So far so good for the ‘atmosphere’.
As a matter of fact Dr. De Costa, more than just an atmosphere, has created a ‘stratosphere’ with all these different intriguing and compelling scenarios.
Whether or not the BOD will listen and execute and Auryn will approve… well, that’s a different story…
Well, I like the KISS method the best. Keep It Simple Stupid.
Auryn exercises their purchase option on the ADL and puts $100 million dollars plus into MDMN’s bank account.
MDMN pays out cash dividends to MDMN share holders.
Auryn goes into early production and deposits monthly sums of money into MDMN’s bank account.
MDMN pays out (say, quarterly) cash dividends to MDMN share holders
Auryn continues to expand mining operations on the Mountain and continues to deposit cash into MDMN’s bank account.
MDMN continues to pay quarterly dividends to MDMN share holders…
All the rest, who Auryn buys MDMN share from and for how much or if MDMN shares are purchased by the company and retired. Well, if it happens it happens. If not no big deal. It’s All Good!
What will happen to the 100 million when and if it goes into MDMN’s bank account. Do we expect that the BOD’s will be honest with this amount of money?
" Do we expect that the BOD’s will be honest with this amount of money?" What do you mean, and what are you implying, by that question???
Will the BOD’s pay themselves before the shareholders?
Do you mean if the BOD will pay off the existing debt of a couple million out of the $100 million+ to be received from Auryn before they issue the cash dividend?
Of course. Most likely the debt will be paid off and enough money kept in house to keep Medinah solvent for a couple of years at least.
Vittal, Gary and Roberto are all men of integrity so I have no doubt that Auryn’s option money will be properly taken care of.
This is not a relevant question. There will not be $100M sitting in MDMN’s bank account to be used at the discretion of the BOD. Even insiders are admitting this reality yet some feel the need to continue to spin this possibility and keep the bar of expectations raised to unrealistic levels. I’m not sure if the spinners or the handful of folks who still pay attention to the spin after 15 years of wild inaccuracies are to blame but most of the people trapped in this cycle are long gone from this inventment with significant losses.
The $100M will never be out of AMC’s control. I can’t imagine a scenario where it’s not used explicitly for Capex or as working capital in a newly created entity (through a TO or RTO).
As CHG so accurately stated, AMC is focused on what is in the ground. These penny stock games are a side show. We will be rewarded as progress on the mountains translates into quantifiable value for the assets MDMN controls.
As long as MDMN doesn’t renegotiate the $100M for more shares in AMC we know our base level is 7-10 cents. I’ve been told the private valuation being assigned AMC is $200M (too high or too low totally depends on the near -term production opporunties). But 7 cents in cash plus 15% of $200M gets us to around 10 cents of FMC today.
The market is clearly not convinced the contact will stand as originally negotiate. This is the disconnect that should be of focus.
Thank you for giving the BOD’s a vote of confidence and I am sure a vote of confidence for the shareholders as well.
Baldy,
Thank you as well for your re-assuring thoughts. I am not investor savvy but hope that this investment gives us a reasonable ROI.
At the beginning of your statement you suggest that “there will not be $100million sitting in MDMN’s bank account to be used at the discretion of the BOD”. Later you state " But 7 cents in cash plus 15% of $200million gets us to around 10cents of FMC today ".
Are you suggesting that MDMN will receive the $100 million but that our current BOD will not have control over it? If so, Wow! Having your cake and eating it too! What a deal, purchase 85% of the ADL for $100million and then continue to have control of the $100million you just paid. Not sure even our less than stellar board would agree to that.
Or, are you suggesting MDMN will never recieve the $100million?
A couple of points might need reiterating. You want Medinah to be doing the share repurchases when the DISCONNECT is extremely large i.e. pre-option exercising. The trick is designing a win-win that makes sense to both Medinah and AMC in order to get some QUICK cash into the Medinah coffers when the share price is in the tank. It could involve a sale of assets or the sale of an option on a current or future asset or forward sale of imminent production, etc.
