It’s NOT FREE MONEY!!! Using the same table that CHG provided it’s ANYTHING but free money if we exchange cold hard cash for equity (in an entity that, at this point might be worth next to nothing). The underlying value of AMC is not there TODAY. You don’t give up cash for equity in what might be there five years from now TO PLAY PENNY STOCK BUYBACK games/gambles. I really hope you aren’t advising and/or supporting our BOD on these types of strategies. They are beyond absurd.
To “Wiz’s” point. We now have leverage. It may take until Aug 2017 (doubtful) but it’s time for our BOD to make Auryn exercise the option as is or come up with a TO (most likely outcome). Just because they are dumb enough to accept shares in AMC (an entity that is impossible to value) for NUOCO doesn’t mean the rest of us need to make the same mistake.
It’s not a matter of access to the cash, it’s a matter of allocation. AMC isn’t interested in mining disconnects (at this point.) They are interested in mining the mountain! Thus we’re not going to get 100 million cash and AMC doesn’t appear to be aggressively buying MDMN stock. What they will aggressively be doing (imo) is drilling, developing infrastructure, and going into early production,
Doc, let me say this, it looks like AMC has wrapped up all the non-MDMN claims. So now there is the one option agreement outstanding, the big daddy. Now, put into financial terms you frequently use, NPV. So a banker is engaged to do a fairness opinion on the MDMN ADL. They have to value all the opportunities in the CU/MO opportunities. So they have to determine all the exploration expense (mapping, drilling, engineering, feasibility studies, permitting, etc.) then C1 for all the capex for the near term and long term opportunities, billions of dollars, then the time value of money, the discount rate, the outlook for all the base and precious metals, mine life.
One might be surprised at what the real NPV is for MDMN ADL. JMO, if MDMN could get $100MM it would be the deal of life time.
If you consider it, while there may or may not be a DISCONNECT of some level for MDMN stock price at this point, without the $100M cash payment the DISCONNECT between now and Aug 2017 is undeniably diminished. And whatever that diminished DISCONNECT is, you have to compare it to the return AURYN would get for putting that same cash into mountain exploration and development. So ironically, the better the Mountain is, the better ROI for each exploration dollar Auryn puts into the mountain. And if that ROI is a better number than the DISCONNECT then it makes sense to use the money on exploration and development, and especially to establish positive cash flow, which Auryn explicitly mentions:
We expect it (production) to be cash flow positive that will supplement AMC’s exploration efforts and ultimate exercise of the JV Mining Option Agreement
Auryn needs to exercise the purchase option that is very clear. The terms of that exercise may stay the same, or they may improve, or may get worse. Pick your scenario. I still believe based on information to date that MDMN position is improving and as a result the terms of the purchase option will improve to our benefit as well. I may be wrong, but I do believe the facts support that position.
We currently have a complete and enforceable purchase agreement and Auryn needs to exercise that option. You can put whatever spin you want on it, but in the end they will need title to all the claims.
If cash is KING and the lack of cash is easily a KILLER. Are we a 15% future owner with FCI or is Medinah currently on the hook for future CapEx funds as a 15% owner of AMC? If we are on the hook for CapEx then the best we could hope for is to negotiate away any requirement to contributing toward CapEx. If we have to pay into mining development cost we are subject to eventually have to sell off a % of the 15% AMC ownership to do so. If we hopefully have no CapEx obligation then we are set to accept a larger percentage for a smaller upfront cash payment than “scaled”, but a minimum of $100M.
The way the agreement is written when the option is exercised AMC owns 100% of the ADL. We own 15% of AMC. At that point we’re an AMC shareholder and it seems to me that’s dilutable just like any other shareholder could be diluted. But doesn’t require cash on our side.
