The Mining Play

MDMN - 2016-04-04 Weekly Discussion

I am up 65% on EKWAX in my 401k, to pull me out of this MDMN nightmare.
Cost base of $100k, wish I sold MDMN at 0.06 when was seriously considering and sat on sidelines as Fed ponzi sceme unfolds. It’s coming … The LIES kept me in … Preying that AMC gets me at least a dime. Never a penny stock again … You cant trust the f&@?'s !!!

2 Likes

Ya the real PM stocks are moving nicely! I subscribe to the Belkin report and he’s calling for a weakening of the US$. His call on buying South African gold miners is already up 300% for the year and good PM’s stocks should do well, especially the silver miners. FWIW

I seem to recall some folks on this board opining that MDMN’s share price was correlated to the PM sector.

Bottom line at this point. There shouldn’t be different sides or opinions on where we are today. The collective focus should be on preventing the 3B authorised shares to be tapped in a measure that further dilutes our inevitable exit (thru a TO) at 10,15,10 cents.

It’s almost like some of the contributors to this board have been asleep for the last 10 years. Otherwise, there’s no way anybody would or should be comfortable with the existing BOD remaining without a share cap. You’d have to be a fool to think this time is any different than anytime in the past when a billion shares were issued to essential mantain the same claims over 20 years.

Putting a leash on further dilution by either replacing or handcuffing our current “leaders” is the next and last step before passive inaction is acceptable. The promotion is over so MGold can enjoy his vacation but corporate governance has been a more important factor for the better part of a decade. There’s still a bit of meat left on that bone.

13 Likes

Well said Baldy…“DILUTION” is once again, one of our our biggest concerns!!!

1 Like

We need a leader.

As I remember Karra was brought on board based on the resume below and most importantly as a shareholder advocate and to improve shareholder relations. The most important isn’t happening. Secondary is a seeming lack of experience in finance , accounting and the markets. That’s a bad hire. No offense intended. I’m sure he is a good and intelligent person. Well qualified for positions other than the CEO of and up coming JR Mining Co dealing with South American Mining Sharks and corrupt trading markets.

We need a CEO that has a proven track record with a successful Fortune 500 or better company. Find him and pay him. It’ll be worth it in the long run.

Thing about it Chapin.

President and Chairman

Mr. Karra is a results-oriented business executive with over 25 years of proven global leadership expertise in corporate strategic operations, client engagement, program and project management, executive and corporate coaching and mentoring. His Industry expertise is in the areas of: Management Consulting, Consumer Package Goods, Software, Social Media, Information Technology, Healthcare, Finance, Mining, Telecom and Infrastructure Capital Projects.
He has a proven track record of producing superior results. He has consulted with and advised companies from startups to Fortune 500 companies. Some of the companies he has worked with include: Accenture, American Express, AT&T, Microsoft, Dell, Coca Cola, Morgan Stanley, Port Authority of NY & NJ, Giants Stadium and the State System of Higher Education PA. He has an undergraduate degree in commerce. B.Com from India and has attended to an executive general management program from the Wharton school of business.

1 Like

John a big concern of mine also given the history, in fact a deal breaker for me. There was a share cap in place while Mr Letts was on the board. Is this no longer in place? Also, in your opinion, would an eventual TO more laborious with more shares out and therefore is Auryn still incentivized to cap issuance? TIA

1 Like

We as shareholders don’t know if those shares are still capped. As of now they still are. You have to remember Auryn owns 210 million shares.

Maybe CHG can modify the closing date to the next 3 weeks

To the best of my knowledge upon signing in Chile The shares are not capped.

How could any future dilution be overlooked??? IMPOSSIBLE!!!

This post was flagged by the community and is temporarily hidden.

Cap was part of the option agreement which will be dissolved with the new MOU signing. But could the new deal contain some auxilliary features also?

This post was flagged by the community and is temporarily hidden.

Buying back shares does not ADD shares to the outstanding - the company actually buys outstanding shares back and either holds them as Treasury Stock or retires them, the goal of which is to REDUCE the outstanding.

I don’t think that is what @comerciante_de_ouro is saying. The discussion has been around the concern that the BOD will “open the checkbook” if there is no cap on further dilution, and the way I read his post, hes saying it wouldn’t make sense to buy back shares while simultaneously issuing more shares . @comerciante_de_ouro corret me if I’m wrong

The reason the junior mineral exploration sector is considered ULTRA-HIGH RISK offset by potential ULTRA-HIGH REWARDS has to do with the 1-in-1,000 chance of a junior explorer making a large discovery and getting it into production and getting that first check in the mail and our securities laws.