You also need to customize any battle plan specifically to Medinah and both the early production opportunities and the expected mine life which I think is going to be significant. From that last bit of information we got regarding the high grade moly making it all of the way down to sea level on the southern downslope off of the plateau at the Pegaso Nero, if you do the trigonometry you can see that the distance from the porphyry found at the 70 meter level below the lDMC adit (an andesitic porphyry with an ocoite texture from the Veta Negro) and the lowest in elevation high grade moly findings (sea level 3.6 Km down the southern downslope at the Cu/Mo porphyry) the minimum diameter for the porphyry/porphyry complex appears to be 4.7 Km if the contiguity holds. Recall that the hyperspectral satellite imaging survey actually located a 7 Km long swath of about a dozen intrusives. All of this suggests a very long mine life and thus a potentially very long dividend stream. Don’t forget that the high grade near surface early production opportunities also extends MINE LIFE.
This in turn suggests that a serious buy back program be engaged in prior to the first round of dividends (if possible) as ALL of those subsequent dividends will benefit from the lowered issued and outstanding share count. Think of it as priming the pump for EACH of the further cash dividend issuances made OVER A VERY LONG PERIOD OF TIME. When the DISCONNECT goes down to perhaps 1.5-to-1 and most of the leverage is gone then a share repurchase program is less effective but at least your market cap is approaching FMV.
There are other benefits to share repurchase programs especially when private firms like AMC are involved and information flow is tight. When a company dedicates cash to share repurchases it is essentially making a press release, we the management guys behind the scene that know all of the details think that our market cap is too low and we’re going to put our money where our mouth is.
A share repurchase plan also puts a perceived floor under the market. The risk/reward calculus for outside investors gets more favorable as the risk dissipates as you can envision a very large bid under the market.
Another thing you might want to do is to think more in terms of the “readily sellable float” (RSF) of securities rather than just the amount of issued and outstanding shares. The RSF is the “supply” variable in the supply and demand interactions that determine share price via the “price discovery process”. If AMC puts away perhaps 500 plus million shares (some real and some fake) then those shares come right out of the RSF. That’s a very good thing. “Fake” shares become “real” shares when you demand delivery of a paper certificate. Those shares sitting in AMC’s coffers are still technically “issued and outstanding” but for somebody going after CONTROL they’re not part of the “readily sellable float” (likely to be sold) any time soon. Corporate share repurchases followed by demanding delivery (conversion into real shares) and cancellation is the ultimate form of buying we’d like to see. Both the I/O and the RSF get diminished.
The second best form of buying is by an ally like AMC where the shares become RESTRICTED and come out of the RSF. If your exit point is prior to AMC selling them then for all intents and purposes for you those shares were pretty much cancelled from existence. The worst form of buying is that induced by a promoter. These purchases can be “flipped” for a quick profit and if you have MMs that don’t like you very much those sell orders can make 100,000 shares of selling look and feel like 100 million. On the opposite side of diminishing your RSF is abusive naked short selling which essentially adds to your RSF since our clearance and settlement system allows the buyer of NONEXISTENT shares to resell them as if they did exist.
Where the tide can rapidly turn in these battles is when the company under attack gains ACCESS TO CASH. Cash is nice because it becomes easier to benchmark the proper market cap for the company and thus easier to recognize DISCONNECTS. If a company has $100 million in CASH and a 15% stake in a very large project run by very solid mining folks and it has a market cap of $27 million then something obviously isn’t right and people can recognize this DISCONNECT. On the other hand, if Medinah had 49% of the action and no cash then it’s tougher to recognize a DISCONNECT even if one is present because mining is a tough industry in which to render valuations.
Another thing to consider is to not worry as much about the NOMINAL amount of cash in the coffers of a Medinah-like company as the potential POWER of that CASH in the presence of a DISCONNECT. The POWER of the cash factors in share repurchases followed by a potentially long stream of cash dividends.
