Replies to post #62770 on Medinah Minerals (MDMN)

[Hurricane_Rick]

Here you go Beth...

After reading today's update several times, I came away with two diverging reactions. These reactions are based on everything I've come to understand based on public, and yes, non-public information regarding the developments at ADL, including LDM, over the past 10 months or so and then comparing my understanding to that which was described in part in today's update. I don't think it's fair for anyone to say that anyone who doesn't see what is going on with ADL based on this update (or the last 3 updates for that matter) is ignorant or doesn't understand what is going on. To be honest, I was left scratching my head, though not necessarily in a bad way because the company is apparently moving forward from whatever delays have occurred over the past few months or so.

So I went back and I reread every update since May 11, 2013 and compared it to what was stated today. I strongly suggest others do so as well to get a perspective of where we've been, where we are heading and where we might have been misinformed along the way, both publicly and privately. I also considered all of the "clarifications" and/or rumors that have been sourced back to Les or other entities close to the situation in Chile. People can read through my weekly updates on MP over the last several months to gauge what the rumored state of affairs were. I didn't post all of the rumors at the time, but the ones that were publicly disclosed. These weren't rumors dreamt up by shareholders. Most of the rumors could be tied back to e-mails or conversations shareholders have had with Les or others close to the goings on of the company.

So let's not rewrite history and say shareholders are being ignorant as to what is going on or what has been going on as the tale of the tape has clearly changed to anyone who has read all of the updates in succession and anyone who has read e-mails from Les or at least read what was posted in various forums that are sourced back to Les. It has been pretty clear that since September 2013, Medinah was dealing with a single entity, a mining company, who was driving the JV process and who was in the "final negotiations" (Medinah's public words, not mine) for a JV, and that all of the changes to Medinah and developments along the way were by their (the JV partner's) requirements, not Medinah's or not by some heretofore unknown consultants. That situation has obviously changed and this update is Medinah's attempt at explaining the change using guarded vagueness, excitement about the future, and statements that simply contradict what has been stated previously. There isn't so much a disconnect between what shareholders do not understand now as much as there is a disconnect as to what the company has reported to shareholders in the past and what they are reporting now.

With that being the backdrop, here is my take on the entire update:

We are pleased to announce that we have received a firm written offer from a group of well-known and highly qualified Peruvian mining experts to immediately commence development of the entire Altos de Lipangue properties. Medinah has until June 9, 2014 to accept or reject the terms of this agreement.

Additionally, there has been accelerated interest in the Altos de Lipangue project with major and mid-tier mining companies actively expanding their knowledge of the property, predominantly in light of recent discoveries at the LDM/NUOCO mining projects. These companies have requested and received signed confidentiality documents and agreements that are on file. Therefore, Medinah Mining Chile has allowed each of their crews access into the field and visitation to the location of the stored core samples.

Obviously most shareholders following the bouncing ball over the past 10 months will jump to the logical assumption/conclusion that the "Peruvian mining experts" are Volcan. There was a time that I would say that this is a no-brainer assumption; however, I no longer believe this to be the case (though I won't mind being wrong there). First of all, if it were Volcan, why refer to them with the toothlessly generic "Peruvian mining experts" when a company like Volcan, or any other significant mining concern could be described in much greater terms, at the very least describing them as a recognizable, publicly-traded, mid-tier regional mining concern. If Medinah was in fact dealing with Volcan all of this time and they were the single entity mentioned by the company in their previous updates (more on this later), then why wasn't the deal consummated 6 or 3 or 2 months ago with them? If Volcan is the standing offer, why wait until June 9, 2014 and as the update indicates, allow other competing bids to enter the picture? Surely a mining company in the final stages of negotiations for a property that they've been interested in and purportedly were upset at losing in the past rounds of JV negotiations would have some kind of non-circumvention agreement in place. This is where my opinion that something had changed along the way with regards to the company (presumably Volcan) that Medinah was dealing with and that's why we're at where we are right now entertaining multiple offers where previously we were only entertaining one. I'm not saying whether it is Medinah's or Volcan's fault, just acknowledging that something clearly changed regarding the final negotiations and that has ended up with multiple offers rather than focusing on closing one as shareholders were previously led to believe.

Medinah Mining Chile’s Board of Directors, after previous failed attempts, came to the conclusion last July 2013, to hire a professional team of consultants in order to review issues and assist in presenting an industry-standard mining option Joint Venture Agreement (JVA), or any other acceptable form of association.

Reading back through past updates, it is strange that this was never mentioned. At no point along the "Partner C" negotiation path has there been any mention of engaging a team of professional consultants, though I would think there would/should have been. This is an unfortunate oversight on Medinah's part as this is not a news item that would be under any kind of NDA and would have provided shareholders an extra dose of confidence that we weren't wresting the company's future solely in JJ's hands. I do recall Les mentioning in some e-mails that there was someone in Chile that was assisting in the joint venture process (my paraphrase, forgive any inaccuracy in the description) and perhaps that is what they're referring to.

After full diagnostic review, the consultants determined that the main concern to address in order to secure an industry standard mining option was that Medinah Minerals, Inc. must take immediate steps to consolidate all of its mining claims under one entity. Over several months, all necessary acquisitions, full title reviews, cessation of encumbrance endeavors and notarizations, the tasks were completed and negotiations began with various mining conglomerates.

Here is where the timeline gets muddied up and does not jibe with what has been historically reported by the company. The claims consolidation effort was reported in September, though the contracts were revised and then the claims were officially notarized and whatnot by December 2013. The company states in the 2/21/2014 update that "After several months and significant legal expense, the arduous endeavor of legally consolidating and structuring each of these mining claims into an unencumbered package was completed in late December, 2013."