Junior explorers do nothing but spend money. Since there is no positive cash flow they pay their expenses by selling RESTRICTED shares out of the Treasury every month to cover the monthly “burn rate”. Any shares sold out of the Treasury are RESTRICTED unless there was some type of “shelf offering” in place or there were previously repurchased shares placed into the Treasury which is rarely the case. Since the shares are RESTRICTED, nobody in their right mind would give management 100% of prevailing share prices when they could go to the market and buy FREE TRADING shares at current market prices. If something were to go wrong with one of these ULTRA-HIGH RISK investments the holder of RESTRICTED shares loses 100% of his money. These shares are thus sold at a DISCOUNT to market. If the company appears to be on its deathbed then the discount will be larger. The DISCOUNT is always negotiated by management and the financier usually involving corporate counsel and/or the accountant. Depending on how desperate management is for the money, sometimes management has the leverage and sometimes the potential financiers do.

If the members of the BOD are large shareholders as is the case with Medinah then they are incentivised to drive as hard of a bargain as they can because their shareholdings are also subject to dilution. Due to the securities laws, management cannot solicit investors to buy these “private placements” without going through very expensive processes. These investors approach management. They must be “accredited investors” i.e. wealthy. No widows or orphans allowed. Sometimes the investors are already large shareholders trying to protect their initial investment. Most of these private placements are due through what are called Reg D 504 processes which provide an “exemption” from registration for the sale of a maximum of $1 million worth of shares per year. The SEC knows that development stage companies can’t afford to do major financings through the markets involving prospectuses and the like.

The World Gold Council statistics state that it takes an average of 24 years from the commencement of exploration for a successful junior explorer to have that first check from production arrive. For probably 98% of junior explorers that “first check” from production never does arrive. As the dilution from paying the monthly “burn rate” via the sale of discounted shares stacks up through time there are fewer and fewer willing accredited investors willing to cut those checks unless any discovery made by the miner is particularly appealing.

These REALITIES within this sector create enormous opportunities for abusive naked short sellers to flood the share structures of junior explorers with fake shares and thus drive the PPS down. This forces management to sell shares to pay the bills by selling shares at discounts to PPS levels that have been artificially manipulated lower. This exacerbates the dilution process due to discounting from lower levels and by making the company appear to be on its deathbed.

Once the lucky junior explorer does gain access to cash it no longer needs to sell RESTRICTED shares to pay the monthly burn rate. It can use its cash. If it has access to a lot of cash it can also buy back and cancel ridiculously priced shares to unwind the previous dilution. Gaining access to cash is a gigantic milestone for the junior explorers lucky enough to make a discovery and get it into production and fortunate enough to have survived the process.

3 Likes

Once the deal is closed, the ATM machine (dilution) will be back open for business. PLUS Letts is no longer on the board, so we will not have a watchdog in place…

This post was flagged by the community and is temporarily hidden.

They still own 210 million shares. Please show me where does it say the cap was lifted

This post was flagged by the community and is temporarily hidden.

1 Like

Doc, if I may add to your post.

  1. Junior minings do survive on selling shares. However, those juniors that trade on exchanges, TSX-V, TSX, CNDX, AUX, AIM/LSE, do not sell shares on a monthly basis. Rather, they will publicly announce a private placement that is usually priced around the current share price (TSX allows no greater discount than 25%). They are restricted for 4 months and then free trade. Most come with a half share warrant per share purchased. When the placement is finished, the results are publicly announced.

  2. Junior Mining companies trading on the OTC need to be split between those that are SEC registrants and those that aren’t, the pinks. SEC registrants mostly rely on convertible debt to finance their endeavors. The term is 6 months after which the tacking period ends and the notes are convertible. Depending on the share price and volume, the discount will range between 10-65%. The pink sheets, like MDMN rely on covertible debt financing, they have never filed a 504 Reg.Form D which is required that provides names of subscribers and amount.

  3. It should be also noted that Reg D 504 are a thing of the past as the SEC frowns upon them.

  4. MDMN has horrible disclosure, but I am sure that there are a small pool of friends/non-affiliates, that loan the company money, wait 12 months for the tacking period to end, and convert, my guess at a 50% discount. These investors sell into the market, keep a healthy portion of the proceeds, and lend proceeds back to the company. It is a continuous circle.

  5. It would make no sense for any investor in MDMN, any pink or OTC reporting company to buy one year restricted stock as the stock price is set at the time, and then subject to falling prices like MDMN. Rather, they can do a convert and choose the right time to do a conversion based on that days share price and at a discount. Much less risky.

  6. I don’t know of anytime when the Company, which needs continued funding, that management has leverage over funders.

5 Likes