Medinah Minerals (MDMN) - 2016-Q1 - General Discussion

Just remember, Joe P. Kennedy was the first chairman of the SEC when FDR created it. Most liberals were scandalized by it to the point where, New Deal liberal Jerome Frank likened the appointment to "setting a wolf to guard a flock of sheep."
Res ipsa loquitor…I believe JJ was an understudy of Kenndy back then. JMHO

[quote=“geoly37, post:143, topic:704”]
We were told that auxiliary contracts were in place. We never got to see them so we should assume after a year that was BS![/quote]
Geoly,
I understand where you are coming from and I don’t disagree with your sentiment. However, the two points you make here don’t help your argument. With regards to the auxiliary contracts, just last week CHG pointed to text within the publicly released contract that references auxiliary agreements…or at least appendices that have not been made public. So saying the auxiliary agreements are BS can be easily refuted. I think the real issue there is that Les indicated to several individuals (and it was posted publicly) that the auxiliary contracts would be made public. Back then we were told that they would be released in (fill in your favorite time frame). Now someone (like Les) can of course make the excuse that Auryn was going to release the auxiliary contracts, but then changed their mind. Where the truth lies and who one chooses to believe is up to each individual. So the argument isn’t the existence of the auxiliary agreements - it is the public disclosure of what is contained within those agreements and whether or not what is contained within them is for public or private consumption.

You’re letting your frustration get the best of you here and you’re not making a completely accurate statement (I know, I know…STFU Rick!..LOL). Seriously though, Auryn is the one funding the entire drilling and exploration program. They will be the ones (hopefully) shelling out $100 million to exercise the option. They’ve spent $4.8 million as of September 2015 and it is probably in excess of $5 million by now. Auryn doesn’t get jack unless they exercise the option agreement. Medinah is having a full scale exploration program on ADL without paying a dime. The only “cost” to MDMN is that they hand over the keys to the ADL kingdom to Auryn (without relinquishing ownership), and they do what they’re told. And what they’ve been told has been 1) Consolidate the ADL claims, 2) Get rid of JJ, 3) Stop diluting the crap out of the company. I’d much rather it be this way then just about any other alternative.

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I think the answer is obvious… Auryn would be that much time ahead… on their business plan schedule… but we had to go through what we went through… and now we are here… does no good to… look into the past and say… what if… what counts is… what does one do from present going forward…

And I think it is important to remember… we wouldn’t even have the Mountain… not us… nor Auryn… if it was not for JJ…

I feel we are in as good a position today… as we have ever been… and I look forward to the process developing further… as time passes… and maybe as early as this month… we will start seeing an increase in share price… and/or start hearing more specific details of Auryn’s future plans…

We can only wait and see…

My choice would be to focus on the the investment. Not on the posters. Give it a rest.

George being the rare exception. And to your previous point we should be discussing more important and pertinent information.

Some particular posters should refrain from using the forum like their Facebook accounts. These posts that are gibberishly prophetic about the future are adding nothing to the forum and are very irritating to say the least. I would like to think that posts which add something to the forum discussions or if you have a question , would be the preference.

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(This is installment #1 of 8)

AN ATTEMPT AT SIMPLIFYING THE MEDINAH STORY

I FIRMLY BELIEVE IN THE NEED TO SIMPLIFY MEDINAH DUE DILIGENCE MEASURES WITH TWO EASY STEPS-FIRST YOU NEED TO ENVISION AND ESTIMATE THE VALUE OF THE POST-ADL OPTION EXERCISING “NEW MEDINAH” (A MINIMUM OF $100 MILLION IN CASH PLUS A 15% STAKE IN “AMC-IANC”-see Schedule A) AND THEN YOU ASSESS THE PROBABILITY OF AMC EXERCISING THE ADL OPTION AND THIS VISION OF A “NEW MEDINAH” BECOMING A REALITY. THEN YOU SIMPLY MULTIPLY THE TWO TOGETHER TO ESTIMATE AN APPROPRIATE MARKET CAP FOR TODAY’S PRE-OPTION EXERCISING “OLD MEDINAH”

