received last night Stockwatch:
Patagonia Capital Corp. Initiates Investment Coverage With
Strong Buy Recommendation For:
Medinah Mining, Inc. ("MDHM" on OTC - BB)
148 South Main Street Lake Elsinore, California 92530
Phone: (909) 245 - 9498
Fax: (909) 245 - 9438
Website: medinahmining.com
Medinah Mining has recently discovered two world-class projects near
Santiago, Chile: Lipangue (Au-Cu breccia) & Dos Marias (shear + manto)
MDHM is a likely takeover target - 19 major international mining companies
and mutual funds have signed confidentiality agreements and are nearing
completion of their due diligence - bidding may have already begun!
Recently-completed geophysical survey on the Lipangue breccia is expected
to significantly increase the size of the deposit; there are indications of
new breccia pipes, with the probability of a huge porphyry underlying the
Lipangue plateau
A huge short position on MDHM shares (est'd @ 2x to 3x public float) could
trigger a rapid price increase as future news events force shorts to cover
MEDINAH MINING's LIPANGUE BRECCIA IS A SIGNIFICANT NEW GOLD-COPPER
DISCOVERY WITH EXCELLENT POTENTIAL TO HOST A WORLD-CLASS DEPOSIT
------------------------------------------------------------------
Medinah Mining's 100%-owned Lipangue Breccia property (1363 hectares)
covers the majority of the Altos de Lipangue plateau, an area situated
approximately 45 km NW of Santiago, Chile at an average elevation of 2,000
meters.
MDHM began exploration of Lipangue breccia in July 1998 with an initial
reconnaissance mapping program. Based on Gordon House's assessment of the
property's potential (http://www.medinahmining.com/projects.html), an
IP/Resistivity survey was undertaken in September and October 1998,
covering over 16 line km; the surveyed area was also mapped in detail.
Earlier this year, a seven hole, 1,652 meter diamond drilling program was
undertaken to test the anomalies outlined by the IP/Resistivity survey;
drilling successfully intersected mineralized breccia pipe at depth.
The discovery hole (L99-03) intersected the Lipangue breccia at a depth of
92 meters, and remained in the breccia to a depth of 237.15 meters;
supergene enrichment was observed over the entire 145 meter intercept. The
"discovery intercept" encountered 84 meters averaging 1.72 g/t Au, 10.07
g/t Ag and 0.40% Cu. Two step-out drillholes (L99-06 & L99-07) returned
intercepts of 154 meters grading 0.60 g/t Au, 13.7 g/t Ag and 0.39% Cu &
124 meters averaging 0.49 g/t Au, 9.68 g/t Ag and 0.31% Cu.
Something that we believe is very significant but that has not been
adequately-recognized is the presence of a 20 to 30 meter wide zone of
higher grade mineralization that occurs at or close to the hanging wall
contact with the granodiorite. Some significant high-grade intersections in
this area include:
L99-03: 29 meters @ 2.59 g/t Au, 20.84 g/t Ag and 0.85% Cu
L99-06: 19 meters @ 1.39 g/t Au, 44.16 g/t Ag and 1.25% Cu
L99-07: 28 meters @ 1.26 g/t Au, 18.11 g/t Ag and 0.49% Cu
Drilling has established that Lipangue contains significant Au-Cu-Ag
mineralization over most of its entire width, and that supergene enrichment
may continue to great depths. Equally important, the drill program
demonstrated that the IP/Resistivity survey results could accurately
identify the location of the breccia.
All of Medinah Mining's sampling and field methodologies conform to
established industry practices. Standard assay techniques have been
employed, with assay work performed by Acme Analytical Laboratories; all
drill core is stored in boxes at a secure storage site in Santiago.
Medinah Mining has just completed another round of IP/Resistivity surveys
at Lipangue in preparation for the fall drilling program; results of the
GeoDatos work are expected to be released shortly. Preliminary
interpretations of field data suggest that the current round of geophysics
may have identified at least one, possibly two more potential breccia pipes
on the Alto de Lipangue plateau (trending NE across the plateau, away from
the Lipangue discovery), and that the main Lipangue breccia pipe apparently
continues to a depth of 1,000+ meters.
BRECCIA PIPES ARE OFTEN ASSOCIATED
WITH PORPHYRY DEPOSITS AT DEPTH
----------------------------------
The apparent discovery of additional breccias on the Alto de Lipangue
plateau is not unexpected, as breccia pipes often occur in clusters. More
importantly, geologists have found that breccias are associated with about
50% to 60% of known porphyry systems, and that breccia pipes generally
plunge in the direction of the parent intrusive.
