Medinah Minerals (MDMN)

[Hurricane_Rick]

Chile Trip Report – Feb 2017

From February 10th through the 16th, 2017, I was in Santiago, Chile as both the President & CEO of Medinah Minerals, Inc. (Medinah) and Communications Director of Auryn Mining Chile SpA (Auryn). The purpose of the trip was three-fold: visit the Altos de Lipangue (ADL) mining district, strengthen Medinah’s relationship with Auryn, and sell Medinah’s interest in Compañía Nuoco Mining Chile S.C.M. (Nuoco). All three were accomplished.

The Altos de Lipangue

The ADL mining district is enormous, comprising more than 10,500 hectares. For reference, that is more than 40 square miles, or roughly twice the size of Manhattan. As one travels about the plateau, more than 400 trenches and numerous adits are visible across the landscape, yet barely scratch the surface of the effort needed to thoroughly explore and put the property into full production. The ADL is truly a massive greenfield mining site.

The slope of the mountain is steep, with 23 switchbacks on the way to the plateau. Auryn has done a significant amount of work on the roads. Whereas it once required a jeep over two hours to ascend the mountain, it now takes 40 minutes while driving conservatively. A twenty-ton truck can make it to the top and back down without having to stop and reverse along the way. It takes about one and a half hours for a truck loaded with ore to descend from the plateau.

I walked through and inspected the Larissa adits on levels 2 and 3. I also inspected the adit that Auryn refers to as level 2a. What I observed matches what I expected to see based on the pictures Auryn has posted and the private discussions I have had with Auryn. The vein on level 2a is eye-popping. Outwardly it appears to have far greater mineralization than the vein uncovered on level 3. This has been confirmed by multiple assays on both veins. The geologists believe they are close to intersecting this vein on level 3. This would be a significant development and greatly improve the economics of Auryn, and thus Medinah. Work is expected to start on this effort the beginning of March.

I inspected the Maria adit on the Las Dos Marias claim near the base camp and could clearly see the various structures that contained copper mineralization. This is an adit that Auryn has significantly expanded and secured.

The Maria adit is not to be confused with the Maria Teresa adit which is the property LDM Chile / Nuoco developed in search of a “glory hole”. The “glory hole” was never found and was most likely the result of a nugget effect on the drill core. Despite the absence of a “glory hole”, the Maria Teresa tunnel has not been discarded as a future target. It appears to be a shear zone and more geological work is needed there and in the Maria adit to better understand their mineralization and determine the best approach to their development.

There were several other areas of the ADL that I observed including some targets that have yet to be publicly reported. The need for an experienced geologist like Dr. Raymond Jannas, recently contracted by Auryn’s CEO, cannot be understated. With the help of Dr. Jannas, Auryn can prioritize the targets in a way that balances the long-term success of the project against the need for short-term results.

Medinah and Auryn

The second objective of my trip was to strengthen Medinah’s relationship with Auryn. It is important to understand that, although Medinah is one of Auryn’s largest shareholders, we have been a problematic partner.

The actions of Medinah’s prior management placed our entire company at great risk and we are relying on Auryn’s goodwill and support to help us correct various deficiencies. For example, prior management signed an option agreement with Auryn which stated that Medinah would not issue over 1.5 billion shares while that agreement was in force. Based on this understanding, Auryn investors purchased significant amounts of Medinah stock. These investors were rightly disappointed to learn that the actual number of shares outstanding had routinely been misreported and was in fact greater than the stipulated cap when the agreement was signed, even though at least one Medinah representative who signed the agreement was fully aware of the violation.

Auryn understands that the common shareholders of Medinah are not responsible for this action. And like the common shareholder, Auryn’s financial backers who bought shares in Medinah have also suffered significant losses due to the actions of Medinah’s prior management. To date, Auryn has not pressed its position as one of the defrauded parties and is letting Medinah’s current management work to rectify the situation in a manner that produces the best outcome for all the common shareholders. I expect that Auryn’s position will remain this way if Medinah’s current management continues along path we have set out – resolve uncertainties and clean the company up. However, I have no assurances from Auryn in this regard. They are not dictating our path and I do believe they want to see the common shareholders salvage what is possible from their investment.

The Auryn Team

I spent much of the week in Auryn’s office working on Medinah business. The office is in Santiago, but outside the main financial district. I worked alongside Auryn’s management team as they attended to Auryn business. I attended an Auryn shareholder meeting, met with Auryn’s lead geologist, and sat in on an interview with Chile Explore Report.

My professional life has given me the opportunity to work in organizations of many sizes, from startup to multibillion-dollar Corporation. Without a doubt Auryn functions as a team of entrepreneurs who believe they’re launching the next big thing. People were coming and going from office to office as needed, decision making is a collaborative exercise, lunches and dinners are often a group function. Communication is often through text messages and phone calls necessitating quick pivots on work tasks. Auryn has every bit of the excitement, vibrancy, and energy of a Silicon Valley start-up.

The Sale of Nuoco

While in Chile I negotiated the sale of Medinah’s 15% interest in Nuoco. Medinah published news in this regard that disclosed we received an additional 645,000 shares of Auryn for our stake in Nuoco. The price was determined by negotiation with Auryn. Medinah had little leverage in the negotiation and we were leery of expected capital calls before exploration begins shortly. Given our financial condition, and the fact that via our ownership in Auryn we retain a roughly 28% interest in the Nuoco property, the board felt this was an acceptable deal.


http://medinah-minerals.com/chile-trip-report-feb-2017