The Mining Play

October 1st, 2016 Informational Meeting News

Announcement:
We are going to ask a couple of folks to post a closing summary of the meeting info here, @brecciaboy @MikeGold. +other?
Then we will lock this topic and keep it as easy referrence to meeting info.
ALL OTHER comments and posts please return to Q4 discussion.
Thank you.

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2 posts were merged into an existing topic: Medinah Minerals (MDMN) - 2016 Q4- General Discussion

Attention Mike and brecciaboy, we’re sitting on the front two inches of our seats. Please stop with the laziness and post your summaries immediately - we all need our dose of bedtime reading material … bwahahahaha!

3 posts were merged into an existing topic: Medinah Minerals (MDMN) - 2016 Q4- General Discussion

Many thanks for the great summaries from the meeting as well as the photos from the PowerPoint presentation. I’m still trying to process tons of information from the formal meetings and various side bars while trying to cross reference it to what we knew before the weekend in regards to both geological and corporate governance issues. I feel we did make a tremendous amount of progress this weekend in advancing along the learning curve we need to negotiate regarding all things Medinah.
There are a couple of things that I feel might merit considering in regards to how REVERSIBLE the dilution damages we recently learned of are. In order to do this I think we need to go back to the concept of “book value per share” (BVPS) as a key metric to gauge the appropriateness of share prices. By book value per share (BVPS) I’m referring to assets minus liabilities divided by the number of shares issued and outstanding. Due to Medinah’s 15% Nuoco percentage stake, both the numerator (top part of the fraction) and the denominator (bottom half of the fraction) of the BVPS equation are in play in this particular problem resolution scenario. If you assume that liabilities are close to zero due to certain recent debt forgiveness developments then the Medinah BVPS ratio can be roughly simplified to assets divided by shares I and O.
As KMT cited, since Medinah has 25% of the action on the three fourths of the mining district that AMC owns 100% of and 36.25% of the remaining one fourth (“the 4 Nuoco claims”) then in essence going into the meeting weekend Medinah owned 28% of “the action” for the entire mining district. The various percentages of “the action” for the overall mining district versus those for the percentage ownership in AMC are going to differ because of Medinah’s retained 15% interest in the 4 Nuoco properties. It is the slightly higher percentage ownership of “the action” in the overall mining district that best portrays Medinah’s assets.

Please keep in mind also that this is indeed a “mining district” that AMC has gone to great lengths and great expense in order to consolidate. Masglas/AMC is clearly a master consolidator of mining concessions which is as much an art as it is a science. Maurizio’s comment that all of the Chuquicamata open pit could fit into just the 145 ha Caren property of the overall 10,500 ha complex provides some context as to the dimensions of the property complex. Within the confines of the perimeter of the property package all of the adnexal structures found in porphyry or multi-porphyry environments have been identified and successfully tied down. These include skarns, well preserved epithermal systems, brecciated areas, stratabound deposits, polymetallic sulfide veins, mantos, networks of stockworks/veinlets of a porphyritic texture, etc.

With 3 billion Medinah shares (temporarily) “outstanding” prior to recent events then each percentage ownership point in AMC and/or the mining district (Medinah’s “assets” i.e. the numerator of the BVPS equation) is offset by approximately 120 million issued and outstanding Medinah shares in the denominator of the BVPS equation. What we need to do is to create a metric in order to evaluate the effect of clawbacks of EITHER AMC percentage points headed in Medinah’s direction (part of Medinah’s “assets”/numerator) OR the cancellation of I/O Medinah shares (the denominator) and how they relate to reversing the dilution we suffered in BVPS which needs to be our focus. There is a lot more at play here than merely cancelling inappropriately issued Medinah shares (the denominator). The true focus needs to be on BOTH the numerator and the denominator of the BVPS fraction because the value of the assets in the numerator is going to be a lot more dynamic than the number of shares I/O.

With Greg Chapin’s surrendering of his 1.7% AMC interest to Medinah, now Medinah’s assets in essence are made up of 29.7% of “the action” for the entire mining district (28% plus 1.7%). In book value equivalency terms, that 1.7% newly received AMC stake handed to Medinah has the same effect on BVPS (what really counts) as about 200 million issued and outstanding Medinah shares being clawed back. Medinah’s “book value per share” (BVPS) increased 6.8% by this action alone. Can we expect “the market” to understand these somewhat complicated concepts pertaining to Medinah with its particular history? Of course not. IN A SCENARIO LIKE THIS, WITH THE EVER THICKENING BLACK CLOUD OF UNCERTAINTY THAT IS JUST NOW STARTING TO THIN OUT FOR THOSE IN THE LOOP THE BVPS MAY TEMPORARILY DISCONNECT FROM WHAT THE MARKET PERCEIVES TO BE THE APPROPRIATE SHARE PRICE BECAUSE OF THE COMPLEXITY INVOLVED AND THE RETICENCE OR INABILITY OF PROSPECTIVE INVESTORS TO PUT IN THE WORK NEEDED TO CLIMB ABOVE THE CLOUD LAYER TO ACCURATELY GAUGE THE FUTURE. I for one like scenarios like this in which I’ve already put in the work needed to assess the prognosis for success. For many it will take a 2 by 4 to the side of the head in the form of perhaps a JV on the Pegaso Nero with a top 3 copper producer. That’s just how it works!