This is what people aren’t understanding. AMC is a wholly owned subsidiary. MDMN has a non-dilutable interest in AMC but there’s no guarantee AMC is the entity going public. Maglas or whatever the name is could be the entity going public and AMC’s percentage of Maglas could easily be diluted with Capex or further dilution. Soooo, when our BOD accepts shares in AMC they really don’t even know what they own. Even more ridiculous is the glaring fact that the majority, if not all, of the AMC assets are properties which we do or did already own. If we start considering equity over cash were are basically robbing Paul to pay Peter and getting less and less equity percentage in the process. If we give up part of the $100M for a greater piece of AMC we are simply reallocating equity we already own back to ourselves. This would the ultimate sucker’s trade!
Baldy, that is an excellent point, Masglas the parent is most likely the entity going public with Auryn the sub. If we accept stock in a sub, what does that really give us? Cash flow from operations are generally funneled up to the parent for use for divy’s, new projects, general working capital.
I am not sure our boys thought of all the maturations when the original agreement was signed.
JMO, but I think how AMC handled CDCH will give us a good indicator of the future. But i do have a concern that the Days were not even consulted on that transaction
That is what has been stated here by several people. But I think that point may be being misused.
IMO there was no time for any negotiations re. these latest agreements to occur during this trip to Chile. So while we portray it here as the Days being excluded and blind sided, I do not think that follows from the fact that they did not go go Chile. IMO the terms of everything that was signed and formalized in this last trip was determined and known before anyone got on a plane to Chile, probably at the end of the last trip a few weeks ago. There was absolutely no time for negotiating, writing up new documents, review of new documents, etc. before the Notario process. The entire trip was a canned legal process that took about 3 or 4 days.
Now, in addition to that business, which is what affected CDCH (and we still await to hear details), there were probably some discussions / negotiations on this ADL Option reconfiguration stuff, maybe even a near completion of it, but that does not affect the Days as CDCH representatives. And this is probably what the rumor mill referred to as ‘negotiations’.
So IMO, we may still learn something shareholders are not happy with re. how CDCH was treated, but I don’t think the fact that the Days didn’t go to Chile means anything in relation to that. The Days almost certainly knew exactly what was taking place as Les et al. got on the plane and flew south before they signed anything.
They got Baldy all riled up with this “negotiation” thing … trying to save that TO. Hope we can but I’m with Wiz, I suspect the very fact that it was explicitly mentioned by Medinah means that it is a mature process at this point, pretty likely to happen. If it was very uncertain they would never have mentioned it.
I agree on the AMC vs Masglas comment. If our guys or MMC take AMC shares these will have to be converted sometime later into the shares of the public entity. And almost certainly that entity will suffer dilution as time goes by. Obviously the intent is that the value creation of the maturing mountain exploration / production overcomes the dilution. But that is the risk that will remain for enduring shareholders.
gee whiz, I was hoping for something in my lifetime. We have lost so many on this road. I was hoping Auryn would want complete control of the ADL and our xxxx board totally out of the picture.
Mike, has all of the news been released that you felt would give us a decent bump in share price or is there anything else coming soon that you feel will raise the share price?
The sooner we get the details of the Auryn takeover of Cerro, the sooner we get the modus operandi of Auryn for the entire ADL complex. And the longer they keep us all in the dark, the more likely it is unacceptable news.
Hopefully the Cerro shareholder heavyweights are demanding the Cerro Board to soon provide the news.
Here is something to think about. The Letts family has a good reputation in the mining sector. .I highly doubt they would jeopardize that reputation by reneging on the the original purchase option agreement ( not like Ulander). There is nothing forcing MDMN to accept any offer that is less favorable to the current option. Worse case Auryn does not exercise the option and we start all over shopping around a more valuable piece of property. I know no one wants this and I do not expect anyone believes this may be a possibility. Just something to consider in spinning all these scenarios and who has the upper hand.
Hope we can but I’m with Wiz, I suspect the very fact that it was explicitly mentioned by Medinah means that it is a mature process at this point, pretty likely to happen. If it was very uncertain they would never have mentioned it.