claims to Cerro was intentional and strategic to a multi-step process in bringing AURYN public and treating all current shareholders equally. The fact remains there is minimal information flowing from AURYN, or the other common management/ownership behind CERRO, MEDINAH and MASGLAS.

What we had been told at the end of the last year:

AURYN has informed Medinah and the rest of its shareholders that AURYN will be exchanging its shareholders’ AURYN stock for shares in Cerro, pro rata, as soon as practical. When this transaction is complete, Medinah will own 1,649,130,000 shares of Cerro with a one-year holding period. This is in addition to the shares of CDCH that Medinah already owns.
… We anticipate this will leave 1.61 billion shares of CDCH to our Medinah shareholders pro rata. This is a ratio of 0.558 shares of CDCH for each share of MDMN that our shareholders own. [1]

Note, the updated information in the most recent Q1 report states that Medinah now has 1,739,360,000 shares (24.848%) equity stake in AURYN. As DOC posted (see post 371), the “informational silence” may have been necessary strategically to facilitate acquiring and locking down additional properties adjoining the ADL. AURYN has always shown a dynamic long view in adapting to changing conditions, IMO. The District wide analysis assisted by Dr Jannas likely resulted in changing AURYN’s strategic priorities for expanding and developing the project over immediate exploitation which is expensive:

This effort will help us refine our business plan as we consider the development of the entire project, including the possibility of bringing on additional partners for the porphyry targets. [2]

AURYN, not Cerro, is clearly the mining operation of this investment. The question remains , “How will present Cerro and MDMN shareholders benefit directly in the underlying asset from this arrangement of Cerro holding only the claim titles?”
Was it a “slip” late last October when AURYN announced:

Mr. Conetta will apply his visionary and strategic leadership and work with Maurizio Cordova to help AURYN put the Altos de Lipangue into production and become a public mining company. [3]

This isn’t a trading stock and hasn’t been for some time. My observation from the informational meeting is that many of the shareholders present were of the age that shares may presently be in an IRA or moved into a ROTH. For those “IRA” shareholders selling for a tax write-off is not a viable option. For those that have trading accounts where a position’s value has vastly decreased, this “tax loss selling” does make strategic sense, provided there is still optimism enough to buy back positions after the one-month holding period before repurchasing. There are different investing styles and circumstances that are suited to an individual’s circumstances and some that are just not suitable for speculative stocks.

…we now finally turn the page on the old and look forward to a very bright future for those who have invested in the Altos de Lipangue mining district. [4]

We don’t know what we don’t know. Why do we only own title to the claims and not AURYN (the mining operations)? It is quite apparent under the relaxed alternative reporting requirements of the OTC we are not seeing the expenditures incurred by AURYN. Without seeing the contracts for CDCH and MDMN we don’t know what new loan obligations exist. We aren’t getting a free ride as evidenced by our current PPS, but there are multiple possibilities for turning around our investments in CDCH and MDMN. We were told last September the only risk we have is normal mining risk. It is up to AURYN to show shareholders what the risks are. Strategically, I don’t think management plans on revealing much before all CDCH shares become free-trading.

  1. https://medinah-minerals.com/medinah-recap-look-forward/

  2. http://aurynmining.com/adl-project-update-january-2017/

  3. http://aurynmining.com/auryn-appoints-dante-conetta-ceo/

  4. http://aurynmining.com/auryn-sells-mining-claims-cerro-dorado-inc/


#417

Thank You Easymillion, for the excellent post and reminder of the articles which Auryn has written; and which reminds us that work is going on behind the scenes…and I am still one that believes when the curtains finally open, we will all like the scenery …and the share price!
Thanks again, ldras


#418

Just doing some checking up:

David Brownrigg - Senior Mining Engineer - still listed on linked-in as working for Auryn on the ADL](https://www.linkedin.com/in/david-brownrigg-b5460945/). Duties:

 Evaluate many targets, projects, old exploitation areas.
 Underground, Adit, surface areas.
 Review potential for advancing or further study.
 Identify opportunities and requirements for production, Short & Medium term

David Bent - listed on the old Auryn Mining presentation
Still showing in LInked in as working for Auryn Mining as Exploration Manager

Matias Ruiz - Logistical Manager -
Still working for Auryn Mining Chile according to his linked in profile


#419

Thanks CHG. It’s interesting how every time we get an obstructed view of behind the scenes activity whether it be your find here or Mike’s discovery that AMC recently added 3,500 ha around the ADL and another 3,500 ha just north of the ADL it seems that all is status quo and progress is being made. Yet the relative silence and lousy share price makes us fear that something bad occurred unbeknownst to us.

What would really make my day is evidence that groundbreaking on the “processing plant” located near where the past environmental baseline environmental studies occurred was confirmed. Maurizio told an interviewer that he hoped to commission it in 2018. This one event would confirm the economics of the ore, the availability of finances, CASH FLOW about to commence, etc.

Between the grades having been encountered in the first 2 lenses of the Larrissa Adit (28 meters of 11.5 gpt gold and 1.6% Cu in lens #1 and “about twice those grades” in lens #2) and the fact that the ore is amenable to 100-to-1 concentration with basic gravimetrics the ECONOMICS is pretty much a given with the infrastructure present. The concentratability of the ore directly reduces the all important “transportation costs” but in order to concentrate the ore you first need to crush it and grind it to the proper mesh size which necessitates a mill/“processing center”. This mill/“processing center” in turn mandates the finances to Engineer it, do the Procurement of building supplies and then Construct it i.e. “EPC”.

