Medinah Minerals (MDMN)

[Hurricane_Rick]

What, in your opinion, is the likelihood of MDMN announcing a (ADL) JV with a Major-esque entity, including 3rd party collaboration in the following time frames:

Now through October 31 --10%
Nov. 1 through Nov. 30 --12%
Dec. 1 through Dec. 31--13%
Jan 1, '14 through Mar. 31 '14--15%
Nothing verifiable by the end of Q1, '14--50%

I know you're being very conservative (I'm sure you'd argue being realistic) in your estimates, but I would think if you were giving them a 10% chance to have something in 30 days, then that percentage would certainly increase more than 2% in twice that amount of time (60 days), more than 3% in 3x that amount of time (90 days) and certainly more than 5% in 180 days. But these are your numbers, not mine. While I don't see anything wrong with having a conservative 10% mindset, I do think that you're not properly factoring in a reasonable time premium when you're projecting further out.

I am of the bent that the company is much further along in the process than you are giving them credit for with only a 15% chance to have the JV finalized in 180 days. If we use the progress of the last round of negotiations culminating in the Amarant deal as guidance, it took them from September 19, 2011 to February 12, 2012 to go from opening up negotiations to signing the first contract - roughly 4 months. We can debate whether that initial contract was merely a paper tiger placeholder commitment to mollify investors for the AGM; however, the public report was that after 2 months of negotiating they had 2 offers in the MOU form and 1 contract to purchase (presumably Amarant).

I would assume that the 2 previous MOU parties from the last negotiation round would be back in the fold in the current negotiations, and pretty much up to speed on the property, so it's not too far of a stretch for me to believe that MOUs were in place sometime in July. Any new parties might take a bit more time to ramp up their due diligence.

I'm going to assume that management's visit to Chile in late August involved a certain degree of decision-making with regard to choosing/vetting/meeting the final joint venture partner, and obviously involved the purchase of the remaining 49% of MMC which was a condition to move ahead with finalizing a final joint venture for ADL. From the September 4 Shareholder Update "(The corporate restructuring) was necessary as a condition of final negotiations with a major joint venture partner." So it is fair to assume that the JV partner choice had been made during that week or just prior to it. So that gives the company and prospective JV partner from late August until whenever to finalize the joint venture contract. Assuming this is more of an industry standard contract as has been reported, then I can't imagine a lengthy contractual process, especially if we are dealing with a mining entity that has been around the block before.

The recently disclosed contract between MMC and MDMN was a milestone requirement as part of the final joint venture. I understand there will be a revision to this contract, so, if true, that adds a slight delay which is anybody's guess, but I don't believe that alone affects the sequential progress in other areas of the finalization process.

The Chilean mining season may or may not be a factor in expediting any kind of deal-making as well.

So given the reported progress that has been made thus far, I believe it is more a factor of how long it will take for both companies to move from the MOU stage to JV finalization stage which I believe is in full gear given the posturing of the company in its updates. As such, I'm fairly confident the company will execute this time and that confidence is reflected in my estimates as follows:

Now through October 31 - 15%
Nov. 1 through Nov. 30 - 30%
Dec. 1 through Dec. 31 - 50%
Jan 1, '14 through Mar. 31 '14 - 75%
Nothing verifiable by the end of Q1, '14 - 20%