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Saturday, October 26, 2013 10:11:00 AM
MDMN Week In Review for week ending 10/25/2013.
Disclaimer: Any mention of rumors are meant to merely acknowledge their existence and how they may affect shareholder sentiment. As always, I advocate weighing the reliability of rumors with your own personal dose of skepticism unless you have other reasons or resources that give you greater confidence in the legitimacy behind them.
Fundamental Analysis:
There were no news items released by the company this week as all parties continue the final steps of completing their joint venture.
On the ADL front, there were reports/rumors that the prospective partner's geologist was mapping claims and performing other due diligence as a step towards finalizing the JV agreement. In addition, ADL lawyers had completed everything they needed for the joint venture at some point earlier in the week. This expectation of completion was delayed until the end of the week. Whether the lawyers have finished dotting the i's and crossing the t's on the contract at this point is anybody's guess. Regardless, all reports appear to point to these items being in the final stages of completion. However, I would not ink your calendars with a date yet. Speaking of dates...there are rumors of a set date for finalization. As BE has pointed out, shareholders should not treat this as anything more than a tentative set date that will move based on developments in Chile as history and experience have previously dictated. Personally, I am essentially ignoring any discussion about "set dates" as it will only lead to further anxiety every time it invariably gets pushed out. When Les travels to Chile, that will be the tell that shareholders should probably move to the edge of their seats.
There has not been an update on LDM in over 3 months and this information vacuum has shareholders wondering what the deal is in that regard. Shareholders are understandably getting antsy for an update on this project. Is LDM hitting snags and delays along the way that the company is remaining silent until they are corrected? Has the local LDM contractor been replaced? Has the work crew hit the glory hole yet, and if not, when? What are the assay grades of the vertical shaft? What is the status of shipments to Til-Til? What are the grades, tonnages (average daily and aggregate) and margins of the ore being shipped? Have the safety inspections on the shaft been completed satisfactorily? What is the progress on CMLDM's goal of defining mineral resource estimates? Is the company waiting to update shareholders on LDM post-JV so that news doesn't suffer a muted response while shareholders anxiously await the ADL JV? These are some of the biggest questions on shareholders minds that remain unanswered. IMO, silence is a cancer that only breeds worst case scenarios, shareholder anxiety and resentment towards management. In the post-Amarant world, shareholders were hoping for (counting on?) a change in this regard, but management is dropping the communication ball here, IMO. Not all news on LDM needs to be held back until post-JV. As a shareholder, I personally would like to know the cause for delays (stated publicly on the record) because by all reasonable expectations and guidance since this project started, I believe shareholders have anticipated LDM to be extracting ore from the glory hole by now. Delays and unexpected obstacles are a part of doing business...any business. Shareholders deserve a project status and checkpoint in the interim. Even on the most glacially calibrated timeline, 3 months is far too long to go without an update of progress on that front.
Technical Analysis:
Last week's close down 11.63% broke the streak of 5 green candles in a row, closing evenly at .06. The shorter term daily chart went into overbought territory and began issuing sell signals. Shorter term shareholders/traders obviously sold on these technical signals. If you recall, a couple of weeks ago MDMN started popping up on momentum player scans due to the significant increase in volume (and price) which I commented on at that time. It is not unreasonable to assume that many of these momo players unwound their positions when MDMN's share price didn't break through resistance, volume started decreasing and the daily chart started turning bearish. The lack of buying (due to lack of news/rumors/large buyers) during the week failed to absorb the selling which obviously compounded the short-term down trend. This is just the market operating normally. The good news being that last week's trading was on significantly lighter volume than the previous 2 weeks. Now we'll wait for the daily chart to reestablish itself into a buying bias. Regardless of all the daily chart fluctuations, the weekly chart remains strongly intact. All indicators aside from a slightly toppy MACD point to a continued move upward with support at .057 (the 10 period MA) and .049 (the critical 20 period MA).
As a personal commentary, I think people need to remind themselves of the obvious - No stock goes up every day, week, month or year. Every stock hits resistance points which is a technical term simply meaning an area where shareholders typically or historically sell more shares than they buy, causing the share price to stall at that level, usually multiple times. This is caused by a number of factors - profit-taking, news, technical trading, psychology, etc. The tenor of the posting in the various forums this week reflected how many people unfortunately don't understand this concept. Regardless, the cause and effect are both critical components of the market. Every shareholder has to decide for themselves using their experience, or lack thereof, whether a sell-off represents a breathing point or a tipping point in the share price.
Looking Ahead:
Regardless of how close the company is to completing the ADL joint venture, the ghosts of the company's past will continue to spook shareholders. Sorry, I couldn't resist the Halloween reference. Another week of silence from the company will have a detrimental effect on shareholder anxiety and the share price, not matter how close Medinah is to landing the elusive joint venture. Without news of the joint venture, I am anticipating a continued low volume downward trickle of the share price.
I have said in the past few weeks that I was expecting news of the joint venture prior to the end of October. While we are still close by all counts, the odds of this happening by Halloween are obviously decreasing. This does not mean anything bad is happening...just that it is taking longer than expected. That should be a given with Chile, JJ and Medinah. Reports outside of the company remain positive/definite as to closing the joint venture in the near term, so these delays and inevitable sell-offs do not bother me personally, though the lack of communication on the company's part unfortunately still does.
