The Mining Play

Medinah Minerals (MDMN)- 2017 Q4 General Discussion

What I find interesting is that CDCH ownership in Auryn was not reduced from 5 % buy eliminating the debt from the cash call instead they issued more stock in CDCH to Auryn to eliminate the debt. In MDMN case they eliminated our debt by reducing our interest in Auryn by .029% . My quess the different approach was to compensate CDCH for becoming the shell company that Auryn assets were merge into saving the expense of finding another clean shell. Now the question is whether JJ still owns any of CDCH shares or is he completely out as well and what happens to American Sierra Gold Corp. Is there a possibility that too will be merged into CDCH or will it remain independent?

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I agree Karl, I arrived at that same “rough” $56M “present valuation” of the “claims package” as of the close this afternoon on the CDCH thread. It appears you made a good purchase today. Daily fluctuations may change portfolio values from day to day, but when all the dust settles it all just boils down to what HR said yesterday:

If it wasn’t for the many insightful contributions this board, I and probably many others would have jumped off the bridge a long time ago. Haven’t said that, I am looking forward to the day when we no longer have to surgically dissect a news release, to figure out what they were trying to tell us. Perhaps today we got a lot closer to that reality…

MDMN didn’t have enough O/S to settle the debt.

From today’s updates, MDMN had 2,881,282,073 OS. That leaves 118,717,927 OS left to settle debts. They owed Auryn $1,648,140. If we divide that by the conversion price of 0.005, that comes to 329,628,000 MDMN shares that would be needed to settle the debt. If you use a lower conversion price, that equates to more shares. MDMN simply didn’t have enough shares to cover the debt. I guess they could’ve used part of the MDMN shares, but why complicate matters when all of the shares are going to be consolidated pro rata anyway?

I reread the documents and I believe I made a mistake in my first calculation since it is a little confusing. First CDCH issued Auryn 38,380,936 of CDCH stock for the extinguishment of debt owed Auryn from the cash call. Then Auryn sold all its assets to CDCH for 95% of CDCH or 6,650,000 shares so then Auryn owns 6,688,380,936 shares of CDCH in total. I assume that MDMN owns 23.559% of the total of 6.688,380,936 or 1,575,715,665 shares of the recapitalized CDCH. If this is correct and if MDMN has 2,881,282.073 shares outstanding that gives me an exchange ratio of .54688 in the exchange and we only own 22.5% of the recapitalized CDCH in the end. The existing CDCH shareholders own 350,000,000 - 38,380,936 ( debt repayment) which equals 311,619,064 shares of CDCH or 4.452% of the recapitalized CDCH and the balance of 72.048 % goes to Auryn of the recapitalized CDCH. So CDCH holders interest was reduce from 5% of Auryn to 4.452% of the recapitalized CDCH or by about 11% and MDMN’s interest was reduced from 26.5% of Auryn to 22.5% of the recapitalized CDCH or by about 15%, So MDMN got about a 27% greater hair cut than the existing CDCH shareholders. Not sure how that seems fair! Yes once again our MDMN executive management looking out for our interests!

Some please correct me if I am wrong!

Yes but they could have increased the MDMN shares authorized just like they did with the CDCH shares in order to do the recapitalization!

Here’s a Thought: Do you really think if they were going to trash these companies they would engage in all the current reorganization activity?

Admittedly, I’m just like everybody else and am waiting to hear what their status as to the achievement of their goals, early production and JV of certain pieces of the ADL. We’ve been believing they would do so for a long time. If they would at least give us an update and prognosis on that part, then I think everybody would fell a lot more comfortable. Is there still any strategic/legal reason they CANNOT do so?

Personally, I hold out hope that, in accordance with brecciaboy’s rationale, the ADL will be found to hold somewhere between 20-30 million ounces of golf equivalent (two porphyries, the Gordon breccia, skarns, etc.). It will take a long time to confirm same through drilling, trenching, etc., but I’m willing to wait while we do so on our own. In the meantime, it would be nice to know that we are producing and making money to fund such drilling/trenching expenses going forward so that we will not experience further dilution. Yes, I know we’ve been expecting a recapitalization event for some time now, but I do believe they wouldn’t have wasted the time to engage in all these precipitous moves for nothing. Here’s to dreaming about … Christmas news.

Looking at the Cerro chart: http://stockcharts.com/h-sc/ui?s=CDCH

The one thing that really stands out is they very low trading volume no doubt due to the low public float of shares. (Medinah can easily have more trading in one day than Cerro has in months combined.) With more than 95% of the shares locked up for a year, even a little buying should have a dramatic positive impact on the share price. Seems reasonable to expect that Medinah will go up to stay close to the .558 ratio. Look for a quick jump in Medinah to 1 cent and beyond with any positive news from Auryn such as a JV with a Major, start of a “massive” exploration program, good gold production numbers or the reopening of the Fortuna. Medinah may jump to 1 cent simply if Cerro runs a bit on some higher than normal buying pressure.

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The one year restriction is for us current shareholders or for new buyers also?

Karl -

First, good catch on the 38.38 million CDCH extinguishing the debt for the cash call. I believe that is incorrect. That went to AURYN Holdings Corporation. Not AURYN Mining Chile SpA. I contacted management and they removed the ambiguity.

Prior to the purchase agreement being exercised Cerro issued 38,380,936 of common shares for payment of $300,000 in debt to AURYN Holdings Corporation. This resulted in Cerro having 350 million shares outstanding, no debt, and a 5% equity interest in AURYN Mining Chile SpA.

Now lets work through the rest of the numbers. I’ll use AMC for AURYN Mining Chile. AHC for AURYN Holdings Corporation.

