MEDINAH MINERALS (MDMN PinkSheets) AND CERRO DORADO (CDCH PinkSheets) CENSUS OF SHAREHOLDINGS
Dear shareholder of Medinah Minerals Inc. and/or Cerro Dorado, Inc.,
BACKGROUND
There is currently a very, very large amount of money seeking investments in heavily naked short sold corporations that have been misdiagnosed as “scams” by abusive short sellers but that really do “have the goods” and can prove it. These opportunistic investors, however, need irrefutable proof of the existence of these “alleged” naked short positions as many development stage companies use naked short selling allegations as a cover-up for either their management’s ineptness or a failed business plan. After many years of scrutiny Medinah Minerals, Inc. and Cerro Dorado, Inc. have been chosen to act as templates for this new investment paradigm.
Abusive short selling has been so pandemic and so easy to execute in the past that many of the perpetrators of these frauds become “trapped” with enormous naked short positions in corporations that they have not been able to “successfully” bankrupt or get delisted. Oftentimes the reason is that these misdiagnosed corporations really did “have the goods” all along and were being supported by those aware of this fact. Due to the ease of abusive short selling and the historical lack of concern by the regulators abusive short sellers can easily get to a “point of no return” at which they have to continue to naked short sell all day long just to keep the share price of the corporation targeted for destruction pinned down in order to keep the daily “marked to market” collateralization requirements of an enormous naked short position manageable. In other words they CAN’T STOP naked short selling on a daily “maintenance” basis even if they wanted to. The daily trading patterns in both Medinah Minerals and Cerro Dorado reveal that this has been the case for several years.
THE CENSUS STRUCTURE
Thankfully, the information regarding the amount of shares being held in an “individually registered” format by shareholders holding their shares at home or in a safe deposit box is readily available to a corporation via its transfer agent. Medinah Minerals currently has 255 million shares out of their 670 million shares “outstanding” in this “individually registered” certificate category. They are being held in 3,054 “individually registered” certificates. Cerro Dorado has 159 million of their 190 million “outstanding” shares in this category that are being held in 139 “individually registered” certificates. These “individually registered” certificated shares need not be a concern of ours. The census needs to only address shares held in “street name” at a brokerage firm as cited on monthly brokerage statements. The reference date for this census will be 4/30/2010.
CONFIDENTIALITY ISSUES
Shareholder confidentiality is always a prime concern in these censuses. The typical approach used is to appoint “nuclei” of shareholders that can canvass the shareholdings of those within their “nucleus” or sphere of influence. We welcome as many shareholders as possible to volunteer to serve as “nuclei”. The “nuclei” will be assigned group numbers i.e. A-Z for reporting purposes. Any given “nucleus” may have perhaps 5 or more shareholders in his or her sphere of influence. “Phone trees” might serve as a methodology to solicit data while dispersing the workload. Confidentiality can be achieved at the “nucleus” level wherein the “nucleus” assigns a shareholder # to his constituents.
Any prospective investors wishing to verify the census and the size of the naked short position could, for example, ask to see a faxed copy of the 4/30/10 monthly brokerage statement of shareholder # 18 in “nucleus A”. To minimize the workload we are not requesting any “nucleus” to acquire faxed copies of shareholdings at this time. The single most important thing to concentrate on is to NOT double count anybody’s shareholdings. Since there are bound to be some overlappings of shareholder groups the various “nuclei” need to make it clear to one of its group members not to disclose their shareholdings to any other “nuclei”.
Individual brokers (not individual brokerage firms) with significant long positions in Medinah or Cerro on their books should take priority as being “nuclei” to save a lot of work. They can hit one computer button and get all of the information they need.
INFORMATION NEEDING TO BE REPORTED BY “NUCLEI” OR INDIVIDUALS
1) Shareholder identification (kept at nucleus level)
2) Medinah shareholdings held at a broker in “street name”
3) Cerro Dorado shareholdings held at a broker in “street name”
4) Brokerage firm/clearing firm
5) # of accounts represented
THE ROLE OF theminingplay.com
We are going to use “theMiningPlay.com” website as the centralized depository for the census findings. The various “nuclei” with their assigned group letters might report their findings as Group “A” reports 26.44 million shares of Medinah being held in 22 accounts and 7.38 million shares of Cerro being held in 12 accounts. If you prefer to fax in your polling results or individual shareholdings you can fax them to 503-692-6787. If you prefer to E-mail them then please send to census@theminingplay.com Time is of the essence.
