The Mining Play

MDMN - 2016-03-28 Weekly Discussion

MDMN discussion for week beginning 2016 -03-28

Baldy,

You wrote:

“In what scenario do you see Auryn issuing a dividend? At this stage of exploration/development/small scale production it would be highly usual for Auryn to distribute cash flows vs. using the same for self funding expansion objectives. IMO”

In the rumored scenario that they start production in April, that they issue dividends to their partners each quarter starting in July from any profits generated from the Caren, that their partner’s(both hidden and known) demand this, that all near term required exploration monies have already been allocated.

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We usually get notification of trips to Chile. Nothing yet?

[quote=“MikeGold, post:2, topic:1111”]
Baldy Wrote:
In what scenario do you see Auryn issuing a dividend?
[/quote] The percentage distributed as a dividend will be a small part of the gold production net proceeds. The early production is necessary to maintain payrolls with the remaining bulk proceeds used to further exploration. In April we may learn of details needed for an early 100% ownership of the ADL without the initial $100M cash outlay. Conserving (borrowing) cash without an income stream moving forward does not make sense.

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One may hope that the formula for calculating profit is defined before any partnership is approved. moo

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There’s an interesting phenomenon that can occur when a company like Medinah with a very large DISCONNECT between its $17 million market cap and the NPV of its assets establishes a clear pathway to a very long period of Progressively Larger Cash Dividends (PLCDs). The reason why the dividends are likely to be “progressively larger” is that through time more concession groups will attain their production permitting and those concession groups with permits will have their permitted number of tonnes per day increased through time.

The standard behavior for stocks with dividends gets thrown out the window in an environment like this. If a $100 stock distributes a $4 cash dividend the share price will drop to about $96 on the “Ex-dividend date” because those corporate assets (the cash) is now gone. If a stock trading at 1.3 cents were to find itself in a position to distribute a 1-cent dividend AND THERE WERE MANY YEARS OF PROGRESSIVELY LARGER CASH DIVIDENDS ANTICIPATED TO BE IN THE PIPELINE then if the share price were to drop to .3-cents the shareholders holding all of that dividend cash would be all over that stock buying ultra-cheap shares in order to earn that many more PROGRESSIVELY LARGER CASH DIVIDENDS throughout time. With time the DISCONNECT will go back to zero and FMV will be reached with the share price not to mention the shareholder rewards associated with the upcoming PROGRESSIVELY LARGER CASH DIVIDENDS. In other words, AMC mines the ore while Medinah management mines the DISCONNECT.

What Medinah needs to do is to enter into a TRANSACTION which clearly exposes the magnitude of the DISCONNECT and then prove to the world that it has established a clear pathway to a very, very long stream (the mine life) of PROGRESSIVELY LARGER CASH DIVIDENDS. Opportunistic investors capable of recognizing an arbitrage opportunity will take care of the rest.

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Selling continues. It amazes me how many shares are for sale at a .012-.02

Maybe CHG can post his report of how many shares each MM sold

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Yep…The selling continues to torture us…Below .013 again…A never ending battle…

Again if there is a seller this person is selling at a loss or the mm’s are shorting the stock.

And theres CDEL on the ASK 412000 @ .0134

It`s Claro, is not done yet

Doc, I have to admit, I do find some humor in your recent post. You want to know why there is a disconnect?

  1. No one knows WTF is going on with Auryn and MDMN, same for Cerro and Nuoco. What is 5% of AMC worth? No one knows. How deep are there pockets, no one knows?

  2. What was it, 17-18, 19 months ago, an option agreement was struck for $100 large and 15% of AMC, now most beleive it will be substantially less $ or may be cash less with equity in a private entity no one anything about.

  3. Now let’s move on to NPV. IMO, it is premature to even think about NPV’s, what data is out there to use to calculate NPV of even the near term production, much less the CU/Moly claims.

  4. My guess is that it will take at least 3-5 years of exploration to get a sense of any NPV from CU/Moly. Maybe after 200 drill holes, thousand of assays, etc. and how and where it is going to processed, a NPV could begin to take shape. You have seen the size of copper open pits, you think they would start open pitting based on 18 holes? 20 holes?