Once you have positive CASH FLOW from a subdivision of a mining district of this scale then life becomes a lot easier but as is true in everything to do with mining progress is super slow. I’ve always been taught that the key is to be able to RECOGNIZE PROGRESS when it is occurring. If step 10 in the overall process represents the commissioning of your own mill and that occurs then by definition steps 1 through 9 must have gone well even though we had no idea they were going well. Going into ECONOMIC production even if only at an artisanal rate sends the message to those in possession of the big bucks that the project may indeed be “scalable” to further enhance the ECONOMICS.


#420

Very nice post DOC! :+1:
Starting a new Chapter?


#421

Yes Sir , I am also a big believer in your incrementalism theory and hopefully Auryn/Masglas/CDCH are getting close to step 10.
Always love your posts Doc.


#422

Yep, learning that ground had been broken on a mill/processing center would be HUGE for us, as it would provide needed confidence. At these prices, I’ve been buying over the last couple months (to average down), but knowing about a mill being constructed might make me want to buy even more.

If a person knows about WHERE such a mill would most likely be located, then he could use maybe Google Earth to monitor any goings-on? I’m guessing that such a mill would need to be in VERY close proximity to OUR mountain? Or, could it be centrally located in the middle of ALL Auryn’s properties (even those in which we do not have an ownership interest)? It seems if such a mill was 10-20 miles away, then that would defeat the purpose, as we would have to first transport our ore to the mill, right?


#423

Happy Fathers Day!!
A Fathers legacy is in the the heart and soul of the children he leaves behind.


#424

Well Said Unever… Children are our soul, all else is lipstick.


#425

Just thinking out loud again here. (edited - Had to revise original) Is this starting to look like my circular ownership model being set up incrementally, or perhaps something like what CHG or DOC suggested? (#314 May 19)

Has anyone commented on Cerro’s Annual report “Accountant’s Compilation Report” signed off by Stayner Bates, P.C. It is prepared for Cerro Dorado, Inc. and Subsidiary. [1] Sociedad Contractual Minera Cerro Dorado Chile.
The Annual report states loans were from AHC, a separate but related company.

As of 1st Quarter 2018, Auryn Mining Chile, SpA, owns 95% of the 7,000,000,000 issued and outstanding common stock of the Company, which shares were approved by the Company in December 2017. Maurizio A. Cordova owns 65% of Auryn Mining Chile, SpA. [2]

There was an asset purchase agreement closed on Dec. 15, 2017 in which Cerro gained acquisition of all of the mining concessions of AURYN, pursuant to an Asset Purchase Agreement. On second look I did miss the subsidiary mentioned by Cerro (Sociedad Contractual Minera Cerro Dorado Chile). AHC was the recipient of the satisfied loan. But something appears to have changed recently. Will AURYN ever be considered a subsidiary? Will a spinout from AURYN or dividend eventually be forthcoming? Is there some regulatory accounting requirement complicating the preparation and release of the Q1 financials? Is an F1 filing in the works in the somewhat distant future? What valuation is being assigned to the expanded claim area? Is there a JV awaiting free trading shares, share consolidation and name change before being announced? Risk? No one should be in doubt this (AURYN, CDCH & MDMN) is a very speculative stock. MDMN and CDCH have a very disappointing storied history. Both are aspiring to become profitable by AURYN eventually meeting it’s goal as a public mining company and bringing the Altos de Lipangue into full production.

  1. https://backend.otcmarkets.com/otcapi/company/financial-report/191800/content

  2. https://backend.otcmarkets.com/otcapi/company/financial-report/190138/content


#426

The subsidiary (Sociedad Contractual Minera Cerro Dorado Chile) was the local entity which held the Fortuna claim until that was sold to Auryn Mining Chile for a 5% ownership position in AMC. As far as we know (or I know) Cerro Chile is just an empty corporation in Chile at this point. The 5% Auryn ownership was delivered to Cerro U.S. and then that was sold back to Auryn as part of the exchange for all the Alto Claims. So I don’t think Cerro Chile has a function at this point.

Medinah had a similar associated entity Medinah Chile which owned the various claims Medinah held before the JV and sale to Auryn. Remember that at one time Medinah and Cerro only owned approx. 50% of those Chilean subsidiaries which situation changed later as the JJ / Les scam started to unravel .

I believe Medinah Chile was disbanded, but I am not positive about that. Wiz could probably confirm.


#427

That all sounds correct, but there may be some sort of legal function for Cerro Dorado Chile (“CDC”) to still be residing in Santiago. Does the remaining 0.2% of Cerro Chile still exist to conform with certain obscure Chilean Mining laws? Perhaps DOC would confirm. I know Cerro’s original 5% equity interest certificate in AURYN was written in Spanish. Weren’t we waiting to see what the current claims acquisition contract for the ADL claims titles looks like? So far as Medinah is concerned, there doesn’t seem to be any reason for Medinah Chile to still exist after everything was turned over to AURYN.


#428

WOW! A blast from the past! I haven’t checked in for probably 2 years. So I guess everything is in Cerro’s hands now, eh? Someone mind filling me in on some things and what the future brings? Is Les in jail? Did we get any money from him other than stock he probably sold most of already? What did the Sillitoe (?) report say? Why is everything under Cerro? Is George and his twins doing ok? Mike Gold? Karl? BE? How are things? Sorry for the questions, going through 10,000 posts will take too long! lol