The Mining Play

MDMN - 2016-05-02 Weekly Discussion

SHAREHOLDER UPDATE May 1, 2016

Dear Medinah Minerals, Inc. Shareholders:

Management and Board representatives of Medinah Minerals, Inc., (“MDMN”) travelled to attend strategic business meetings with AURYN Mining Chile, SpA officials in Santiago, Chile during the week of April 23-30, 2016.

As reported earlier, all Medinah Minerals, Inc., Management and Board Directors possess the legal authority to conduct business in Chile, via DL600 Chilean government licenses, that are necessary to act and represent issues concerning our corporate and administrative Company matters.

Management and the Board of Directors of Medinah Minerals, Inc., are very pleased to announce the formal signing and official Ministry of Mines notarization of the Sales Contract of the Altos de Lipangue properties to AURYN Mining Chile SpA in exchange for a 25% equity share interest in the capital structure of AURYN.

The notarized documents were forwarded to various Chilean governmental agencies for formal registration. Further detail of the Sales Agreement will be forthcoming upon completion of review by Chilean authorities.

As soon as all the document inscriptions are finalized, Mr. Gary P. Goodin Esq., Board Member of Medinah Minerals, Inc., will also join the Board of Directors of AURYN Mining Chile SpA.

Medinah Management and Board Directors will hold Company shareholder meetings on the dates of October 1-2, 2016, at the Orleans Hotel & Casino in Las Vegas, Nevada.

Gregory, Chapin

Just as a reminder for anyone new to Medinah:

Gary P. Goodin, Esq.,

Mr. Goodin is a long time Medinah Minerals shareholder. He is a practicing Attorney with over25 years of experience. Mr. Goodin is the founding Principal of the Law Firm Goodin Orzeske &Blackwell, P.C., located in Indianapolis, Indiana. Mr. Goodin’s primary practice is in the representation of national and international corporations. Additionally, Mr. Goodin has vast experience in civil litigation. He is also fully legalized to represent and conduct corporate business actions in the Country of Chile. Mr. Goodin recently travelled to Chile to review legal issues, and assess MDMN mining properties, including the claims located on the Altos de Lipangue plateau.Mr. Goodin possesses Bachelor of Science, Master of Public Affairs and Juris Doctorate Degrees from Indiana University, Bloomington, Indiana.

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As suspected . . . a very straight forward shareholder update with no ambiguities introduced. Welcome to the new MDMN. It’s almost time we just start following the AMC updates.

I’m not one of those who expect the price to be flat between now and dividends. I expect that AMC will update shareholders regularly as the project develops over the next many months. With each update, the market and existing shareholders will gain more confidence that this isn’t stinky pinky and nor is it “old Medinah”. As the property proves up, the share price will improve. Slow and steady.

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Look at the previous suggestions I posted about moving forward. It makes sense. MDMN is a 25% shareholder of AMC. Anyone who owns 25% of the shares of another company should have board representation.

I suggested this to AMC and they agreed. In fact, it was already in their plans whether or not MDMN asked for it. This is how responsible, transparent companies do business. MDMN should have visibility into AMC through board representation. If I had 25% of a company I’d certainly insist on representation.

We (non-insider affiliated shareholders) own far more than 25% of the outstanding. For the next meeting we should insist that we select and vote on at least one possibly two board members outside of Greg, Vittal, and Gary. We need to make it clear to the BOD that they need to file the appropriate paperwork for this upcoming shareholder meeting so that proxies are properly handled by brokerage firms and shareholders are allowed to vote their street shares. Every legitimate company does it that way. The only companies I’ve invested in that haven’t is MDMN and CDCH. Enough of the stinky pinky BS.

Every time MDMN has had a meeting they have never really let the shareholders vote. This meeting will not begin like the last one with Bob Hackney saying any discussion or vote is perfunctory because the current BOD is voting the omnibus certificate.

::: Below is a link to the previous post with my personal views of how we needed to move forward. :::

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MDMN has finally turned the corner. We all (shareholders and management) have taken (and given) each other a lot of #%# over the years. We also have received more than enough of it from the people on IHUB, Raging Bull, Silicon Investor, etc.

Along with the views I stated here about how we started and what I’m thankful for, I think three people deserve a shout out for making this day possible, regardless of any missteps they’ve made and lumps they’ve taken from us along the way.

LP – he kept the relationship with JJ intact after the FBI fiasco and Godwin years so that we didn’t lose it all.

GC – he paid the bills and made sure that things were done legally so that any enemies of MDMN couldn’t shut us down.

MC (AMC) – they rescued us from oblivion. I don’t think people really understand how poorly things were handled by JJ / MMC, how little MDMN USA could do, and the incredible amount of work that AMC had to do in order to clean up and consolidate the ADL.

Are all 3 of them compensated? Absolutely. But for those who think they were trying to get one over on us, you’re completely wrong. If either of those three didn’t do their part they could have completely screwed over the MDMN common shareholder. With respect to AMC in particular, they could have had the entire project and left us high and dry for the most part. Those who disagree with me simply don’t know the facts of the situation.

AMC has been more than fair in how they treated MDMN. As things progress and more is known, I believe you’ll see AMC continually putting our interests (the common shareholder) ahead of the insiders / BOD of both AMC and MDMN. That is how your run a successful company, in my opinion!

::: and of course, JJ – thank you for believing in the mountain and finally letting it go :::

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Gold now at $1304 with Auryn to begin exploiting a bonanza grade gold deposit soon that contains several million ounces of near surface gold between the Caren adits and the Fortuna… oh my! :slight_smile:

I think the combination of the news, the pending news, the price of gold above $1300 should all conspire to see us about 2 cents this week.

