My gut says we need to let things play out just a little further. From my limited view, our financial incentives with AMC are aligning tighter and tighter almost by the day but they’re still not 100% coaligned. I sense that we are still sitting across the table from AMC on a few issues. This might be why Medinah is apparently bringing in the heavy artillery lawyer for this next series of meetings instead of just using AMC’s legal staff for the more mundane tuff. To me, the 10,000 pound gorilla at the moment is how to divide up the cash flow from the early production opportunities and whether or not Medinah has the leverage to say “Let’s divide it up 85/15 RIGHT AFTER YOU EXERCISE THE OPTION”.
I don’t think deciding that issue made a whole lot of sense UNTIL that recent approval by the SEIA (environmental guys) was secured in regards to IAL’s baseline work. Now that the SEIA has the baseline water purity issues in hand they are in a position to monitor if AMC’s leach pad efforts on the plateau are hunky doorie. The 3 cites in the watershed chosen to test suggest a leach pad is going in somewhere in between sites 1 and 2 up on the plateau. AMC already told us they like that area where Merlin 3 heads west from the Fortuna Oeste Vein. Those 3 test (and retest) sites are all downstream from this area.
From my vantage point, there would be no way that AMC would exercise the ADL option UNTIL that environmental baseline work was done. These matters can become protracted beyond one’s imagination. The early production opportunities are extremely critical to the overall economics of the entire project. We saw from a recent plot map that AMC successfully secured the Caren concessions and they mentioned that this group of concessions was preapproved to produce 5,000 tonnes per month or about 167 tpd. I believe that Medinah’s ADL concessions are currently permitted at somewhere around 5,000 tpd or 30 times that number. We’ll see what the “run of the mine” average grade comes in at but if you take pencil to paper using industry standard metrics for that area somebody’s going to be making some serious bank pretty soon.
AMC has already expanded the lineal extent of the known vein sets making it to surface from 400 lineal meters to over 5,000. I sense that the upcoming drilling (current drilling?) will provide a seeing eye dog role for the production efforts.
As far as the role of JJ’s share block, if the issue is as simple as determining if the July contract is binding or not and those shares are sitting in some escrow or trust a/c somewhere I would think a resolution is coming quickly and is well overdue. Whether the share price level at the time of adjudication is “x” or “2x” I wouldn’t think it would have any bearing on the result and I would certainly suspect that AMC’s lawyers have a pretty good idea what the ruling is going to be. Either way AMC is going to need a whole bunch more of Medinah shares in order to gain control. I wouldn’t think that AMC’s lawyers would let AMC affiliates get anywhere the market if they’re about to announce that we’re going into production or an exchange listing has been applied for or the option is about to be exercised. No way. My hope would be that the successful completion of the preliminary environmental work might trigger contractually mandated moves.
A usual you lost me. Let’s say AMC has the option to buy 200 million shares from large shareholders or out of the Medinah treasury at the same price. They currently own “X” amount of shares. After either transaction they would own 200 million plus “X” shares. I think we agree that their end goal is CONTROL. If they bought the shares from large shareholders that money would go into the shareholder’s wallets or back into the market. If they buy it from Medinah at these lousy share prices that money would go into buying back and cancelling A WHOLE BUNCH OF SHARES. This would make AMC’s percentage ownership much higher than if they handed that same amount of money to large shareholders. THEIR GOAL IS GAINING CONTROL AS ECONOMICALLY AS POSSIBLE. If they handed a bunch of money to large shareholders, many of them would probably take the cash and buy back cheap shares and increase their position to much more than then what they had when they started. They would be front-running AMC’s buying efforts and making their CONTROL goals that much more expensive. There is a DISCONNECT present and Medinah management would be in a position to lever it for the benefit of all shareholders because all of our percentage ownerships would go up.
Exactly. I’m obviously not referring to the block as a theory or game playing but rather the notion that Auryn will provide MDMN with capital so that we can drive the stock higher. Makes no sense but this “debate” has already been covered and people can make up their own minds on plausibility.
Doc you totally lost me, since MDMN has only 7.8 Million shares in treasury there is no way that could generate enough money if they sold those shares to Auryn to buy back MDMN stock. There is no 200 million shares in treasury!
That still does not make sense ,since when you increase the Issued and outstanding at the same time it increases the amount that Auryn would have to acquire to gain control. Yes I know they would then use the funds to pay back the shares issued plus more, and if their is a big disconnect from the transaction with Auryn to the market prices they should have plenty of more money to eliminate more shares than issued., but it just seems like circular reasoning. Also I believe their may be a problem in accounting for the transaction , I believe they would have to record a profit on the the private transaction especially if it is significantly above market prices they are buying back the stock at. I understand the math but I believe the mechanics are not the simple to implement. If it is legally possible and also justifiable from an accounting point of view I would sure like to see where any company ever tried to do such a thing. Also you would have to assume that the price of the buy back does not go up significantly. I believe this one is nice in theory but not in a real world application. JMO
I don’t think Auryn will give MDMN one penny until they are ready to either exercise the option or do a buyout. If all Auryn wanted was control, all MDMN has to do is issue/sell Auryn 1,000,000 preferreds with super voting rights. Maybe 500:1. Solves the whole control issue.
Yes, I thought about those points as well, and also the brotherhood of brokers and the DTC cover up, and I do believe that such an action of pulling that many certificates would be significant enough to may topple the apple cart and put both the brokers and the DTC on the edge of their seats, especially if it happen at a single broker. JMO
Again, this has been covered. You may disagree but it’s not hard to follow my point.
