doctor "brain wash "decosta is trying to brainwash shareholders into thinking a cash dividend will happen. Mark this post, medinah will never, EVER, give out a cash dividend. Decosta is the master carrot dangler distracting folks from the obvious pump and dump that he participated in with partners A and B
"I think a lot of people are missing out on the true significance of going into production and gaining access to positive cash flow for a company like Medinah. Before a junior explorer gains access to cash flow the only method available for management to reward shareholders is through the capital gains associated with share price appreciation. In our OTC markets, however, there is no guarantee that share prices will be a good indicator of fair market value.
Upon gaining access to positive cash flow, two new options to reward shareholders present themselves and both are supportive of an unmanipulated share price discovery process. These are the ability to declare and distribute qualified cash dividends and share repurchase programs. Both of these modalities become "supercharged" when share prices are well below fair market value. The further below fair market value the shares trade at the more powerful they become. Imagine a company trading at a penny that finds itself in a position to pay out a 3-cent cash dividend. Imagine a company with a $10 million market cap but with $40 million in cash available to buy back and cancel shares. You could theoretically buy back all of your shares with one-fourth of your cash.
There is a reason why the junior explorers are the favorite prey of those making a living off of downwards share price manipulation. It has to do with the 1-in-1,000 chance of them ever becoming cash flow positive and their management teams gaining the option to reward shareholders via these other two modalities.
Yesterday we had a good discussion on the advisability of junior explorers spending money on blocking out 43-101 reserves and resources. Why would a Medinah type of company finally gain access to that 1-in-1,000 status only to spend that cash on blocking out reserves and resources. You'd gain access to those 2 other options and then lose them. Then you're stuck back in the "sitting duck" posture where the only shareholder rewards available are tied to easy to manipulate downwards share prices. If the stock were trading at $1.50 bid, sure just sell some shares and drill it on your own and keep ownership of the whole enchilada.
Rick Rule of Sprott Assets and the former boss of Brent Cook whose work citing the 1-in-1,000 chance of a junior explorer discovering an "OK" deposit and 1-in-10,000 chance of discovering a "big" deposit we read yesterday has a saying for the junior explorers "Spend the money of your JV partners on blocking out reserves. As far as your own cash, if you ever are lucky enough to gain access to cash flow toss those nickels around as if they are manhole covers!"
As far as Medinah using their cash flow from the LDM's Los Amigos #1 to drill out the Los Amigos 2-10 I would suggest it shouldn't be done for the above reasons. Why lose those other 2 options to reward shareholders? The shareholders have been through enough.
