Hi Dentman,
The abusive naked short selling issue has proven to be a very divisive topic on this forum because the participants most critical of management’s performance saw it as offering an excuse for low share prices that should more appropriately be placed on management’s shoulders. My advice would be to TRUST YOUR OWN GUT on your observations of market behavior AND CHART THE ANOMALIES YOU DETECT. The toughest part of doing due diligence on this particular project is to block out all of the interpersonal issues raised on a daily basis AND JUST STUDY THE HARD DATA especially that which when misrepresented there are repercussions like data dfound on press releases.
After the Quijanos were paid their 350 million shares for half of the action at the ADL you heard that Masglas/AMC put in a private bid for those shares. An announcement was made stating that a deal couldn’t be reached. Masglas/AMC previously announced that they had accumulated 150 million shares plus another 60 million from the Quijanos. The 150 million shares of buying was fairly easy to trace via the “time and sale” logs as being in between the 5 and 10-cent levels. Later we learned that a formal contract was entered into between Masglas/AMC and the Quijanos for a huge chunk of Quijano shares to be delivered in a paper-certificated format.
After the Quijanos received their 350 million shares a bunch of very agressive selling transpired. The sellers didn’t seem to care how much they were receiving for their sales as they pummeled away at the bid. THIS IS AN ANOMALY THAT NEEDS TO BE CHARTED. But if there was an offer on the table at the time which I believe an objective person would assume was well above the current market prices due partly to the Quijano’s stubbornness/greed and Masglas’s earlier willingness to pay 10-cents per share to some stranger they didn’t have issues with, then it didn’t make sense that the Quijanos would be wailing away at the bid with their new shares. They just cashed a check for the 60 million share sale of paper-certificated shares. Yet the consensus was that it was the Quijanos wailing away. TRUST YOUR GUT, something just didn’t resonate with that explanation. Some Quijano selling might make sense for liquidity purposes while waiting for the big check but not tons of selling in a very vindictive manner. Nobody thinks more of this deposit than JJ.
Later we learned that the Quijanos ended up depositing their shares at a very large bank in close proximity to either JJ and/or Claro’s Santiago office. This very large bank is in the middle of a scandal that just about brought down Brazil’s government recently. This bank also has a Cayman Island branch bought from a certain huge brokerage firm/bank famous for abusive naked short selling abuses. Is it the Quijano’s fault for depositing huge amounts of Medinah shares at a troubled bank with a Cayman Island affiliate with a history of NSS abuses? I can’t make a judgment call like that. I can’t guarantee that my shares haven’t been loaned out to short sellers in an illegal fashion.
Later a contract was entered into between the Quijanos and Masglas agreeing to sell a large block of shares at an agreed upon price. After that the rumor was circulated blaming the Quijanos for reneging on this contract and refusing to deliver (not being unable to deliver)the agreed upon paper-certificated shares. I don’t know for a fact which explanation is accurate for the lack of delivery by the Quijanos. Again, something didn’t make sense, why sign the contract if you didn’t plan on honoring it and why expose yourself to whatever penalties the contract dictated for nonperformance. TRUST YOUR GUT, SIGNING THIS CONTRACT JUST TO LATER BREAK IT DOESN’T MAKE SENSE. BANGING AWAY AT THE BID WHEN A SUPERIOR BID WAS ON THE TABLE MADE NO SENSE. DELIVERING THE 60 MILLION SHARES IN GOOD FORM AND NOT THE SECOND TRANCHE MAKES NO SENSE UNLESS THERE WAS A COMMON EXPLANATION FOR ALL OF THESE ANOMALIES.
After hearing a rumor of meetings in NYC involving some chicanery in the Cayman Islands branch of this bank in regards to the “loaning/renting” out of Claro’s shares against his will to a short seller we saw some anomalous behavior in the market. Somebody posted a bid for 62 million Medinah shares. This was unheard of. You’d have to be an idiot to show the entire size of a buy order of that size at once because any potential seller is obviously figuring that the bid will need to be scaled up in order to get a fill. Buyers of blocks like this aren’t typically market idiots and a more plausible eplanation is usually available.
