The Mining Play

MDMN - 2016-03-14 Weekly Discussion

MDMN discussion for week beginning 2016, 03-14

OK, I’ll break the ice. Lets get news this week from Auryn and /or MDMN. Lets break .02 due to the news.

And lets start new, moving forward with renewed faith in Auryn and MDMN. As I see we have a great investment opportunity in front of us.

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Bloomberg article on the ongoing construction of Resolution Copper Mine, by BHP and Rio. There is 2B tonnes of ore, but it’s 7,000 ft below surface:

http://www.bloomberg.com/features/2016-arizona-copper-mine/

So hot down there they have to air condition. The miners call the heat “the hand of the devil”. $7B to construct the mine ultimately and it still is not fully permitted.

Thanks Cabezon for the new thread. Thanks to the moderators for keeping the peace (as much as possible.) :slight_smile: Thanks to those of you who click relevant ad banners. It keeps the server lights on.

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Wiz, first let me say the info shared re:Masglas meeting was trememdous.It is nice to get the info straight from the horse’s mouth vs relying on unreliable sources.

Second, I did reread the blog a couple of times and I am sure you have good reason, but the first paragraph requires quite of bit of reading between the lines. Question, did you have our boys help you write that paragraph as they are experts in subliminal suggestion? :grin:

Lastly, not sure about anyone else, but I use Kapersky and I have never see an ad to click on. Otherwise I would.

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$5.5M acquisition for well over a million ounces of high grade

http://www.marketwatch.com/story/paramount-gold-nevada-enters-into-an-agreement-to-acquire-calico-resources-corp-and-its-advanced-stage-grassy-mountain-project-2016-03-14

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Not really. Here’s the PEA: http://calicoresources.com/wp/wp-content/uploads/2015-07-09-Grassy-Moutain-Gold-Project-Amended-Technical-Report.pdf

I’ve watched them for quite a long time. They got themselves into some weird problems about 2 years ago or a little less when they agreed to sell the project but in some sort of muddled mess the deal fell apart, the share price fell severely and never recovered. They decided to start advancing the project again. They are in permitting but have made very slow progress and have little prospects for funding construction of their modest mine. They really just ran out of money.

There is a small high grade core to the deposit of about 483K OZ @ around 5 g/t and that is all the PEA refers to. About $100M construction costs ($144M total capital) to get back $300M, IRR of about 31%, 9 year mine life.

I think they just ran out of money and the deposit just was not big enough to get much excitement. if anything went wrong you would be out of your potential profit quickly, whereas something with a little more potential higher return would let you make up for some mistakes. Slowly but surely nice little projects are being bought up all over the place on the cheap

In truth, this deal is really more of a merger. Paramount only has a $10.3M market cap and Calico shareholders will own 46% of the combined companies. Paramount has a little cash ($8M) but not nearly enough to put this into production. They should at least be able to advance it to a feasibility study and complete permitting though. Maybe they view this modest deposit as a stepping stone. But it’s expensive enough ($100M) that it’s not going to be easy for a such a small company. It’s possible the combined company will just go on the sale blocks.

Still the sale price was $18 / OZ in the PEA or closer to $10 / OZ of the larger resource. So it’s not that out of line with what has been seen in recent deals where the acquired company was in some financial distress.

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It is discouraging when the ask is .0153 and nobody wants to buy the stock…

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2nd big gold smash down of the day: $1234, silver $15.33

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The surviving company is Paramount (PZG) and they have a book value of about $40M ( $9 M in cash) or $4.38 per share, before the acquisition of CKB, so in the end CKB shareholders will own 43-46% of Paramount plus CKV assets. I could not find a balance sheet for CKV. It is not a simple $5.5M cash acquisition, especially since PZG is selling for substantially below book and has .93 in cash per share.

At what point would anybody buy more stock, if they were in the position to? I would like to see one more solid update. Then there is always the fear of being able to buy more shares at a cheaper price. I hate that we traded below .015 today…

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My last purchase a few weeks ago was at .0147, tapped out now, tho.

Just buy a few at these prices. Then wait and see where it goes. If it goes down. You can average down. If some good news comes out and it goes up. You can average up. But in the long run it is probably a good bet at today’s prices.

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I’d been toying with the idea of throwing my big tax refund at MDMN and cutting my cost basis from 8 cents to 3 but I’m not sure. I’ll probably spend half on MDMN this week and the other half on something else.

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Just my opinion, but I would throw the money at something else that has possibility a quicker return and then throw the profits at MDMN. I do believe MDMN still has a longer time horizon before the stock price is out of the woods.

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