It seems to me that part of the problem with the Medinah market is that the overall story is too darn complicated and too lengthy for a prospective investor to get her or his arms around unless they’ve been around for maybe 18 or so years or they have access to a tour guide. It seems simple to some that after any ADL option exercising by AMC, Medinah is going to have at or above 100 million CURRENTLY VERY STRONG U.S. DOLLARS in the coffers, the interest earning capacity that much cash represents, plus a 15% stake in a very large mining project that has “officially” been given the “thumbs up” by virtue of the option exercising. It is the connotations of the option exercising itself (that the project is ECONOMIC and is a “go”) that gives that 15% stake its value.

It is no longer a potential 15% stake in a corporation that may or may not exercise an option. The early production opportunities and the anticipated extended mine life also are important in valuing that 15% AMC stake as is whether the project is open pitable or not which recent results at the Merlin-Fortuna, Pegasus Nero and new surface gold zone west of hole #24 suggest is highly likely.

In order to estimate an appropriate market cap for today’s pre-option exercising “Medinah” one would have to first estimate the probability of that ADL option getting exercised (Schedule B) and then multiply that by the value of the $100 million MINIMUM cash portion of the purchase price (an easy task) and then multiply that probability by the estimated value of the 15% AMC stake POST-OPTION EXERCISING (a not so easy task).

For instance, if you feel that after studying AMC’s moves to date that there is a 90% probability of the ADL option being exercised then Medinah’s appropriate market cap today might be a “minimum” of $90 million plus 90% of the estimated value of that 15% AMC post-option exercising stake. You’d have to introduce a fudge factor to account for the time value of that cash since AMC might wait until the last minute to exercise the option but I feel that the early production opportunities make waiting that long highly unlikely since they currently “own” nothing.

I think that this is a pretty SIMPLE formula to get at least a ballpark handle on an appropriate Medinah market cap pre-option exercising especially with the significant up front CASH portion in easy to value U.S. Dollars. Keep in mind that the benefits of the cash portion of the purchase price is much larger than the NOMINAL value of those dollars if the current DISCONNECT is still intact at that time. This is because management could simply buy back, demand delivery and cancel ridiculously cheap shares with that cash. This would leave all shareholders with a larger proportionate interest in the remaining cash as well as the 15% AMC stake. One should also note that the value of the U.S. Dollar has gone up 25% since the deal was signed almost 18 months ago. The minimum amount is now $125 million of those same U.S. Dollars present at the time of signing.

WHICH “AMC” ARE WE REFERRING TO?

In wrestling with the concept of Medinah owning 15% of “AMC” post-option exercising after “the project is a go” signal has been sent via the option exercising itself, I think it might be helpful to think in terms of the developmental stages of a PRIVATE entity like AMC, SpA (an Italian domiciled private entity). Today, perhaps among other assets, AMC “holds” 3 ADL related options-1 to earn an 85% stake in the ADL which includes the gaining of LEGAL TITLE to the ADL concessions, 1 to earn an 85% stake in Nuoco’s properties (LDM, Los Amigos, Mambo and Columbo) and 1 to earn an 85% stake in Cerro’s 2 ADL properties (Lonco Millarepu and Fortuna). AMC has successfully corraled “first dibs” on 85% of the mountain but they currently “own” nothing. The question arises as to when AMC needs to “own” something. They also hold an unknown amount of cash.

We don’t know the exact ownership structure of AHC or AMC other than the Letts family is apparently prominently featured in the ownership structure. Questions that arise: Is there a mining major or two already in an ownership capacity of AHC and/or AMC? Is there an interested mining major or two awaiting an NI-43-101 before committing funds to the project and/or AMC? What mining firm is going to act as the “project operator” which typically owns a significant percentage of the action?