The study of abusive naked short selling is really pretty simple. If you know that a junior mineral explorer has a 1-in-1,000 chance of making a huge discovery, landing a solid partner and going into production then you attack it. Why? It has to do with a nearly infinite amount of LEVERAGE. Until a Medinah-like corporation becomes cash flow positive the crooks know that th junior explorer needs to pay the monthly “burn rate” by selling shares. It’s their only CURRENCY. If corrupt MMs can easily knock the share price down to near zero by selling fake shares and thereby driving up the “supply” variable then the issuer under attack needs to sell boatloads of shares on a monthly basis just to pay the bills. In fact it gets even worse as the lower the share price gets the steeper the discount from current share price levels the financier 3will demand since the company at least appears to be on its deathbed. THE CROOKS KNOW THAT THERE IS NO WAY ON GOD’S GREEN EARTH THAT THE TYPICAL JUNIOR EXPLORER WILL EVER BECOME CASH FLOW POSITIVE AND BE IN A POSITION TO BUY BACK AND CANCEL ITS RIDICULOUSLY PRICED SHARES. NO WAY! THIS IS BASICALLY LEVERAGE AND THE CROOKS HAVE TONS OF IT BECAUSE OF THE NEED TO PAY YOUR BILLS.
The flip side of that rather somber record, however, thankfully involves an enormous amount of LEVERAGE also. IF, IF, IF a heavily beat up issuer, no doubt with a massive DISCONNECT in place, were to come up with CASH in order to buy back and cancel cheap shares then that EXACT SAME LEVERAGE PENDULUM swings over to the issuer under attack. If the crooks choose to apply a “cap”/“blanket” on the share price then an issuer with cash can buy back and cancel a very large amount of ridiculously cheap shares.
Knocking the share price down 99% does not necessarily represent a victory for the crooks. You have to land the knockout punch BEFORE the comatose corporation gains access to cash. In measuring risk versus reward in this ultra-high risk offset by ultra-high reward sector, in my opinion the biggest risk is sustaining a knockout punch prior to making a discovery and landing a partner. This form of securities fraud and successfully combatting it is all about deploying LEVERAGE when you have it and deploying LEVERAGE for issuer under attack is all about gaining ACCESS TO CASH.
I believe we may get some value appreciation for the $100M but, no I don’t believe the $100M will be at our BOD’s disposal to play games with a bulletin board stock. This money will/would be used to advance the mountain and there’s no way AMC would trust an affiliate of MDMN to allocate those funds.
Similarly, to beat the same drum of having AMC provide us early access to cash to buy back stock is becoming remiscent of a 90 year old grandpa telling the same story over and over again over the course of a 30 minute dinner.
Let’s say AMC wants to devote $10M to take advantage of the discounted share price. Let’s also assume they currently own 300M shares or 25% of the float.
Do they advance the $10M to MDMN for the company to buy back stock? This advance would be a material event so, to be conservative, the stock would rally to at least 5 cents on that news. So MDMN could buy approximately 200 million shares (assuming the stock went nowhere which is highly unlikely). So there would be 1.2 billion vs. 1.4 billion shares outstanding and AMC would own 30% of the company instead of 25%. An improvement of 5%.
Or
Does AMC take that $10M and start buying stock in the open market? There wouldn’t need to be a public release. Based on the 100M in volume over the past week let’s assume their cost basis would be 4 cents which would equate to them buying 250M shares. This would bring their total to 550M shares or 40% of the company. An improvement of 15% with more upside for appreciation (owning more shares), more control over the buying, and a lot closer to a controlling interest.
Which scenario seems more likely?
So, I believe what you are suggesting is that Auryn will not advance monies to MDMN to purchase undervalued shares but will instead, continue to accumulate shares of MDMN while also adding BOD positions until they get control of MDMN. Upon attaining control they will then exercise the option, pay the $100million to MDMN and since they have control of MDMN they will in fact have control of the $100million.
They could maintain control over the $100M by either:
a) A tender offer.
b) Achieving a controlling interest in MDMN through open market purchases.
c) A simultaneous RTO and Option Exercise.
d) Re-negotiating the $100M for shares of AMC/Maglas.
e) Earmarking the $100M for debt reduction and capex (restrictive legend).
If Mdmn received 10 million dollars from AMC,how many shares would Mdmn need to buy back and retire before the current of number of shares that AMC owns make them a 50 % owner of Mdmn ?