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You are being very conservative about your stock prediction.

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Yes indeed. Good possibility that the next news we are waiting for will not be out this week and recall the likelihood that UBS is short Medinah and will try to keep a lid on things for now.

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Now that Maglas/Auryn controls the ADL claims and will no doubt aggressively prove up the property in this recovering PM client, what would compel them to pay dividends to Auryn (MDMN) shareholders in the near term versus reinvesting that money back into ADL to further explore and develop the property? Please don’t say “Because Les said so.”

Unless there is something contractually specified, Auryn has no obligation to pay dividends to its shareholders and for all we know the majority owners of Auryn may not want to spend their revenues in that fashion just yet. Granted Auryn principals and affiliates own a few hundred million shares of MDMN and would probably want to see their investment bear fruit. But they are most likely on a much longer time horizon than pre-Auryn MDMN shareholders and may want to see Auryn’s profits earmarked towards building up the mountain, exploring some of their other properties and perhaps look towards other property acquisitions in order to build up the company rather than siphoning those funds out to shareholders.

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I am ok with this, money makes money, and my time horizon is 10 years. I know others that may not be the case. I just wished I had purchased more at the 0.012 to 0.05, vs 0.014 to 0.14. And maybe AMC had a good idea where Gold was going. The perfect storm, a good storm, for all of us. We only need to take a glance in the rear view mirror, as those days are behind us!!!
TDK

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I’m OK with it as well. The more they prove up the property and show revenues, the higher the share price of MDMN should be, even if those revenues don’t flow back immediately to shareholders. I’m not convinced that Auryn has any strategy or interest in “levering disconnects” of MDMN’s share price via dividends, but I could be wrong. If I were Auryn, I’d be focusing my time, energy and resources on proving up the flagship asset and growing the business at this stage of the company’s development.

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HR,

I understand and agree with that argument which is similar to what John has stated. And I understand that it is formulated with the intent to counter the “perpetual ATM” idea promoted (and most likely believed) by our guys. I get that.

My comments:

  1. If you use the words “obligated” and “compel” I agree 100%. I doubt anything will compel or obligate them. Although, as a person who is a majority owner in a business with a minority partner, minority partners are not without rights. They do own their minority % of the cash flow of the company. Company to company arrangements tend to dominate what level of input they get for making decisions of what to do with it. We have an “operating agreement” for example between myself and my partner that limits the level of decisions I can make without explicit permission from my partner even though it is a 60/40 ownership arrangement. Such agreements are very common. I will not assert that such an agreement is in place between MDMN and AMC because we have no way of knowing. But they are common and it would have been an obvious concession to get in giving up the $100M cash. But let’s leave that aside for the moment.

  2. I agree with the argument that the priority for revenues generated by early production will be expanding exploration. That is clear and makes sense, IMO.

  3. My only argument is that there is a “may” still available for consideration, IMO. My argument is formulated as follows:

a. if you just calculate the potential cash flows for 5000 tpm at any grades above 25 gpt or so and gold at $1275 or above, they are going to generate a non-trivial amount of cash.

b. Although in theory you could spend almost limitless amounts of money exploring the ADL, as a matter of practicality, especially in the early stages, you can only usefully spend so much, maybe $15M per year for a couple of years. Why? Good “next decisions” are limited by data and by people to use the data for next decisions. E.g. you need this years drilling to decide on next targets. You need this years data in order to hire a company to design metallurgical processes. etc. Even if you have infinite dollars, you can not do exploration infinitely fast.

So I think there is room for a “may”, if they get to 5000 tpm, probably not till end of 2016 or so, and their accessible grades are high enough, they could generate enough cash flow to have some left over to dividend. They could just save it of course. But if production continues to look good going forward, they will not be short in the future either. And we will now have representation on their BOD and have a legitimate representation to at least ask for shareholder consideration, if it makes sense in light of future plans and future production.

The other side of the above though is that as lots of money is spent on exploration in the next 12 to 18 mos the asset value of the mountain will rise especially if the POG continues to improve. As it does so, and as more significant mining stages are considered, ones which require $50M or $100M, or $500M in capital expenditure, then it will make sense for everyone to consider a TO.

MDMN owns 25% of AMC and 15% of NUOCO, which makes for about 32+% of the LDM. I think once they seriously start considering LDM production (and maybe even open pit Fortuna/Merlin production), which could be long before any porphyry production, and thus are staring something on the order of $75M or $100M +/- of expenses in the face, it starts to make a lot of sense to test the TO waters and get back that mountain ownership so you get the return on that investment. IMO, building an open pit on the LDM when you you do not own 32% of it is unlikely. And at that time when capital expenses really move up the curve and MDMN shareholders see that dividends will be hard to come by for several years due to construction expenses, everyone will be in a TO mood, imho.

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It would be nice if they were to “wire” release yesterday’s news. I thought we would have a little buying this morning. Not yet…

The New MDMN in my world will receive positive cash flow, until that happens we maybe be getting closer, but we are still not there yet! JMO

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Hey Mike, can you give us a summary of the situation with UBS? I recall it involves allegations of Claro having placed his certificated shares on deposit with some offshore broker which was affiliated with UBS and then Claro commencing some proceedings against them, which is what caused UBS to have to “cover” (reproduce the shares)? I’m sure I’m missing a step in this.

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Mike,
You had hoped to have some news re JJ/Claro sale of MDMN shares to Auryn late last week.
Do you have an update? Thx

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I suggest you check back on a recent post of mine for a little more clarity on something that remains a little fuzzy.

4 hours and NO trades

NO “wire” news release as well…

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