The Mining Play

MDMN - 2016-04-11 Weekly Discussion


#82

Yes, and along those same lines I don’t see AMC as being willing to let THEIR shares in MDMN go away for a song either.


#83

Just me, I would have liked to see a fairness opinion on this transaction. $100 million is not chump change. Maybe the BOD got one, but tend to doubt it.

This is not cast any negative dispersions on AMC, but a reputable 3rd party fairness opinion would provide some level of comfort.

Looking forward to the next phase of this investment.


#84

Was this in a shareholder update or pr?


#85

Trying to systematically screw Medinah, Cerro and Nuoco is also a bit of a stretch. I have not detected any of this behavior by Masglas or MC in the past.

I’m not claiming that Masglas is looking to “screw us” but they will certainly do what is in the best interest of their shareholders. Taking advantage of an identifiable disconnect b/w what they can Tender for MDMN vs. the value of the mountain would just be common practice for an astute operator. I don’t think they will become a black box of information but they will always have an enhanced view on the value and potential value well before the public markets do.

If AMC is indeed soon to go public then all kinds of new transparency will be brought into effect as they’ll have the incentive to over brag versus under brag.

I don’t believe AMC has any intention to go public in the near future. You can confirm the same with Wiz.

As we go into production and cash flow numbers are released and checks cut Medinah’s visibility of reality will be greatly enhanced.

Agreed. But, unless MDMN has negotiated a royalty type participation of early production, the majority of cash flow will go back into the mountain making it very difficult for MDMN as a public company to back out the actual cash flow numbers and assign a discounted CF analysis.

As far as me being in a position to handicap whether or not Masglas would launch a TO and at what levels it might come I don’t worry about things like that in which I just don’t have the background information to make a guess.

This is exactly what I worry about or consider when thinking about the risk adjusted returns/exit. I’m fairly certain that AMC will NOT want to have MDMN/CDCH as a 30-35% equity holder when they are spending the money and doing all the work. This equity split would/will also make the entire project less valuable to a possible suiter as AMC ultimately considers their exit .

If they foresee the need to bring in a major miner skilled in Cu-Mo deposits then I believe by far and away the maximum amount of money they can make in the long run would be by taking a very large stake in Medinah and brokering the sale of Medinah to that major right after the NPV of the deposit has had a nice pop via perhaps robust cash flow from the Caren or elsewhere or perhaps a couple of long intersections into the porphyry.

IMO, AMC will look to tender for MDMN before or simultaneous to “monetizing the ADL.” They aren’t going to get nearly the same value if they try to monetize the ADL while MDMN is still holding 35%. No way. I don’t see why any major would consider an indirect investment in MDMN vs a direct partnership/investment in the ADL, etc.

Time will tell.


#86

Umm… We will BE shareholders so they owe us fiduciary also. Creates a quandry, eh?


#87

No quandary if you understand the ownership structure. I’m talking about Masglas and their shareholders. Masglas owns 70% of AMC. MDMN is a minority holder in AMC. Masglas basically created a new entity “AMC” spent some money on drilling, and gave us 30-35% ownership in what we used to own 100% (this does not include the Caren and other peripheral claims which we somehow never bothered locking down). Masglas gets 70% for having some $$$ and expertise on how to advance something we previously owned but never advance b/c of a “less than stellar” management team. This is why the 15% and $100M orginally sounded so solid. The market was quick to call BS on this outcome/option and we lost our 7 cents floor.


#88

John why would Auryn have agreed to that deal in the 1st place? Also what changed there mind to go to plan b? Your comments are greatly appreciated


#89

Can only speculate. I never thought the $100M was going to be exercised but assumed it could/would be incorporated into the TO. Masglas was obviously aware of our BOD’s “deal making prowess.” Maybe they threw out a big number knowing they would rework the deal at a later date once MDMN was out of options. They simply took advantage of the situation in the short-term. We obviously hope to be rewarded in the long-term. I just can’t see how we reach the long-term before getting taken out. I have no problem parting with my CDCH and MDMN at 10 cents but I’d love to see 15/20. Knowing that 20 would equate to over $1B market cap, I have my expectations in check.


#90

I’ll go ahead and speculate that the MOU will specify and allow the short term money flow from any near surface, early production hi-grade gold to proceed for an open pit on the LDM. The goal will be for early production to get underway and provide the significant money flow for the rest of the mountain to be explored/defined/developed before any TO is offered up. See my previous post on this and the significance of developing the LDM:

AMC has announced that they are now moving from an exploration phase to a combined work project. This now includes planned production that covers an area over 2 km long of high:-grade gold zones identified from Fortuna to Caren.

