Medinah Minerals Inc (OTCMKTS:MDMN) Embarks on Another Run
A month ago, we saw Medinah Minerals Inc (OTCMKTS:MDMN) make a rather impressive jump. The ticker woke up at the end of April and in a matter of less than two weeks, it surged from under $0.04 to its 52-week high of $0.1078. Unfortunately, it failed to sustain the pressure at these levels and after just four sessions of selling, it was back below the $0.07 per share mark.
Right now, it seems to be attempting a second run. On Friday, investors traded over 4.6 million shares which resulted in a dollar volume of nearly $350 thousand. In the meantime, MDMN managed to add a respectable 18% to its value and it finished the week with a price of $0.0838 per share. The question is: “Will it be able to hold on to its gains this time, or will it drop back down like it did last month?“.
There are a few things that might tempt investors to put their money in MDMN.
For one, Medinah is a revenue-generating OTC-listed mining company (which is a rare sight) and, at just over $0.08, it still appears to be relatively affordable. Especially considering the figures found in the latest report. Here’s what MDMN had at the end of March:
- cash: $253 thousand
- current assets: $909 thousand
- total liabilities: $391 thousand
- quarterly revenues: $440 thousand
- quarterly net income: $353 thousand
It’s pretty clear that, at least by penny stock standards, the company is in a relatively good shape. What’s more, the management team have apparently set themselves the task of improving the balance sheet even further.
They announced on June 10 that they have decided to accept the Joint Venture offer which regards the exploration of the Altos de Lipangue group of claims in Chile. If the press release is to be believed, MDMN‘s representatives are now in South America and they are negotiating the final details around the JV. More information will hopefully be out very soon.
In any case, if the deal goes through and if everything else goes according to plan, the future financial statements should look even better. At first glance, it looks like shareholders simply need to keep their fingers crossed and they might just see their investments grow. But are things really so simple?
No, they aren’t. The problem is, while there’s no shortage of things that could lure in potential investors, once you do some more in-depth research, you’ll see that there are a fair few red flags as well.
MDMN‘s headquarters, for example, is located in a residential house which is, we reckon, not the most suitable of places for the principal offices of an $81 million company.
Then you have MDMN‘s history which is a bit sketchy. We can see from numerous old posts around message boards and from articles such as this one that the company’s stock was once involved in a massive undercover FBI operation called Bermuda Short. Apparently, MDMN‘s former CEO, Les Price, was charged with conspiracy to commit wire and securities fraud.
The 35 million preferred shares that we discussed in our previous articles are also definitely worth bearing in mind. As we mentioned already, they can be turned into 350 million common shares and if that happens, the resulting dilution could put enormous pressure on the price.
That’s why, carefully evaluating the risks and doing a lot of due diligence is absolutely essential.