Then the company states today that after this (December, 2013 as reported by the company) negotiations began with various mining conglomerates. However, in that same 2/21/2014 update they stated the following:

"This communication will serve as the official Company release with regard to our completing the Joint Venture Agreement (JVA) with the major tier mining company concerning the 1,573 Altos de Lipangue breccia properties."..."Any Company disclosure would result in the entity vacating the deal. We will report the issues and produce the contract(s) publicly when completed."

There is no mention of opening up negotiations with "various" mining conglomerates in the 2/21/2014 update, but now today they are saying they began negotiating with various mining conglomerates at that time? I don't know, but to me this appears like revisionist history on the company's part or they are trying to cover something up. The notion of negotiating with multiple mining conglomerates was first mentioned in the summer of 2013 where they were dealing with 4 entities and then 6 entities, but those had, by all accounts public and private, been whittled down to a single entity up through the 2/21/2014 update. Recall these statements by the company in the Fall of 2013:

"[The consolidation of claims under one entity] was necessary as a condition of final negotiations with a major joint venture partner." - 9/4/2013 Shareholder Update
"This was necessary in order to position the company for the Joint Venture agreement that included the stipulation that Medinah Mining Chile own 100% of the Altos de Lipangue mining properties." - 10/18/2013 Shareholder Update

And anyone close to the situation, or who has communicated with Les, or who has read this forum that denies the notion that Medinah was clearly dealing with a single entity through the Fall of 2013 is simply not being intellectually honest...and that includes the company itself.

A company agent was enlisted to be the main representative negotiator for the Altos de Lipangue (ADL) project.

I'm pretty certain they are referring to Les Price as it had been rumored that Les was taking over as the pointman in negotiations and JJ had been effectively put on the bench. Plus Les was referred to as the agent for Medinah N.A. when he recently traveled to S.A.

Note: I have subsequently been corrected that this is not the case and that the primary negotiator is not Les.

Management was later advised, by the representative agent, that several complex legal issues were impeding potential transactions and also needed to be resolved. These matters were handled and formally notarized for presentation and ultimate approval by the Chilean Ministry of Mines in December 2013.

My guess, but one potential legal issue may have been the Antonio and Colihues claims that were previously owned by Cerro and that according to Les' explanation to Bill Hoffman were due to a mixup on Claro's part due to the complexity and multitude of claims (my paraphrase of what I was told). There could have been other legal matters as well, but those claims issues were at least identified at the time.

In January 2014, Medinah Mining Chile was noticed that it had clear ownership of the entire Altos de Lipangue group of properties. Medinah Minerals, Inc. then legally acquired 100% ownership of all of the shares of Medinah Mining Chile.

I think the update meant "notified". Shareholders had been notified how many times that Medinah had clear ownership of 100% of ADL? Throughout the Fall of 2013, the company went out of its way to let shareholders know about the finality of this transaction, including posting the contracts involved in the transaction. Why weren't shareholders notified of further legal encumbrances that needed to be cleared up and that finally were corrected in January 2014 after being notified consistently through the Fall? It is this type of after-the-fact revelations (similar to ENAMI ore shipments, and Amarant contractual breakdowns, and so forth) that unfortunately foster more of mistrust and an adversarial relationship between shareholders and management. This is the kind of communication oversights and retroactive updates that the company consistently engages in to their own detriment and the most frustrating aspect is that it is so darn preventable and correctable with honest, open communication.

Over several months, various mining companies have sent representatives consisting of geologists, mining engineers and management teams to view the ADL. Documents and historical issues were provided, as requested, to each of these entities. Further verifications of core samples have been undertaken by several potential partners. Each of the groups also visited the privately-held LDM and NUOCO properties.

So based solely on the company's updates, at some point between February 21, 2014 where they made it clear they were dealing with a single entity, and now, negotiations apparently opened up to multiple mining companies. If they were dealing with a single final joint venture partner all this time as was certainly alluded to in the previous updates and stated in no uncertain terms by Les Price in e-mail clarifications, I would assume that that entity would have a non-circumvention agreement or clause in its contracts. There's no way a mining company in final negotiations allows other mining companies to visit the property and negotiate with Medinah or its agents. This is where I believe the change occurred from dealing with a single prospective "Partner C", to opening up negotiations to multiple entities again. I'm not saying it is the company's fault. As kmt stated earlier, it could very well have been something that went awry on Partner C's side which enabled Medinah to open up negotiations to other parties. I guess we'll never know.

I honestly don't have any problem with them opening up negotiations to multiple parties and I'm glad they are doing so with an apparent deadline for a potential decision on one of them by June 9. The problem I have is that it is clear to me based on what they put in their updates, that they are rewriting their own history and it appears they are trying to hide or backtrack from the single "Partner C" focus and momentum that somehow changed I'm guessing around Febraury 2014. It would serve the BOD much better if they simply came out and told shareholders what happened with "Partner C" and state how they are moving on from it by doing such and such. If I'm wrong about what I'm reading, then the company's historical updates are wrong unless someone can show me where I'm misinterpreting what the company has stated historically versus what they stated today.

Medinah Mining Chile will thoroughly investigate every offer presented by the team of consultants in order to capitalize on increasing the value of the Altos plateau properties. These offers are being reviewed by Management and the Directors of Medinah Mining Chile, and Medinah Minerals, Inc.

This is the reset button or perhaps more accurately, turning off the pause button IMO. Whatever the case may be, the company is at least moving forward with production efforts starting in LDM and NUOCO and potential new, more significant discoveries at these places that potentially could lead to a JV with better terms. I am excited for how this plays out IF the company is being completely honest about the current state of affairs. Unfortunately, this has been the overarching theme since I've been an investor, their communication to shareholders, both public and private, does not provide shareholders with the confidence that the current state of affairs is actually the current state of affairs...and that is reflected in the share price.