  5. I am sure there are quite a few more reasons for this “disconnect”, obviously we can’t leave out Les, JJ, Chapin, Vittal, Claro and the crew.

For the life of me, I can’t see where divy’s would be paid while AMC is starting minimal production which looks to processed off site. They did mention an Enami geologist was out there, but Enami levies a tax of 40%.

The other thing, guess stepping back from the board for the holiday, caused some pent up thoughts, but if some major came in to take over the ADL CU/Moly, I can tell you that at best it will a standard 2% NSR off of production many, many years down the road.

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Why are you here?

Why, because I have a small share holding, know a little bit about mining, and am expressing my thoughts which IMO, are realistic.

Instead of asking why am I here, why don’t you comment on the points in my post.

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mdmnholder can stay as long as he wants. He provides valuable realistic insight.

Auryn will be in production on Caren claims most likely in the next month. If mdmn receives more of Auryn for less cash and the option is exercised for that, why wouldn’t mdmn receive portion ie 25 percent of “profit” for that piece?
Also, whose to say the porphyry won’t be up for sale to a major in the next 12-18 mos?

Dentman, from my view, Auryn has said they will start mining very soon. I believe that, But to get to something that all the big and now mining companies are looking at AISC (All In Sustainable Costs) and Total Costs. When AMC starts mining, there will some fairly decent sized cap-ex, for mobilization of equipment, staffing, safety, etc. Then make the mine sustainable, if will require more money for engineering, testing, and building of processing plant.

I have not seen a mine go through start-up and sustainability and pay out divideds and cashflow is reinvested to expanding the mining operation. Maybe after the first couple of years, divies could flow, but not right away. Just my experience.

I don’t disagree with the sale of the poprhyry, I have also said that is the realm of the big boys and there are few left that could afford to take on an unexplored greenfield project. I hightlighted Sumitomo in a post last week. But there investment was predicated on all ready completed exploration/results.

Open pit copper mines are massive in size and expensive. Billions, you don’t take the risk based on the limited and very old data MDMN has. Given the nature of the project (copper/moly) and amount of time and money to bring the proprhry to a MR/MR state, what is the value of the ADL proprhyrys? I would say with demand for such project so low, the value has decreased substantially.

Having said that, I could see a mid major doing a farm in agreement, they get increasing percentage ownership for increase dollars spent on exploration, but no cash upfront.

If you go back and read and believe what Doc writes, the average time it takes a mine to come into production is 15+ years. Now go take a look at how long other major copper mines have taken to get into production.

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There sure seems to be a lot of posters telling the board why this investment won’t do well. I’ve seen a lot of BS on both sides and personally don’t trust but a handful of people’s motives on this board!!!

Dentman, I don’t think people are saying this investment won’t do well. it I thought that, I would have sold by now. There are a lot positive occuring with Auryn on board. I think the time horizon has moved out, but is more of a sure thing with Auryn than it was with MDMN. That’s all.

I think partner A and Ulander deals, along with the rumor mill set expectations for a hugh quick score to high. Along with crash in the metals market. I am more than content to see this through, at least until I see the details of the new/renegotiated option agreement.

Think of it this way, there has been more exploration done on the mountain in the last 15 months than the last 20 years. And MDMN did not have to pay a dime. How can that be bad?

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There are people who discuss the realities of this investment based on empirical evidence, comparative valuation analysis, and a sound perspective of the natural resource/hard asset sector. And then there are people who seem to be lost in the fairytale of Medinaland spinning implausible whatif scenarios (over decades) that have very little basis in rational thought. This board is a “democracy” and people can and do choose to believe one side or the other.

Luckily, even the more “realistic” viewpoints may translate to 10 cent plus prices which are considerably higher than where we trade today.

I still can’t see where short-term dividends will come from (per mdmnholder’s point). But, if our “savvy” dealmakers somehow negotiate a royalty deal (which is what will be required for dividends) there will be a lot more upside for holders of MDMN and CDCH.

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