Medinah Minerals Inc (OTCMKTS:MDMN) Stays Calm Under the Pressure

Medinah Minerals Inc (OTCMKTS:MDMN) announced in their latest financial report that over the past sixteen years, they have spent as much as $20 million on research and development activities. $20 million is a lot of money and sixteen years is a lot of time, so naturally enough, most investors would expect to see some results. What do MDMN have to show for themselves?

Not much, unfortunately. The company headquarters still looks like this, and the financial statement is not quite as confidence-inspiring as you would expect. In fact, during the second quarter of this year, MDMN recorded a negative revenue of around $35 thousand and they forgot to tell us how that happened. The rest of the statement looks like this:

  • cash: $41 thousand
  • current assets: $787 thousand
  • total liabilities: $1.8 million
  • quarterly operating loss: $214 thousand

Once you take a closer look at the older reports, you’ll see that MDMN‘s financial position has never really been healthy and you’ll also see that the promises from the company’s press releases haven’t always materialized.

In 2012, for example, they said that a joint venture with an entity called Altos de Lipangue is in the works, but sadly, nothing came out of it and just over a year later, the agreement was terminated. We can’t blame MDMN for giving up, though.

Last year, another joint venture was drawn up, this time with a company called AURYN Mining Chile and if an announcement from last week is anything to go by, this one seems to have quite literally struck gold.

On September 17, mere hours after Chile was hit by a rather massive earthquake (the company had previously announced that everyone working for MDMN is safe), the management team said that the results from certain exploration activities conducted by the Joint Venture with AURYN are absolutely marvelous. According to the assays, MDMN‘s shareholders can hope for an average of 26.9 grams of gold for every ton drilled. Drilling should begin during the second week of October and we’re all keeping our fingers crossed that there will be no earthquakes that could delay the start.

The news is good and the reaction from the market is definitely there. MDMN went up by about 24% almost immediately which, it must be said, is not much by Pennyland standards, and it goes to show that investors are still quite cautious. Nevertheless, the stock seems to be holding up relatively well. Yesterday, it added 9% and it finished the day at $0.0269 per share.

So, the performance is not that bad and if all the optimism from the press releases transforms itself into actual figures, it might get even better. Does that mean that you should jump in without thinking through all the risks, though?

Not in the least. Especially when you are considering an investment in a company with such a long history of failures.

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