The Mining Play

Medinah/Auryn - 2019 - 1st Quarter General Discussion

I spent some time with MC and others at the booth. He’s a very amicable, enthusiastic, guy who has sincere optimism for all of the various Auryn/Masglas assets. I would say that LDM, Fortuna, etc. is less of a focus vs. some of the other projects where they have spent significant money but they are nonetheless very excited about some of the early results. Peru is clearly a priority over Chile for the indefinite future

They are pretty much deferring to Hochshild to advance things at their pace (which is known to the industry as being very slow). I would be very surprised if MC doesn’t ultimately make the decision to roll all of the assets under one umbrella using the AUMC shell. I wouldn’t hazard a guess as to what that may mean (from a dilution standpoint) to existing AUMC shareholders but it would make a lot of sense for maximizing any value the public markets would assign to a diversified resource play.

The good news/bad news reality is that MC doesn’t need to raise any more money. Good because this means there are no immediate plans to further dilute AUMC. Bad because there is no incentive to move the stock up. If you’re a long-term holder of AUMC shares I would suggest you start to do more work on the other Masglas assets b/c, at the end of the day, they will make up a larger percentage of what you own with each share.

I was told the MDMN/AUMC share issuance/consolidation would happen over the next few days.

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Looks like somebody wanted some shares today and gobbled them up. Still another fairly large buy
order sitting there.

Thank you John! Does this change your mind and get you back into the mix?

DD. No, I’m happy watching from the sidelines at this point because I don’t have any way to value this investment. There are a lot of companies with several years of production and considerable exploration upside that are trading at smaller market caps. I acknowledge that any of the Auryn/Masglas projects could turn out to be WCDs but there are a lot of multi million ounce deposits trading at ~$10 in situ per ounce.

With a market as distressed as the one we have witnessed over the past 8 years you can find a lot of lower risk projects, down 90%+ that offer similar upside with a lot less uncertainty. The highly speculative, exploration stage projects will attract the second wave of capital once this market finally turns. That will be when you want to have a position in AUMC, IMHO.

MC also mentioned that Les continues to sue them for certain claims covered in the Auryn acquisition. Figured I’d mention that in case anyone thinks that Les Price has completely exited this story.

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I would like to put the money in other projects that AUMC will have problem is I am looking at 95% loss and over 100,000 invested into this stock so looks like I am stuck. Good Luck with your other investments!

Baldy,

Thanks for taking the time to do this!

Any insight on the Caren vein mining or lack thereof? Is that ever going to mount to anything or have they mouth balled that project until further notice?

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I don’t think they have mothballed anything. I believe the have some encouraging data across many of the projects, Fortuna included, that have not been made public. Until/unless they reach a phase where it’s in their best interest to have a higher share price, the public markets, PR, etc. are going to take a back seat to everything else. Focusing on execution over hype is clearly a more sound strategy unless one is looking for some upside momentum or share appreciation. This needs to be a “long-game” strategy for those who remain invested here.

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Oh I know your pain…bright side is we did it and everyday that goes bye just think…we learn from our BIG mistakes!

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So now they have money?

If the share exchange is going to happen within a few days, looks like Medinah shares should get a bit of a premium in the exchange?

Assumptions:

Medinah 2.9 billion shares outstanding
Auryn 70 million shares outstanding
Medinah owns 25% of Auryn (24.848 + they own 300,000 shares of Auryn)

70 million * 0.25= 17,500,000 shares of Auryn goes to Medinah
17,500,000 / 2.9 billion = 0.006 shares of Auryn per each share of Medinah.

Current share price of Medinah: Bid .0023 Ask .0027
Current share price of Auryn : Bid 0.54 Ask .71

Current fair value for Medinah shares would be:
At Auryn’s current bid 0.54 * 0.006 = 0.00324
At Auryn’s current ask 0.71 * 0.006= 0.00426

Premium increase = .0023/.00324 = 71% at Bid
= .0027/.00426 = 63% at Ask

Any comments on my math?

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No problem with your math, just your assumption: that Auryn’s share price is the benchmark. You could just as easily do the calculation in reverse, using Medinah share price as base and decide that Auryn is overpriced. Or both could float toward convergences. Until both are freely trading there really are no arbitrage opportunities.

Medinah shares are being converted over to Auryn shares so it only makes to sense to convert one to the other especially since the only value of Medinah to begin is its shares of Auryn.

Probably a more appropriate caution is that once Medinah shares are converted to Auryn, it will likely have some negative effect on the share price of Auryn because its liquidity will suddenly increase unless there is some sort of restriction applied to the new Auryn shares or otherwise the conversion process is more complicated than just a swap of trading symbols in your brokerage account with a conversion factor applied. Nevertheless, I think just the conversion process itself will increase Medinah’ shareholder’s bottom line based on where we are at today.

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If you take the information from this news release: https://aurynminingcorp.com/auryn-sells-mining-claims-cerro-dorado-inc/ your calculations may be a little different. since we own not a % of Auryn public company, but we own a percentage of Auryn private company at this point. So if Auryn private owns 66,500,000 shares of Auryn public and we own 23.559% of auryn private which equals 15,666,735 of Auryn public (66,500,000 x .23.559). Plus the 300,000 ( I assume that is the correct number) shares we directly own of Auryn public ( via the CDCH shares we owned ). According to my calculation that comes to 22.81% that MDMN owns of Auryn public (15,966,735/70,000,000). I may be incorrect but that is how I read that PR.
Also it gets a little confusing since some of the shares that we gave up in Auryn private went to pay off the loan to Auryn Holding Company, but I belive that works out since we own less that 25% of Auryn public and and CDCH owns less than 5 % since the differences went to pay off the loans.

So the ownership in Auryn public is divided by Auryn Private, Auryn Holding ( shares for debt repayment) the original CDCH shareholders, and MDMN shareholders.

Without doing the actual calculations MDMN’s ownership is probably about 23%, CDCH ownership is probably about 4.5 % , Auryn private ownership is about 70% and Auryn Holding is about 2.5% in Auryn public company.

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If we use Karl’s percent:

Medinah 2.9 billion shares outstanding
Auryn 70 million shares outstanding
Medinah owns 22.81% of Auryn

70 million * 0.2281= 15,966,735 shares of Auryn goes to Medinah
15,966,735 / 2.9 billion = 0.0055 shares of Auryn per each share of Medinah.

Current share price of Medinah: Bid .0024 Ask .0028
Current share price of Auryn : Bid 0.54 Ask .71

Current fair value for Medinah shares would be:
At Auryn’s current bid 0.54 * 0.0055 = 0.00297
At Auryn’s current ask 0.71 * 0.0055= 0.003905

Premium increase = 1-.0024/.00297 = 20% at Bid
= 1-.0028/.0039 = 29% at Ask

That is probably right especially since the calculations now approximate the exchange ratio mentioned in the previous PR of https://medinah-minerals.com/medinah-recap-look-forward that was .00558.

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 (or 16.1 Million after the reverse stock split) 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.

So, for every 100,000 shares you own of MDMN you’ll get 550 shares of Auryn. Let me point out that Auryn’s vast array of properties, IMHO, is worth far more than 71 cents per share. Hopefully that will be born out within the next year.

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Or for every million you own is 5500 shares😉

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About 5 minutes ago the bid on AUMC was.15 cents now it is .21
That is super low

Yup. Like the market knows what’s coming

Its now trading less the MDMN .0021 or .021 Auryn before the reverse