The Mining Play

MDMN - 2016-03-28 Weekly Discussion

Hey Wizard, what exactly is the substantive difference between an exercising of the existing option and a new “purchase agreement”, as you say? Under both scenarios, ownership and rights to the mountain are transferred to Auryn and MDMN (via MMC) receives an ownership interest in and to Auryn plus some cash, right? The only difference is the terms, right?

Yes – terms.

BTW, I don’t think MMC will be involved any longer. If it’s done like it was with CDCH, AMC transfers the shares in the name of MDMN USA. MMC is no longer needed at that point. :smiley:

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If Auryn is offering a percentage of cash and shares in the company-we do not know the value of Auryn. Is it a shell right now? I know in the Ulanderfink deal we got many shares in his company which were worth nothing. I would like to see a short squeeze right now., but when could we see a squeeze and under what conditions?

Auryn would only buy shares with certificates. To me that says a lot.

Guess we missed out on some of that $20 billion

Ultra-bearish call on copper, oil prices

According to a new note by investment bank Barclays quoted by the Telegraph, these returns are not likely to last and the $20 billion that flowed into commodity investments in January and February (a five year high) could just as easily flow back out again.

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Very low volume today…Holding steady…Anyday there is not a big seller, is a good day!!!

I believe it is simply a matter of Auryn’s cash flow. First I highly doubt they (Masglas Americas) have the $100 M available to lend to Auryn, and if they did, I believe they would prefer to use it to lock up other properties at these substantial discounts while this commodity glut continues. They want the cash so they can continue shopping, JMO

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Not too sure about that since that sale of assets is between Auryn and MMC and MMC would own the 15% of Auryn and I believe there are tax reasons still to have MMC in collecting any dividends before they are sent to MDMN-USA. Something to consider!

Owning Amarant shares and AMC shares would be totally different. At that point AMC would own all of the mountain’s claims. So though we may not have an accurate determination of value for AMC, if we feel there is value in MDMN, CDCH and Nuoco currently, then that value and higher would translate to AMC with the consolidation of all those claims.

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You do know they are basically the same people involved? Yes…they could lend to themselves…no problem! :slight_smile:

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Cabezon, as always, just my opinion, but I do think that Auryn will providing semi-annual financial statements financial statements to shareholders, as well as, an audited annual financial statement. Given that most of world only provides financial statements on a semi-annual basis, I would expect CDCH and Nucco owners to get a 6 month statement for the period ended 6/30/16 no later than 8/30/16. The statement will be financials along with a Management Discussion.

I am sure their lenders (the $10MM credit line) require it, despite the fact the credit facility is probably based on personal net worths of the parties involved.

And I am confident that Masglas will have audited financial statements, and as a subsidiary of Masglas, Auryn would need to audited for their accounts to be consolidated into Masgals financials.

I think over the next 6 months, lots of positives will be released. The end of the tunnel is nearing, but I also understand the share price, which is really the scoreboard, does not reflect it. All I can say is we are in better hands with Auryn than current and past MDMN management.

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It won’t happen that way. It didn’t with CDCH either.

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Mike, I’ve got to side with baldy and mdmnholder. This is completely unrealistic. You’ve got to consider the source.

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And I have to side with you, this option is very unrealistic.
Im surprise there is people that actually believe in this scenario. Les is got to be a good promoter, isnt he?

I’ll leave the door half-open for possibilities.

5000 tonnes per month @ 20 g / t would be somewhere around $40M in revenue per yr / $10M per qtr. Even 65% of the profits post sale would be significant.

In the short term, Auryn needs to fund drilling efforts, some fairly modest construction to mine the Caren adits, and possibly start construction of a concentration facility of some type on the ADL in order to make trucking rock more efficient. These are fairly modest expenses only somewhat higher than what they have already been spending. I have concluded they may be able to be funded from their share of gross profits from sale of gold. It’s too early to be sure though. But it is clear they don’t need $50M or $100M or $200M in capital right away. You can only spend money on early exploration so fast else its wasted.

Fortuna will be some additional expense. It’s hard to estimate at this time but could largely be offset by its own production.

As I pointed out at one time before, Hecla has just put a new near-surface high grade silver mine into operation in 3 months and $5.8M in capital expense in 2015 and $2M more in 2016 for $43M in after-tax cash flow in the first 18 mos. Those are Hecla’s public facts. There are other companies doing the exact same thing for the exact same reason - self booting via low capital high grade opportunities.

In addition, Auryn will certainly not start more serious expenses for a leach operation ($25M? $40M?) until permitting for such is completed. And that could be a year from now or more. In addition they will not start that effort until they are fairly committed to a long period of gold production, 5 to 10 years, else why bother? When they have to spend that kind of capital then the story will need to be recalculated. But by then both Caren and Fortuna may be in operation and perhaps tonnages for each increased. So who can say?

But the beauty of the near surface and high grade stuff is how quickly you can produce significant revenue with so little capital expenditure. That’s why Auryn is clearly so eager to get the train going down the tracks so the money doesn’t have to keep coming out of their bank account. If the average grades are high enough (20 gpt+) they could have excess beyond the short term needs which will be gated by permitting and just the pace of exploration. If grades are lower then maybe not.

And we’ll have to see how successfully they can concentrate the ore. They need to do this because only so many trucks can run up and down those ADL roads per day. And “so many” isn’t dozens and dozens. They will need to concentrate to get the most out of their traffic limitations. In a year or two when if take it to the next level and commit to 5 more years of production they can can spend lots of money on roads and leaching facilities etc. Then we’ll see.

SUMMARY: the dividend dream can not stand on its own without skeptical examination to be sure. But I wouldn’t totally discount the possibilities until the numbers are better known. Capital expenses are real and there will be plenty to be sure and undoubtedly the gold production will need to pay for much of it, reducing profits and thus potential dividends. But if the grades are high enough - ounces will add up.

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Maybe you should wait to see the terms of the purchase agreement first before you call them disappointing?!!

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The same would probably be true about claiming we will get dividends paid to us by July.

CHG, I really can’t dispute your “door open” to divy possibility, however, using top line revenue as a measure for cash flow/divy potential is the wrong line item as it does not take into account mining and processing expenses.

As I have talked to potential investors, one in UAE queried me about my AISC. Frankly, me nor my geo had seen this metric before in the US/Canada. I did some DD in effort to provide this infomration, and in fact, the World Gold Council came out with measurements calculations to determine AISC (All In Sustainable Cost) and Total Cost in 2013. See link below, read the blurb and open the pdf which is the spreadsheet.

The difference between AISC and Total Cost is that Total Cost adds the start-ups (e.g. initial cap-ex). AISC assumes that the mine is up and running and is what essentially is the breakeven cost/AISC. The costs inputs are computed on a $cost/oz basis. Add up the costs and that is what it cost to produce an ounce of gold.

Now, getting back to MDMN, while I have not independently verified these AISC numbers, this Seeking Alpha article details the AISC for the big miners. It may not be a fair representation as it is a blend of all their mines, some of which have differing grades and cost efficiencies, but could be a guide in determining the mining costs at the Caren and Fortuna. Need to scroll down to individual miner AISC.

http://seekingalpha.com/article/3343475-update-gold-miners-2015-all-in-sustaining-costs

As a side note, if anyone has not visited the World Gold Council website, it is quite informative. http://www.gold.org/

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Kinda of early to have an attitude already? It was a rumor combined with a best case scenario. If you are going to insult me, I suggest you at least read my posts correctly.

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