Similar to JJ who will undoubtedly be restricted from buying shares in the open market after selling his block, shareholders would have the same restrictions following a private sale. This is a given. Unlike JJ who would most likely break this legal restriction, shareholders who actually have an appreciation for a legally binding agreement would be prohibited from reentering the market.
The only way your scenario makes sense would be if MDMN offered enough shares (through whatever transaction) to give the Letts control. This would not be a “win” for shareholders at current prices (more ridiculous dilution) and we’d have to rely on the Letts coming into the market to buyback/cancel shares. Somehow I don’t see Auryn buying 500M shares at 5 cents (aggressive given where we are trading) and then using the $25M of proceeds (that they just coughed up) to buy shares for anything above 5 cents. As the Irish would say that is literally “pissing away money”. Unlikey given the billion the Letts just lost in the market.
Always a good rule to move on to another “hypothetical” when the math doesn’t work. IMHO. I thought we had already done so after the last time we discussed this topic but some “stories” die hard
That all sounds good but I do not believe you can legally restrict any shareholder from buying more stock even if it is part of a private deal. If it is legally possible it would be almost impossible to enforce.
Cash is king. Nobody is giving it to MDMN or anyone else to execute some penny stock short arbitrage strategy. Any cash will go into the ground and maybe (if MDMN gets some via production) into a buyback or dividend combination.
Let’s just assume the early production talk isn’t bluster. Supposing AMC can produce at 5,000 t/mo. Say MDMN negotiates a 30% return on that. Now we have some cash flow to use to reduce the float and dividend to shareholders.
Hopefully when they go down there to negotiate this agreement, they don’t settle. Play hardball, guys!!! Tell AMC to either exercise the option or we get a serious percentage of the cash from early production!
Restrictions on selling/buying shares is the cornerstone of private placements/transactions. People often break the rules and some people have gone to jail for doing so but these types of transactions wouldn’t work without these restrictions for some pretty obvious reasons.
I sure would hope they first pay off the $2.1 Million in shareholders loans, just so they do not do another Preferred issue at a ridiculous debt to preferred exchange rate which is convertible into common.
I guess it is possible, but I imagine on most private transactions this is not an issue because the seller simply wants out. This JJ situation is different so I do see the need for it, but simply think that enforcement would be difficult for all the obvious reasons.
This topic has been regurgitated ad nauseaum, so here’s one more. MDMN has 3 (or more) signed contracts that it holds as very valid leverage. Any attempt by AURYN to gain majority control of the company, without explicit permission made, and announced, publicly by MDMN’s BOD would likely be viewed by regulatory authorities as a hostile takeover. I don’t believe this is AURYN’s best choice at this time as AURYN is primarily interested only in those claims under contract, and those contiguous claims it has already procured rights to. It does not need the legal entanglements that could ensue from pursuing a hostile takeover of MDMN (the company). The assumption that AURYN is maneuvering for majority control may not be valid in moving the projects forward and gaining legal title to 100% of the mining claims.
A TO for the 15% equity interest would be likely sometime after AURYN (or simultaneously with) has satisfied the current written JV offer agreements, IMO, and only for the properties contained in the contracts. These agreements may be modified and bundled into a single package to be placed in a vehicle on the TSX exchange. Time will tell. I don’t think AURYN will offer a TO for the company (Medinah Minerals), only the properties under contract will be involved. The TO will only be for the 15% equity interest of AURYN remaining.
I don’t think AURYN has any intention of filing a Schedule 13D, that would very likely be required in the case of a hostile takeover bid of MDMN, the company. If the TO is only for the 15% equity interest after exercising the options (or modified consolidated option) agreements, I don’t think AURYN has any need to comply with the requirements of filing a Schedule 13D.
Schedule 13D consists of seven different sections:
Security and Issuer - This section contains basic information regarding the type and class the security and the contact information of the owner. Identity and Background - This section contains even more background into the owner, including if they were involved in any criminal activity in the past. Source and Amount of Funds or Other Considerations - This section lets investors know where the money is coming from. The most important use for this section is in determining if a buyout situation is overleveraged, when a majority of the purchase is leveraged or borrowed capital. Purpose of Transaction - This is the most important portion of the 13D filing. It allows you to see why they are buying shares in the company, whether it be for acquisition, hostile takeover, proxy battle, or simply because they believe it is undervalued. Interest in Securities of the Issuer - This section states the express purpose of the transaction, which should be explained better in section 4 (Purpose of Transaction). Contracts, Arrangements, Understandings or Relationships with Respect to the Securities of the Issuer - This section contains any special relationships between the owner and the company. This is important to be sure that the buying is legitimate and not just a friend purchasing stock or the result of some other agreement. Materials to Be Filed as Exhibits - This is the second most important section. It contains any exhibits that may be filed along with the form. This is famously used for the filing of letters to management in the event of a hostile takeover. Exhibits can also elaborate on the Purpose of Transaction (Section 4). en.wikipedia.org
I don’t think AURYN has any intention of filing a Schedule 13D, that would very likely be required in the case of a hostile > takeover bid of MDMN, the company
Schedule 13D does not apply to OTC/non-reporting companies, so it has no bearing on MDMN or Auryn.
Hypothetical production profit potential of a penny a share with early production assuming MDMN gets 30% and grades of 30g/t at 90% recovery for 5,000 tpm.