I would be somewhat disappointed if a buyout was accepted below $200 million
Get ready to be. Nothing ever worked with those guys. They just don`t have it.
I know you read this already but maybe you want to give it a read again.
From a professional edge fund manager, so you might guess that he has a lot of experience in trading and most importantly he knows how to read the financials.
Care to comment?
"I read through the latest financials for Medinah (linked above). After doing so, I have the following concerns.
The first issue is with corporate governance… It appears there has been plenty of self-dealing, and there is no oversight over the few people that control the company. As an example, on Oct 26, 2013, the company bought the 49% it didn’t already own, from its president, Juan Jose Quijano Hernandez. Since the company has almost no cash (and thus pays for all major expenses and investments with newly issued stock – another huge red flag), it gave Juan 35M preferred shares which are convertible to 350M common shares. The transaction was valued at a conversion price of $0.10 per share, so his share was valued about $35M and company’s equity valuation was about $70M.
The balance sheet…. The company only as current assets of $880k and this includes 199k of cash and 539k of accounts receivable (the fact that the former dropped markedly and the latter rose are also negative trends). All the supposed value of the company are in long-term investments (which are valued over 47M). I suspect that there is no independent valuation of these assets, so the company values them wherever they like or at par, indefinitely.
The income statement… The company claims $699k of sales over the past 6 months. There is no disclosure (that I could find) that says where those sales derived from. I do see that salaries and wages were only $21k. It seems clear that there is no work being done (and there may be no actual employees) if total salaries are at that level. It should be noted, however, that directors were issued 9.5M commons shares for their efforts (unclear what those were) valued at $256k.
The cash flow statement… The company had negative cash flows of $138k in 2013. This explains why cash is down to $199k and why the company has to keep diluting shareholders (issuing more stock) indefinitely. The good thing for the company (another bad thing for investors) is that they have authorized 3 BILLION shares to issue. So they have plenty of room.
Bottom line… This business and the people running it can’t be trusted and the financials paint an ugly picture. Even in the extremely small chance that the company’s interest in these Chilean mines becomes valuable, there would be all kinds of legal and political risk that would jeopardize the payout (namely that the Chilean government or unknown parties would take the spoils, making the loss all the more painful).
I strongly advise anyone holding these shares to sell immediately. I realize the stock is down from a recent high of $0.09 (last quote, $0.055) and it may bounce back on some kind of positive, though immaterial, chatter. Nevertheless, the financial statements and commentary tell me that this company is worth next to nothing, and anyone who continues to hold will lose his/her entire capital investment."
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