The picture that is taking shape on the Alto de Lipangue plateau is one
well-defined breccia pipe (Lipangue), plus one (possibly two) additional
potential breccia pipes located along a line trending from SW to NE across
Medinah Mining's property toward adjoining ground owned by Cerro Dorado,
Inc. (CDCH on OTC-BB), about two kilometers away. The apparent strike
length of the multiple breccia pipes suggests that they may be related to a
common system, and that a massive porphyry deposit with world-class tonnage
potential may underlie the Lipangue plateau at depth!
DOS MARIAS HAS EXCELLENT POTENTIAL
TO HOST A MULTI-MILLION OUNCE GOLD DEPOSIT
------------------------------------------
Medinah Mining's 100%-owned Las Dos Marias project is situated on the
western slope of the Alto de Lipangue plateau, about 2-1/2 km east of and
500 to 700 meters lower in elevation than the Lipangue breccia deposit.
Dos Marias consists of one mining claim covering about 130 hectares (1,750
by 750 meters). Numerous old adits, shafts and pits are located on the
hillsides and in the vicinity of the old Dos Marias mine, where historic
workings exploited the near-surface oxidized zones. The date of these
workings is unknown, but certainly dates back hundreds of years, possibly
to Spanish colonial times.
The principal feature (and primary target) at Dos Marias is a major shear
zone that roughly parallels the Quebrada Durazno, striking north and
dipping steeply to the west. Exploration by MDHM has defined a 50 to 100
meter wide, auriferous shear zone that can be traced approximately 700
meters within the property boundaries, and remains open along strike and at
depth.
Dos Marias also hosts stratabound "manto" replacement skarn copper
mineralization which occurs as a series of 1 to 2 meter thick,
north-striking, east-dipping, vertically "stacked" copper rich horizons
that are hosted in an interbedded volcanic and sedimentary sequence on the
east side of the Quebrada Durazno. The potential of this type of
mineralization has not yet been tested by Medinah and therefore the true
thickness and typical copper grades of the mineralized sequence has yet to
be determined.
Medinah Mining began exploration at Dos Marias in July 1998 with an initial
geologic mapping program; in September and October, an IP/Resistivity
survey (6 line km) and more detailed mapping program was completed by
GeoDatos. Earlier this year, a two-hole diamond drilling program (456
meters) was undertaken to test the anomalies outlined by the IP/Resistivity
survey.
MDHM's drill program was successful in intersecting the southerly extension
of the shear zone; the results suggest that the shear structure remains
open along strike and at depth. Although the shear zone is seen in outcrop
for several hundred meters around the old workings, its ultimate strike
length is unknown, owing to topography and overburden.
The second drill hole (DM-99-02) intersected a six meter wide shear zone at
a depth of 68 meters which returned a weighted average of 37.27 g/t Au over
5 meters, including a value of 122.2 g/t Au and 54.2 g/t Ag over one meter.
A.C.A. Howe re-assayed the high-grade interval and reported a grade of 455
g/t Au over one meter.
The potential strike length of the shear zone and the grades intersected
thus far indicate a significant economic target could be present. Just
assuming a strike length of 700 meters, an average grade of 37 g/t and a
vertical depth of 200 meters suggest a potential for something close to a
million-once deposit. However, the strike length may be longer than 700
meters, and there might also be multiple shear zones. There is also the
yet-to-be-drilled manto deposits on the east side of the valley, which
further enhances the attractiveness of the Dos Marias property.
A.C.A. HOWE INT'L REPORT VERIFIES
WORLD-CLASS POTENTIAL OF PROPERTIES
-----------------------------------
Howe Chile Ltda. ("Howe"), part of the A.C.A. Howe International group of
companies, recently issued a geologic report on MDHM's Lipangue and Las Dos
Marias properties; the report has been posted at
Copies of the A.C.A. Howe report has been provided to the 20 or so mining
companies and mutual funds that are evaluating Medinah Mining; it has been
our experience that a positive report such as this provides both great
credibility for the property owner (MDHM), as well as substantiating and
validating all of the exploration work conducted to date. The Howe report,
combined with the soon-to-be-released GeoDatos IP/Resistivity survey
results should provide the interested suitors with all of the information
required for one or more bidders to put an offer on the table.
Among the A.C.A. Howe report's conclusions and recommendations (pp. 82 -
83) was that "...both the Lipangue and Dos Marias properties could host a
significant gold and/or copper (+/-silver) resource, and that these targets
have only been tested on a preliminary basis. All defined zones remain open
along strike and at depth and Medinah believes that with a minimal
exploration program the potential size of these prospects can be
substantially increased....Other parts of their land position have only
been reviewed on a preliminary basis, mot not at all, and should be further
explored, since the potential exists for additional mineralized zones. Howe
concurs with this target objective."