This particular buyer didn’t seem to care how much he ended up having to pay for those shares ALMOST AS IF IT WAS A MANDATED NSCC “BUY-IN” secondary to Claro demanding delivery of the shares he deposited so that he could get paid those presumably higher share prices. In a compulsory buy-in, the actual buyer doesn’t care what he pays for the shares because he has the legal right to hand the bill to the settlement bank of the party getting bought-in i.e. the recipient of the “borrowed/rented/stolen” shares of Claro. It’s illegal to loan out shares from a Type 1 cash account without the owner’s permission. In a margin account it’s fine but Medinah is a nonmarginable security which has no place residing in a margin a/c. If there were potential legal repercussions on the table you can see why Claro’s bank/broker ordered the buy-in STAT.
Shortly after all of this anomalous market activity with the gigantic bid being filled via a bunch of what CLEARLY appeared to be “crosses/wash sales” (study the time and sales data)the Quijanos all of a sudden are able to deliver a paper certificate for 218 million shares to Masglas. Wait a minute, I thought they they had dumped pretty much all of their shares in a vindictive fashion. Who the heck was doing all of that selling in such a fashion? Was it a new short seller trying to go for Medinah’s Jugular Vein after learning that AMC was involved and all kind sof new goodies were being found? Of course not, nobody starts a new short position at the all-time lows after releasing news like AMC’s involvement plus what they were finding.
The way our clearance and settlement system works, even if the party selling those 62 million shares into that bid owned ZERO Medinah shares if the clearing firm being they used had that many in inventory then Claro’s bank would indeed get delivery of paper-certificated shares. Shares held in an “anonymously pooled” format are not assigned to any one investor or groups of investors. With behavior like this, the naked short position basically goes from somebody’s left hand to their right hand. I’m sure some of the selling into that bid were real shareholders selling real shares. IN OUR CORRUPT/OPAQUE MARKETS, IT TAKES A DISRUPTION TO THE DAILY STATUS QUO (like Claro unexpectedly demanding delivery of his deposited shares back) TO REVEAL THIS TYPE OF FRAUDULENT ACTIVITY.
So why did all of us get conned into believing that the Quijanos were dumping hundreds of millions of shares in a vindictive fashion? Trust me, I am not a big fan of the Quijanos. I feel that it has to do with how different people react differently to the frustrations associated with being down on an investment. I see it on a daily basis on TMP.
Some frustrated investors that are very nice human beings simply need to ASSIGN BLAME to others when they’re frustrated. Other equally nice human beings simply don’t find the need to assign blame. For some, that massive amount of selling just fit right into their wheelhouse as an opportunity to assign blame in the midst of frustation. That long list of anomalies that just didn’t make sense didn’t matter.
As far as the DISCONNECT goes and whether or not there currently is one, when dealing with a private company in a secrecy obsessed industry like this one we shareholders are flying blind. When flying blind part of your due diligence needs to be to study the actions of the insiders that aren’t flying blind. “AHC and associates” was willingly paying 10-cents per share at the tail end of their purchase of 150 million shares. This was before they had great trenching results all over the place and great geochem sampling results at the PN. They’re not flying blind; they are the smart money whose actions need to be studied in an environment like ours. I can’t explain why they’re not buying hand over fist at the 1.5-cent level but that’s not my job. All I know is that the “smart money” was buying aggressively at the 10-cent level before a lot of great developments occurred. Now we’re on the edge of the ultimate goal of going into production in an area with extremely high grade near surface gold ore. A warning: Do not try to estimate the proper value of Medinah’s share price by doing a market comp analysis involving blocked out MR/MR ounces.
This deposit is going to have MR/MR up the cazoo. It’s not critical right now to spend a gazillion dollars on blocking out MR/MR for the sake of blocking out MR/MR in order to impress potential suitors. They know already that the final MR/MR count will be very high. All a geoscientist needs to do is to study the GIS database to roughly estimate what the final tally might come in at. If you have near surface early production opportunities you go after them. Entries in a bank a/c trump MR/MR in a NI 43-101.
Time to enjoy the nice weather.