There’s a subjective aspect to this issue also in regards to what the heck a 1.7% stake in AMC is worth in terms of asset value. This, of course, is tied to the skills of management and the merits of the deposit which we learned about in the afternoon session at the shareholder information meeting. The point is that if the Medinah assets (percentage points in the entire mining district) really are incredibly valuable then a lot of dilution damage can be reversed by the surrendering of a relatively small amount of AMC percentage points “donated” to Medinah. There is an aspect of leverage present as development efforts increase the “value” of these assets i.e. the very dynamic numerator. You have to keep in mind that Greg’s signing over of his 1.7 AMC percentage points did NOT directly reduce our issued and outstanding count although his and Vittal’s surrendering of 120 million Medinah shares certainly did. This share surrendering gesture increased our BVPS (what really counts) by yet another 4 or so percentage points.

Another factor that needs to be kept in mind is that the asset value of any percentage point in AMC and/or the entire mining district (the numerator)is probably going to go up as successful developments progress. This acceleration in asset value and therefore BVPS might accelerate quite rapidly if a second party like a mining major starts signing checks for very large amounts while aggressively developing Pegaso Nero. Try to keep an image of the graph of the value of a single percentage point of AMC or the mining district over time and what factors might accelerate the upward swing. Household mining names entering into JV relationships and subsequently signing very large checks might accelerate valuations markedly. The largest of the largest major miners don’t do JVs on small projects. Their threshold for involvement is very high and if just the PN project satisfies this threshold then that makes a statement about the entire mining district.

Prospective investors will look at the value of Medinah’s assets (currently the perceived value of 29.7 mining district percentage points of the action) divided by the official number of shares of Medinah issued and outstanding or about 2.9 billion shares as of October 1, 2016 the day of the Las Vegas meeting. If Les were to surrender (or if AMC were to confiscate and hand over to Medinah) his 1.7 AMC percentage points back to Medinah then Medinah’s mining district stake would advance to 31.4 percentage points of “the action” in AMC’s mining district and about a 28.4% stake in AMC itself.

It’s premature to discuss it now but if AMC does indeed land a JV with a partner like Freeport McMoRan then the intrinsic “value” of Medinah’s option to buy another 5% of AMC for $50 million over the next 5 years will go up. Today it might be worth only a couple of hundred thousand dollars to an investor wishing to roll the dice but a lot can happen in 5 years if world class majors are aggressively developing portions of the property. I don’t for a moment foresee Medinah itself exercising this option on a solo basis but it could represent a valuable bargaining chip in the future if developments go well especially if a nice intersection into the Cu/Mo porphyry is realized by the JV partner. The average Cu/Mo porphyry worldwide weighs in at about 500 million tonnes of ore. These are the behemoths in the porphyry world which represent the elephants of all mining deposits. With this option in hand, this little company named “Medinah” could represent a legal pathway to a 36.4% stake in the entire mining district.

If this transferrence of a 1.7% AMC stake from Les to Medinah occurs and if you factor in the 120 million shares of Medinah held by GC and VK recently returned then the equivalent of about 500 million of the extra 1.5 billion shares inappropriately “issued” (from a BVPS point of view) will have been successfully addressed right from the start. As far as overall progress being made, you need to also factor in the approximately $4.2 million of debt that Les and GC have already agreed to forgive to Medinah almost wiping out its debt. As mentioned, this simplifies the BVPS equation nicely. Keep in mind that the new legal team will need to be paid.

In my opinion, we shareholders and prospective shareholders need to keep an eye on four things. First of all, what is our official I/O at any given moment in time starting 10/1/16 at 2.9 billion shares. Secondly, we need to get a feel for the prognosis for successfully clawing back more shares through time. In this regard, I would assume that there will be some “low hanging fruit” blocks of shares available at first and later on it might get tougher. The “halt transfer” order in effect at the T/A should help matters. We also need to keep an eye on our overall mining district ownership percentage status starting at 29.7% (includes the Nuoco 15% but hopefully advancing to 31.4% quickly). We also need to keep an eye on the value of an ownership percentage point in AMC and/or the mining district. This last variable will have to do with things like grade, tonnage, cash flow, JV partnerships entered into with majors, MR/MR, etc.

