Medinah Minerals (MDMN)

[jetpilot1101]

I think that it would be of great interest to shareholders how the contract for the 30% FCI was written. Given that private entities are financing this operation, I think it is safe to assume that they are going to want to be paid back before anyone else along with interest and profits. After all, they took all the risk right? So what happens if after all the bills are paid and they either break even or never hit their profit target as specified in the contract? Does MDMN still receive the 30% FCI? I can't imagine that any "venture capitalist" would agree to having an entity get 30% of the proceeds who put up 0% of the risk before they (the venture capitalist) is fully paid back with profit and interest.

It would make no sense to me if I wrote a check for $1,000,000 and then when profits started rolling in, MDMN got 30% of them before I was even paid back. If I was writing the checks, I'd want my $1,000,000 back with profit and interest before MDMN got 1 dime.

I'm obviously speculating here because no one (except for the financiers) are privy to the contract, but wouldn't this type of agreement, albeit it simplistic, make perfect sense? Put yourself in the venture capitalists shoes...

Final question: MDMN has zero risk in this project. So why were they given a 30% FCI? What do the venture capitalists have to gain by giving away 30%? They are in it to make money and this certainly doesn't seem like a very good deal for them.