CDCH indirectly owns 5% of AMC claims and has 350 million shares per news release. They issue 6.65 billion shares for AMC’s claims. CDCH now owns 100% of claims. CDCH shareholders are made up of 5% current shareholders (350 million shares) and 95% new shareholder AMC (6.65 billion shares). No discount.

MDMN paid AHC for its cash call as well. After that tranasaction, MDMN is left with 23.559% of AMC (or 23.559% of the 7 billion shares of CDCH that AMC now owns.) The MDMN update indicate that MDMN anticipates it will be using its remaining assets and some of that 23.559% to pay off all its debts. They anticipated having 1.61 billion shares of CDCH to distribute at the end of the day. That is 23% of CDCH’s 7 billion. So it seems they’ll be using current assets plus 0.559% to pay off the bills. No haircut. They do have to pay off the bills.

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Since CDCH has been selected as the absorption company for the merger of all companies, its capital structure will be the basis for all allocations and percentage splits between the companies.

After settling all of its debts, CDCH will have 350million shares outstanding and will own 5% of the new company. ( 350million/.05 = 7billion shares ).

After settling its debt with AHC, MDMN will own 23.56% of the new company, or 1,649,130000 shares. The remaining 5,000,870,000 shares belong to Auryn ( 71.44% )

Counting the CDCH shares already owned by MDMN ( 29.15million, Les etc. ) and the payoff of the remaining debt, MDMN ends up with 1.610billion shares ( 23% ). This results in .558 shares of CDCH for every 1.00 share of MDMN.

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^^^ what zotron said! :slight_smile:

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Hey Kevin, I presume that MDMN is going to divy out CDCH shares to shareholders. “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.”

Do you have any idea if there are any plans for the MDMN vehicle after that? Are we still going to be holding MDMN shares, or is there going to be an exchange, to your knowledge or in your opinion? TIA for any clarity on this.

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At the October 1, 2016, Las Vegas shareholders meeting, after the new Auryn/Medinah management team detailed what the previous scoundrels had done, we were told to hope for the best but to expect it to take a minimum of 18-24 months to sort through all the resulting legal and financial entanglements — and even then we shareholders all might easily wind up with nothing.

Fourteen and a half months later, we have this applause-filled moment.

On the speed of execution front, the whole Auryn/Medinah management team has earned an A-plus-plus.

— madmen (Brad Newsham)

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I don’t know the mechanics at this point. I don’t think (AMC/CDCH) does either. That will more likely be something that the security attorneys workout.

I have made a plea to management that it be done as quickly as possible, that if it is at all legally possible, MDMN shareholders get unrestricted shares, and that it be something that is done without anyone having to request certificates and manually exchange.

My personal hope is that one day I have CDCH shares in my account in place of the MDMN shares at the assigned conversion rate.

That said, after the distribution MDMN will be a worthless shell. I don’t think they can simply remove my ownership in the worthless shell. So it may be that I have millions of MDMN shares that have no value. Eventually I expect someone will assume control of the shell, clean it up or otherwise dissolve it.

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Thank you Kevin
So was was cdch selected as the chosen shell because it’s already in existence and cheaper than creating a new Auryn IPO?

We also may benefit down the road from the additional assets owned by Auryn and now sold to CDCH - outside of the ADL

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From the announcement: “AURYN shareholders now own 95% of the issued and outstanding shares of Cerro. These shares have a one-year restriction on them.

Does this one-year restriction have any impact on my ability to sell some of my shares in MDMN and CDCH on, let’s say, Monday morning? Or any time thereafter?

Are MDMN and CDCH shares still as liquid as they were last week?

— madmen

I read it that only the 95% are restricted. So any existing common shareholder that owns any of the 5% are free to buy/sell

Thanks for the clarification on the that the debt repayment that went to Auryn holding corporation and not Auryn Mining. That probably also means that our 2.9 % of Auryn Mining also went to Auryn Holding for our repay our debt. That changes one part, but I believe further clarification is still need.

So Auryn holding as a result of the first step gets 38,380,936 of CDCH stock for the extinguishment of debt out of 350,000,000 shares issued . then Auryn Mining hands over 95% of Auryn Mining assets for an additional 6,650,000,000 shares of the recapitalized CDCH. So as a result CDCH existing shareholders still only own 311,619,064 shares of CDCH or 4.452% of the recapitalized CDCH ( 350,000,000-38,380,936 divided by 7 billion shares) the other .548% goes to Auryn Holding so CDCH still only gets a 11 % hair cut. So the real question becomes whether MDMN owns 23.559 % of Auryn Mining or 23.559 % of the recapitalized CDCH. I believe it should be of the recapitalized CDCH, which would mean we own 23.559 % of the recapitalized 7b shares of CDCH that means we own 1,649,130,000 shares of CDCH. Then our hair cut is from 26.5% Auryn mining of to 23.559% of the recapitalized CDCH which is also about 11%, the exact same haircut as CDCH. That makes perfect sense, but the way the article is written it sounds like we own only 23.559 % of Auryn Mining and Auryn Mining owns only 95% of the recapitalized company. If that is the case my original calculation becomes even worse since it changes our ownership in the recapitalized CDCH to 21.876% which definitely would not be fair.

Assuming that we will own 23.559% of the recapitalized CDCH, then the pie in Auryn Mining is 23.559% MDMN, 4.452% to existing CDCH shareholders prior to the recapitalization and 71.989% in total to Auryn Holding company. if that is the case all is good!

Now that makes perfect sense, but that is not how the article reads. I believe a further clarification is necessary!.