The Mining Play

Medinah/Auryn - 2018 Q3 General Discussion

Read my note from earlier: It’s an LOI still. Small potatoes. Probably won’t report until it’s a signed JV and/or in the quarterly financials. My guess is $7 million is not material for them at this point. :slight_smile:

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On the other hand, $7M is about 40% of their annual $15M +/- exploration budget. They announced a considerably smaller one in 2017 … So I wouldn’t be surprised if it’s announced. But not until its finalized, I agree.

Hochschild is a real and competent minor. They are very similar in size to Hecla Mining for example. But this project is big enough to matter to them. They aren’t Glencore or BHP or anything.

If you look at their presentations their JVs and exploration play a significant part of their messaging to shareholders. So I am optimistic … no guarantees though

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Very quite in volume today

And perfectly arbitraged. CDCHD closed at .74
.74 * .00558 = .0041292
MDMN closed at .0041

can’t get any closer

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Don’t forget though it’s $7M over 5 years.

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I know this is in the future But sure would be nice to start receiving a dividend

If they actually hit something good at the start, they will spend that in a single season! Hard to say if that will happen as the LDM geology is very complicated so it won’t be easy to define things. Previous IP studies were very difficult to conduct/interpret which didn’t help matters. So many years has elapsed that exploration technologies have improved so the pre-drilling exploration work might be able to define things pretty well. It will be exciting to actually see exploration work restart on the mountain…it has been awhile!!

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BusinessWire company profile update:

Becoming more and more real

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I’m creating a little arbitrage calculator that can alert me if the balances get out of whack and it makes sense to sell A to buy B, or vice versa. I can already tell it’s not going to be of much value. With only 3.5 million CDCH shares in the float and little to no volume, the spreads are large and the liquidity low.

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I think it’s high time we hear from brecciaboy - falling down on the job, sir. If you’ve been on vacation or are having some other problem, I apologize in advance.

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Great question. Mostly depends on the actual results. You can’t really use the $30M and percent ownership and reverse engineer any sort of number but you can assume that if H spends that type of money (not insignificant for them even over 5 years) the project will have a NPV exceeding $200M. Most public co’s are trading at a discount to NPV in this distressed market but if we use 1xNPV (Net present value) the value to Auryn will be a minimum of $80M. We are currently trading at ~$50M market cap.

I’m not an investment advisor but the two things I’d suggest:

  1. sell either CDCH or MDMN to take advantage of what will be a large tax loss and buy the other with the proceeds (if you want to stay invested). Follow the arbitrage if you can but take the loss before the conversion otherwise you are really wasting the opportunity. As an example, I’m out of my MDMN position completely and fortunately/unfortunately won’t be paying capital gains for a bit as a result

  2. I’d rather add to this investment at twice the valuation after there is some real visibility on how things play out vs. at these levels which are pretty expensive. These types of speculative plays (read: high risk/high reward) should have 10x return potentials. I don’t see the roadmap for a $500M market cap (yet) and have no grip on how much dilution will come over the next several years.

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That’s a great arbitrage strategy for those that have not already done so. The tax loss advantage is a given for those that can benefit from one. From those I know, there is a large portion of shareholders who have accumulated incrementally and held shares over many years in an IRA or ROTH account that can not do what you have done with a trading account. Unfortunately, there is no tax loss to write off against gains in other investments for shares in an IRA or ROTH. For those of us similarly situated, we can be optimistic and disappointed that it will still take time to see if this unfolds in a very beneficial way.

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Baldy, Would you mind briefly explaining “before the conversion, otherwise you are really wasting the opportunity” ? Why would the tax loss not be available after the conversion? When do you expect the 'conversion to take place? Thank you. geo

When our MDMN shares convert to AURM, does anyone know if we lose our MDMN tax loses that we have accumulated, to write off against any future gains? Those are quite significant for many of us. I am sure nobody wants to lose those…

I think that Baldy meant that now, while they are two different entities, you can sell MDMN and buy CDCHD and it will not be a wash sale. Later, after the converstion, you would have to wait 30 days to buy back in. Correct me if I’m wrong.

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But if I sold my 13 + million shares of MDMN, I would need to buy 70,000+ cdchd shares. and my fear is no one is selling. That many! Then what?:thinking:

now there’s a breath of sunshine.
Gotta love The Trees.
Just stay away from those fires out there
and we’ll pump this to a buck.
You go, Trees!!!

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My suggestion would be to buy CDCHD first since it is the least liquid then immediately sell MDMN equivalent.

I have no clue what will happen to our loses after the conversion. There is no way I am doing any buying or selling. I just printed out my current loses on my account to give to my tax guy. I will let him figure it out. I will do it again before the conversion just to be safe. I would think it would still show a loss for the “old” mdmn shares and any gains or loses from AURM will be just that…

It appears the potential tax loss situation and planning to avoid a wash rule violation may be quite dicey at this point. Losses on the old MDMN shares may not be viewed the same as AUMC once the shares are converted. There may not be a tax loss carryover. Who knows? No one has seen the contracts or how tax losses on MDMN may carry over to AUMC. It is wise to have your tax guy look at it! Certainly was a wise tax loss write-off for those that sold during the past year, waited 30 days, and then bought back before the recent news. IMO
20/20 hindsight is usually excellent!