THE ROLE OF THE NSCC SUBDIVISION OF THE DTCC
In the case of Medinah there are currently 415 million shares being held in “street name”. This means that there are indeed 415 million paper-certificated shares being held in the vaults at the DTC “depository” on Water Avenue in NYC and elsewhere within their vault system. These legitimate shares are posted as electronic “book entry” credits in the “shares accounts” of the various NSCC “participating” clearing firms. In abusive short selling “bear raids” an NSCC participating clearing firm might have 10 million legitimate shares in its “shares account” but it might be implying that it is “holding long” 40 million Medinah “securities” (which include IOUs for failed to be delivered shares) on the monthly brokerage statements it sends out. The disparity represents the number of Medinah shares that have been bought and paid for by their clients but NEVER DELIVERED. This particular clearing firm would be “naked short” 30 million Medinah shares.
It would be impossible to make contact with all of Medinah’s 6,000 plus shareholders during this census but we don’t need to. At the end of the day we might locate perhaps 1 billion purchased shares (some fake and some real) amongst let’s say 2,000 shareholders that SHOULD BE being held at the DTC but only 415 million were successfully delivered and are being held there. Medinah’s naked short position in this example would be the missing 585 million shares plus the shareholdings of the 4,000-plus shareholders that couldn’t be contacted. One could make a very rough estimate of the amount of shares that these usually smaller shareholders might average per account and then make the proper extrapolation.
The census committee recognizes an enormous naked short position as an asset that needs to be “harvested” especially if it was established under the misdiagnosis that the corporation was a “scam”. Before “harvesting” it needs to be verified and roughly quantified. We thank you in advance for your efforts in this regard and hope that you will find it refreshing to be able to dig in and actively enhance the prognosis for the success of your investment.
Admittedly, it might seem selfish at first glimpse that these new opportunistic investors insist that the Medinah and Cerro Dorado shareholders that have been through a dozen years of grief do all of the grunt work in delineating the size of the naked short position as well as management proving that the company really does “have the goods” by hopefully executing a lucrative joint venture agreement. However, this new investment paradigm could result in the “rescue” of many victimized U.S. corporations and hopefully provide some heretofore missing deterrence to abusive short selling crimes.
The concept is to create an inventory of solid development stage corporations with enormous naked short positions whose shareholders were willing to do the work to objectively help prove and quantify the naked short position (subject to audit). Then the pressure is on management to make a substantial breakthrough to prove the company’s bona fides and then a group of opportunistic investors are alerted to the breakthrough of the pre-qualified corporation. Without a significant breakthrough and a well-trained management team most naked short positions never get covered and the purchasers of nonexistent shares never get delivery of that which they purchased.
The corporations currently being pre-qualified are all in the junior mineral exploration sector. As the abusive short sellers are quite aware these corporations have between perhaps a 1-in-100 and 1-in-1,000 shot at discovering an economical mineral deposit. This ultra high risk, however, is matched by an ultra high reward for the fortunate ones. This investment paradigm is based upon the corporation’s success at making an economic mineral discovery functioning to remove the ultra high risk factor while leaving the ultra high reward factor. This ultra high reward can then be augmented by the enormous preexisting naked short position needing to be covered due to the success of the corporation that was MISDIAGNOSED as a “scam”.
In essence, the concept is to not assume the ultra high risk and to not invest in these ultra long shot corporations UNTIL a pre-qualified candidate hits pay dirt. If they hit they hit; if they don’t they don’t. Of course, we are only going to pre-qualify junior explorers that our mining people think have either already hit pay dirt or are soon about to. “Pay dirt” in the junior mineral exploration sector is typically attained by the confirmation of an economic mineral deposit as evidenced by a major mining corporation being willing to enter into a joint venture relationship with the junior explorer and spend perhaps hundreds of millions of dollars to develop the deposit.
DELIVERY DEMAND PROGRAM
This census taking might provide a good opportunity to encourage shareholders to demand delivery of their paper-certificated shares so that their shares cannot be illegally rented out to abusive shareholders. Willing shareholders should be warned that they need to make sure that their broker will take them back in the future when the shareholder wants to sell them. The census committee of Medinah Minerals, Inc. and Cerro Dorado, Inc. thanks you in advance for your efforts.
(DISCLAIMER: The above statements should not be interpreted as a solicitation to buy or sell any of the securities mentioned. The management teams of the 2 corporations cited have neither approved nor disapproved of this census.)
AI