From a Medinah shareholder’s point of view, you might think of AMC’s developmental stages as today’s AMC being “AMC Initial” or AMC-I. If and when AMC exercises the ADL option they become AMC-I plus A (for ADL) and they finally “own” something. The ADL represents about 4,500 ha of once disparate mining concessions which AMC asked Medinah management to consolidate into one contiguous package of mining concessions. AMC also requested that the legal ownership of this “package” of assets be consolidated into 100% ownership by Medinah Mining Chile or MMC. This was effected by Medinah purchasing the Quijano family’s 49% stake by issuing 350 million shares when the stock was trading at about 5-cents or about $17.5 million worth of Medinah shares even though there was already a deal on the table just for Medinah’s ADL assets involving the payment of $100 million in cash as well as 15% of the action on the ADL project. It’s the Chilean subco’s like MMC, with their DL-600 credentials intact, that typically hold the LEGAL TITLE to mineral concessions in Chile.

If and when AMC exercises the Nuoco option think of them as becoming AMC-I plus A plus N. Nuoco has about 2,400 ha of ADL related concessions involving the LDM, Los Amigos, Mambo and Columbo concessions. If and when AMC exercises the Cerro Dorado option they would then become AMC-I plus A plus N plus C or AMC-IANC. These various option exercisings may or may not end up being somewhat simultaneous. At the moment AMC goes public, if that is their plan, let’s refer to that entity as AMC-P. That could conceivably happen at any time within the AMC-I to AMC-IANC continuum.

Keep in mind that if the TSX.V or TSX is involved, then AMC must have a minimum of 200 shareholders at the time. An RTO (reverse take over) into a shell might provide the necessary shareholder number or perhaps a mini-share swap with Medinah might do the trick. Once public, I would think that AMC would heartily welcome the interest of a couple of thousand mining investors/Medinah shareholders already with vested interests.

Since Medinah already owns 15% of N (Nuoco) then if and when AMC exercises the Nuoco option (perhaps after they exercise the ADL option) Medinah will own 15% of AMC-I plus A plus N (“AMC-IAN”). AMC would still have to earn that 85% of Nuoco by fulfilling their commitments to Nuoco and I picture Medinah as pretty much sitting off to the side while this occurs. I’m assuming that the LEGAL TITLE for the Nuoco properties will flow into AMC-IAN perhaps facilitated by Medinah’s option to acquire the 85% of Nuoco they don’t already own. Interestingly, this option was drafted by AMC’s lawyers. In these sometimes confusing relationships, it’s important to keep an eye on where the LEGAL TITLE to the mining concessions reside. It’s also critical to keep in mind which stage of development those concessions have attained i.e. pedimento, manifestacion or mensura.

Again, think of “Medinah” as being not just the owner of a large percentage of these mining concessions but also as the entity chosen to spearhead the achievement of AMC’s goals. The option to buy and gain title to the 85% of Nuoco’s LDM, Los Amigos, Mambo and Columbo mining concessions Medinah doesn’t already own resides within “Medinah”.

Since Medinah already owns 7.5 million Cerro Dorado shares which may or may not approximate 15% of that corporation, then I would anticipate another smooth transition here also with AMC doing what it needs to do to earn that 85% Cerro property stake and perhaps Medinah once again somewhat standing off to the side or aiding in the effort to transfer the LEGAL TITLE of these 2 groups of concessions eventually into AMC. Medinah could conceivably acquire title to these two properties via a purchase involving Medinah shares while keeping in mind that Medinah already owns 7.5 million Cerro shares. You can’t help but notice all of the 85% and 15% stakes and the extent of the previous planning directed towards AMC’s original goal of acquiring the entire mountain’s mining assets.

Medinah seems to be playing the role of a “holding company” designed to hold the assets that AMC seeks under the watchful eye of Sr. Letts as a Medinah BOD member. You don’t see any AMC ownership stakes directed anywhere except the 15 percentage points aimed in Medinah’s direction upon the ADL option exercising. I’m assuming that if AMC goes public they’re going to need to have LEGAL TITLE to all of these mining concessions and “own” these assets or perhaps come to own these assets as part of the terms of any IPO associated with going public. Note that the ownership structure of AMC might change as they gain investors and morph from AMC-I to AMC-IANC to AMC-P. The 4 main methods for going public on the TSX or TSX.V are via an IPO, an RTO (reverse take out of an existing shell), a CPC (capital pool company) or a direct transfer from a different “reputable exchange”.

