A few people have asked me about my comments regarding the conversion, whether they should sell one and buy the other to take advantage of tax losses, and other thoughts about the future.
Let me restate my thoughts on some of this in one place so it’s clear.
This is what Medinah stated in the 2017 year end update.
One Mining District – One Company
The Altos de Lipangue mining district has always had the potential of being a successful mining region but claim fragmentation and lack of vision prevented it from being so. It took AURYN several years to consolidate the claims. It is time to combine the companies and give all the shareholders direct ownership in those claims.
To this end Medinah plans to satisfy its financial obligations as quickly as possible and distribute the remaining assets to our shareholders before ceasing operations. We anticipate this will leave 1.61 billion shares of CDCH to our Medinah shareholders pro rata. This is a ratio of 0.558 shares of CDCH for each share of MDMN that our shareholders own.
How they do this (distribution, conversion, or some other mechanism) is still to be determined as far as I know. It is also subject to regulatory approval and so forth. Also, note the word plans in Medinah’s statement. This is their intention, not a guarantee. I do not doubt that they will execute this in some way, but I also realize that it is a forward looking statement.
I do not think any of this starts to happen until after the restriction on the AUMC (formerly CDCH / CDCHD) shares is lifted. And to be very clear, because of the reverse split in CDCH and symbol change, I am anticipating it is 0.0058 shares of AUMC for each share of MDMN. With the restriction being lifted December and time for legal work and regulatory approval, I suspect the earliest we could see a distribution of some kind is sometime in Q1 of 2019.
I have no idea how the price of AUMC reacts when that happens. Nor do I have an opinion at this point. There are far too many variables and unknowns. AURYN just announced their Hochschild LOI. Hopefully by the time the distribution occurs we will have a much better idea of what the property holds and is economic viability.
MDMN is lagging AUMC. Perhaps some people sold the more liquid MDMN and bought the far less liquid CDCHD (AUMC) and harvested their losses to offset gains.
Let me state this very clearly. I do not recommend any action one way or the other. Every individual’s situation is unique and I am not anyone’s financial advisor. Trying to play an arbitrage between the two and adding offsetting tax losses into the mix is a very complicated calculation. If you don’t understand exactly what you’re doing seek professional help (which may or may not be worth what it costs based on the amount invested.)