Work done by LDM/NUOCO team previously outlined a copper gold manto structure as well as another gold system within those properties. An Enami Engineer and a Geologist recognized the mineralization as significant. The Engineer commented that in this type of formation, we have the mineralized leads to follow for continuous mining towards the origin of the fluid enrichment. He also stated that additional high-grade gold content will begin to appear as we get further into the formation. Several areas of the copper zones sampled, returned grades of 3.2% copper over a 9–meter width.

While on site, the mill/refinery Professional Geologist sampled an 11-meter width of the gold-bearing quartz vein that returned 7 grams of gold per tonne.
The discoveries at the Altos de Lipangue claims groups are significant and continue in all directions.
http://www.medinah-minerals.com/?p=3450

As I’ve already said, the MOU is really the key that all shareholders will need to see before making any further conjecture about dividends, TO’s or what to expect in the short or long term.


#91

Just found this on the OTC under filings.

http://www.otcmarkets.com/financialReportViewer?symbol=MDMN&id=152984


#92

May need more copper/ore to fill capacity of new smelters

http://www.miningweekly.com/article/chile-says-germany-china-eyeing-investment-in-copper-smelters-2016-04-14


#93

And there is such a thing as minority shareholder rights, even in Nevada. All it takes is a small group of shareholders to gum-up the works and this thing could be at a legal impasse for years - I’m thinking AMC would like to avoid such an outcome by acting reasonably under the circumstances.


#94

Mr B, for once I gotta agree with you. Lots of big finds later cause follow up law suites. Don’t think they want any of those either once they’ve struck a final deal if it’s a buy out they are angling for.


#95

The following link has some good Q&A on minority shareholders rights in both public and private Chilean Companies. I am assuming MDMN is getting shares in Auryn Chile.

http://us.practicallaw.com/2-615-8427?source=relatedcontent#a815504


#96

Shareholders always have rights. In this case we would be talking about a minority group of shareholders in MDMN who have a minority ownership in a private company AMC. Very different dynamic but irrelevant nonetheless. As is often the case, certain shareholders have a very difficult time following the discussion on this board. Nobody has inferred that AMC is going to try to “screw” MDMN. If you are under the impression that AMC is going to be looking out for the long time suffering Medinamites over their own self-interest, well…

As soon as AMC can determine, with confidence, a certain value for the mountain and/or reach a point where they begin exploring their options to monetize the ADL, etc through a JV etc…they will look to tender for the 35% of the mountain we currently hold. At that point they will come up with a number that 1) they believe will be accepted by the majority of MDMN shareholders and 2) makes economic sense (appropriate discount) to their perceived value of the asset.


#97

I also believe that is by far the most likely scenario. That’s just how things work in this industry. There is no such thing as ‘long term’ (5 yr +) junior mining companies who are 25% shareholders in large producing mining companies. We will be bought out, imo.

But in regard to timing it not only depends on when Auryn is convinced the value is there (one might argue they themselves are already quite convinced) but when others are convinced (financing people) and Auryn has the ability to support the financing steps necessary to make the TO. It is by no means certain, or even likely, that Auryn is sitting on a $200M checking account.

This brings everything back to the high grade gold and cash flow. As production increases, Auryn’s financial flexibility increases greatly (more options), and the probability rises greatly for some type of takeout, either 1 - a TO to MDMN for the AMC and Nuoco shares, else 2 - just a direct TO to shareholders for MDMN shares.

That brings up an observation: Case #1 seems like it could be under the control of the MDMN BOD whether to accept or decline, whereas Case #2 will certainly require shareholder approval. So control of the price of the transaction could differ between the cases, no?


#98

Well thank you, old man. You are correct - the concept of “lesion beyond moiety” is more prevalent in Civilian Law jurisdictions, but such suits based on different theories happen in common law jurisdictions as well.


#99

I hope once Auryn is comfortable with what they know about the value of the mountain, they let us know what they know.


#100

OK, Who the hell are you, and what have you done with John ???

We don’t have much money, so ransom is out of the question !

:laughing: :astonished:


#101

Seems like our MDMN deal is almost identical to the standard housing developer deal with the old man who owns a hundred acres of prime freeway access land.

Give them their asking price and gradually take it back or delay payment as they move through the entitlement process!

You know Mr Smith, that this land is just too expensive to develop at your asking price and we need you to carry the load until we acquire our final tract map in 18 months!

Most land owners will agree because the have already spent or obligated the future money!