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Few things to focus on…

  1. Auryn releasing news this week.

  2. Shortly after the release of news, Auryn will again finally be in position to restart buying Medinah shares in the market. European groups might become more aggressive in the market as well. In both cases, who knows when exactly the buying will start, how much will be bought or how aggressive the buying will be and how long it will last.

  3. Auryn finally rolling up their sleeves and starting to promote the mountain in January.

  4. Business trip to Chile starting in 2 weeks. Among various things on the agenda, most notable is attempting once again to resolve the JJ share issue.

  5. Share price/shareholder mental health…I think we will all start feeling better soon!

  6. The fact they Auryn has discovered a preserved(complete) epithermal gold/silver system potentially worth billions of dollars.

Mike why would Auryn be in a position to buy now, just because of disclosure? Obiviously the JJ share issue still hasn’t been resolved

Might be an interesting day in the markets in general. Chinese market 7% loss when they halted trading. FWIW

Exactly. Without the issue with JJ and his shares being resolved, they won’t be buying. But Mike is picking up on Lesism’s. Mike said “shortly after the release of news, Auryn will again finally be in position to restart buying”.

“Shortly” could be 4 months in relation to the 16 years some have been invested. Don’t expect any buying until you hear definitively from Auryn that it is in possession of JJ’s shares.

Hi Mike. Just a few questions.
Why would you think that news is coming out this week, which may increase sp, prior to Auryn resolving the Juan share issue?
Why has Auryn not been successful in legal action against Juan to obtain the 350 million shares that he previously contractually agreed to transfer to Auryn?
And lastly,just want to know if the comments per your post are based on a reliable and credible source ? Or based on laws of probability or wishful thinking?

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??

The JJ share issue is not preventing Auryn from doing anything save perhaps being in a position to make a tender offer.

Auryn is going full speed ahead with their business plan. What they disclosed recently is only the start of the release of information they have to share. They are now back in the mode of the normal timely release of news.

If for some reason, they choose not to buy shares in the market because of the JJ share issue, it is a choice, not a requirement.

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But why would Auryn release positive exploration news now which would only make it even more difficult to extract Juan from MDMN ownership?
I am not trying to be difficult , just trying to understand this issue.

???

You need to drink your morning coffee…Auryn has already release great exploration news!

Thanks Mike for your response but there is news and there is NEWS. Auryn’s last exploration news release had little impact on sp. And their news contained little about future exploration efforts which was confusing.
Can anybody else take a minute to explain why we would get more positive news from Auryn before they deal with the Juan share issue?

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I think with the business trip so close at hand… that Auryn will hold off on any news… I would also think they would like to settle the JJ and Family… share issue(s)… before going forward into the open market… to buy shares… however Auryn won’t wait forever on JJ and Family… at some point they will move forward… with or without them…

But non the less… with the news that has already come out… we may see some new buying coming in… once investors start… turning their attention back to the market… now that the Holidays… are over with…

JMHO

Their next update will be their long awaited corporate update.

Again…you need to set aside the notion of connecting the JJ share issue with Auryn conducting their business plan. It likely impacted the release of information over the Summer/Fall but no longer. (Some speculated that it slowed down the pace of exploration on the mountain but I think that isn’t true. Rather, it was their change in focus of the development/early production of the Merlin veins that shifted their focus from exploring other targets.)

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Thanks again Mike. So Auryn will keep developing/proving-up MDMN’s resources even though Juan still controls 350million shares and he can also go to the market and further increase his position of shares?
Anybody?

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Yes… that I believe to be a true statement… “Auryn will keep developing/proving-up MDMN’s resources even though Juan still controls 350million shares and he can also go to the market and further increase his position of shares?”

But so can anyone… go to the market… and further increase their position of shares…