Another point worth developing might be the effect on Medinah’s fate should AMC sign a JV with one of the top 3 copper producers on the planet. If any JV partner were to develop a desire to obtain a piece of “the action” in the ENTIRE mining district which is owned by AMC (or in AMC itself) and not just a working interest in the PN then I would think that the Medinah 30 or so percent AMC interest or a portion thereof might catch their attention. Is AMC likely to sell any of its own 65 ownership percentage points to a major? I seriously doubt it. They own 100% of their other 12 Chilean assets.

Besides the PN which might cost billions to put into production there are plenty of copper production opportunities elsewhere at the ADL perhaps especially in the LDM stratabound deposit area (think Lo Aguirre or El Soldado type of nearby deposits) and/or the breccia area which appears to be vectoring towards the PN. Once a major miner of this size “sets up shop” on a project they’ll typically want to tie down nearby opportunities/ownership interests in order to extend the mine life of the portion they have an interest in. Opportunities in a mining district like that at the ADL in an infrastructure like that present at the ADL might be few and far between. The majors that need to constantly replenish their reserves or die are growing weary of going deeper and deeper while going after lower and lower grades in more and more geopolitically risky environments.

Keeping in mind recent developments at Medinah and Masglas’s current ownership position in Medinah itself I would think that Masglas/AMC would be highly motivated to broker a deal resulting in a “swapping out” of Medinah as their “shareholder/partner” for a mining major especially if Masglas ever wanted to go public.

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Thanks, brecciaboy!
Closing this topic. If someone has pertinent meeting info to share that should be here, let a mod know and we can add it here.

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Copy of easymillion’s analysis of meeting:

Got home late last night so this is my first post since the meeting. Much was presented there, and has largely already been presented and recounted by those posting in the meeting thread set up by cabezon (now closed). Great summaries and comments by all, including yours Brad. Big Thank You!
Not sure what your point was in mentioning this (highlight above), but I’m glad I did have my moniker below my name. Wish more shareholders who post and attended had done so, as I only got to meet a handful of you face to face. Also, sorry I only knew you as “Brad” at the time, since you didn’t have a moniker attached under your name. I understand you had a plane to catch and weren’t there to socialize. I actually thought I was talking to an iHuber at the time (lol), but after reviewing all the absolutely incredulous misinformation and comments posted over on iHub I doubt any of them actually attended the meeting. Brad, I enjoyed our discussions, even if a little contrarian. You showed a very healthy skepticism, although I thought you were a little overly aggressive in the some of your opinions. Understandably, since you said you had brought about 15 people to invest in this company, which also explains why you are “madmen” (plural), rather than madman. :relaxed:

Vittal publicly stated he had brought in about 50 family and friends, which compelled him to divest of his holdings the same day while in the Miami meeting (along with Greg) when they first heard and saw of the fraud Les was confronted with for the first time. Les did not suspect that he had been caught until after the meeting started. Les was indeed caught flat footed that day in Miami. The meeting was arranged to discuss company debt, and at least Les did give up his claim to $3.1M on the spot and confronted with the proof he had forged documents. It is apparent the past BOD were not actively involved in protecting shareholder value as required by management positions, especially in trusting Les to an unwarranted degree to handle the paperwork. This is most recently apparent in the scrivener’s error in the Okanandian contract. I don’t think there is a single investor present in this investment that hasn’t been completely disgusted, and with good reason, over what all shareholders have experienced over the years in lost value.

There will be no quick resolution to restoring the degradation of our investment over the years, but my take away from the meeting is there are a lot of good people putting time and money into make things better NOW. Letting the legal team apply as much leverage to the claw-backs and stock cancellations as facts come out of their investigation will result in quickest and cleanest results, IMO. Painting with a broad-brush in a vindictive manner without all the facts, as many have done, is unproductive. The least amount of time spent in the courtroom by our attorneys the better for all investing here. I expect the DOJ and/or RCMP will go after those that deserve jail time for their misdeeds as the facts will be handed over to those refusing to cooperate and pay back what was stolen. Time is linear and one can only move forward. That is what the BOD is doing. I had a good a good time, actually great time, socializing and having dinner with a few … would have like to have mixed with other investors had time allowed. I was pleased to discuss various issues and socialize with Karen, John, Wayne, Nora, Teresa, Darlene, Dan, Annie, Mark, Jim, Bob, Elaine, Maurizio, Raul, Gary, Vittal, Dennis and others I had the pleasure of meeting. Thank You, Thank You, Thank You. All in all, it was a great meeting and more than I expected.