Disclaimer: Any mention of rumors are meant to merely acknowledge their existence and how they may affect shareholder sentiment. As always, I advocate weighing the reliability of rumors with your own personal dose of skepticism unless you have other reasons or resources that give you greater confidence in the legitimacy behind them.
Fundamental Analysis:
There were no news items released by the company this week as all parties continue the final steps of completing their joint venture.
On the ADL front, there were reports/rumors that the prospective partner's geologist was mapping claims and performing other due diligence as a step towards finalizing the JV agreement. In addition, ADL lawyers had completed everything they needed for the joint venture at some point earlier in the week. This expectation of completion was delayed until the end of the week. Whether the lawyers have finished dotting the i's and crossing the t's on the contract at this point is anybody's guess. Regardless, all reports appear to point to these items being in the final stages of completion. However, I would not ink your calendars with a date yet. Speaking of dates...there are rumors of a set date for finalization. As BE has pointed out, shareholders should not treat this as anything more than a tentative set date that will move based on developments in Chile as history and experience have previously dictated. Personally, I am essentially ignoring any discussion about "set dates" as it will only lead to further anxiety every time it invariably gets pushed out. When Les travels to Chile, that will be the tell that shareholders should probably move to the edge of their seats.
There has not been an update on LDM in over 3 months and this information vacuum has shareholders wondering what the deal is in that regard. Shareholders are understandably getting antsy for an update on this project. Is LDM hitting snags and delays along the way that the company is remaining silent until they are corrected? Has the local LDM contractor been replaced? Has the work crew hit the glory hole yet, and if not, when? What are the assay grades of the vertical shaft? What is the status of shipments to Til-Til? What are the grades, tonnages (average daily and aggregate) and margins of the ore being shipped? Have the safety inspections on the shaft been completed satisfactorily? What is the progress on CMLDM's goal of defining mineral resource estimates? Is the company waiting to update shareholders on LDM post-JV so that news doesn't suffer a muted response while shareholders anxiously await the ADL JV? These are some of the biggest questions on shareholders minds that remain unanswered. IMO, silence is a cancer that only breeds worst case scenarios, shareholder anxiety and resentment towards management. In the post-Amarant world, shareholders were hoping for (counting on?) a change in this regard, but management is dropping the communication ball here, IMO. Not all news on LDM needs to be held back until post-JV. As a shareholder, I personally would like to know the cause for delays (stated publicly on the record) because by all reasonable expectations and guidance since this project started, I believe shareholders have anticipated LDM to be extracting ore from the glory hole by now. Delays and unexpected obstacles are a part of doing business...any business. Shareholders deserve a project status and checkpoint in the interim. Even on the most glacially calibrated timeline, 3 months is far too long to go without an update of progress on that front.
Technical Analysis:
Last week's close down 11.63% broke the streak of 5 green candles in a row, closing evenly at .06. The shorter term daily chart went into overbought territory and began issuing sell signals. Shorter term shareholders/traders obviously sold on these technical signals. If you recall, a couple of weeks ago MDMN started popping up on momentum player scans due to the significant increase in volume (and price) which I commented on at that time. It is not unreasonable to assume that many of these momo players unwound their positions when MDMN's share price didn't break through resistance, volume started decreasing and the daily chart started turning bearish. The lack of buying (due to lack of news/rumors/large buyers) during the week failed to absorb the selling which obviously compounded the short-term down trend. This is just the market operating normally. The good news being that last week's trading was on significantly lighter volume than the previous 2 weeks. Now we'll wait for the daily chart to reestablish itself into a buying bias. Regardless of all the daily chart fluctuations, the weekly chart remains strongly intact. All indicators aside from a slightly toppy MACD point to a continued move upward with support at .057 (the 10 period MA) and .049 (the critical 20 period MA).
As a personal commentary, I think people need to remind themselves of the obvious - No stock goes up every day, week, month or year. Every stock hits resistance points which is a technical term simply meaning an area where shareholders typically or historically sell more shares than they buy, causing the share price to stall at that level, usually multiple times. This is caused by a number of factors - profit-taking, news, technical trading, psychology, etc. The tenor of the posting in the various forums this week reflected how many people unfortunately don't understand this concept. Regardless, the cause and effect are both critical components of the market. Every shareholder has to decide for themselves using their experience, or lack thereof, whether a sell-off represents a breathing point or a tipping point in the share price.
Looking Ahead:
Regardless of how close the company is to completing the ADL joint venture, the ghosts of the company's past will continue to spook shareholders. Sorry, I couldn't resist the Halloween reference. Another week of silence from the company will have a detrimental effect on shareholder anxiety and the share price, not matter how close Medinah is to landing the elusive joint venture. Without news of the joint venture, I am anticipating a continued low volume downward trickle of the share price.
I have said in the past few weeks that I was expecting news of the joint venture prior to the end of October. While we are still close by all counts, the odds of this happening by Halloween are obviously decreasing. This does not mean anything bad is happening...just that it is taking longer than expected. That should be a given with Chile, JJ and Medinah. Reports outside of the company remain positive/definite as to closing the joint venture in the near term, so these delays and inevitable sell-offs do not bother me personally, though the lack of communication on the company's part unfortunately still does.