MEDINAH MINING HAS BEEN RE-STRUCTURED
IN PREPARATION FOR AN EVENTUAL BUY-OUT
--------------------------------------
Medinah Mining, Inc. ("MDHM" on OTB - BB) is a well-funded company that is
aggressively exploring two significant and potentially world-class
gold-copper discoveries located near Santiago, Chile.
In April 1999, following the announcement of major discoveries on the Alto
de Lipangue and Las Dos Marias properties, the company went through a major
re-structuring.
First, Medinah Energy incorporated a new, wholly-owned subsidiary called
"Medinah Gold, Inc." All of the assets of Medinah Energy (except for the
Lipangue and Dos Marias properties) were sold to Medinah Gold. Medinah
Energy then declared a dividend of one share of Medinah Gold for every 10
common shares held in Medinah Mining (preferred shareholders received a
dividend based on a ratio of 1:2.5); the result of the dividend was to give
100% ownership in Medinah Gold to the current shareholders of Medinah
Energy in the same ratio as their present equity positions. Lastly, the
Board of Directors voted to changed the name of the company from Medinah
Energy to Medinah Mining, effective May 14, 1999.
We believe that there were two reasons for dividing up the company's assets
into two separate entities.
First, as the true magnitude and potential of the Lipangue and Dos Marias
properties became apparent, it was a wise move to streamline and
re-structure Medinah Energy (Mining) to prepare for what everyone believes
will happen - an eventual merger with a major mining company following
further work at Lipangue and Dos Marias. Effectively transferring all of
MDHM's other mining properties (Andacollo, etc.) was an astute move - if
the company is ultimately going to be sold, why give away all of the other
assets? So, rather than giving away many promising properties, all of the
non-Lipangue assets are safely tucked away in Medinah Gold, which we
understand is on track for an IPO sometime next year.
Secondly, we believe that the Medinah Gold dividend was a very clever and
effective way of establishing how large the MDHM short position is, and who
the guilty parties are! After all, the transfer agent knows that with ~72
million shares outstanding, that as the MDHM certs are sent in and
registered, that there should only be 72 million MDHM shares coming in.
Obviously, if investors are claiming a total 90 or 100 million shares (or
more), then there's a problem!
We understand that Medinah Mining has been working on getting the issue of
the short selling resolved once and for all, and that a significant short
position, reportedly on the order of 20 to 30 million shares, has been
established, with the bulk of the short selling originating from a handful
of well-known brokerage houses in North America and Europe. The law of the
markets is that at some point shorts have to cover - the questions are when
and at what price does the covering begin to take place, and what news
event(s) might trigger a frenzied short covering?
We should also point out that although MDHM is currently a non-reporting
company, we have been advised that the financial audits are nearly
completed, and the SEC filing is being prepared. Medinah Mining has until
February 9, 2000 to become a fully-reporting company. Also, we understand
that the next annual meeting for Medinah Mining & Medinah Gold has
tentatively been set for October 25, 1999 in Reno, Nevada; only registered
shareholders may attend.
News releases, letters to shareholders, and other corporate documents can
be reviewed at medinahmining.com and technical reports
on the Dos Marias and Lipangue projects can be viewed at
medinahmining.com
For investors interesting in doing further due diligence on Medinah Mining,
there are several active discussion threads. On SI "Medinah Energy - A
Junior Gold Mining Company With Great Potential"
(https://www.siliconinvestor.com/subject.aspx?subjectid=22738 ) is dedicated to
research-related due diligence postings (lots of good links and honest
discussion about Medinah Mining), whereas "MDHM: Medinah Mining, Inc."
(https://www.siliconinvestor.com/subject.aspx?subjectid=16900) with nearly
19,000 posts, offers a more general discussion about MDHM and mining plays
in general. Medinah Mining's discussion thread on Raging Bull is also quite
active (http://www.ragingbull.com/mboard/boards.cgi?board=MDHM).
SHARE STRUCTURE & RECENT TRADING RANGE
--------------------------------------
Total Shares Outstanding:
72,300,334 Common & 8,965,000 Class A Preferred
Public Float: 12 million shares (est'd)
1999 Trading Range: US$0.21 (low) by US$0.48 (high)
Current Bid & Ask: US$0.32 by US$0.34
Last Trade (September 9, 1999): US$0.34
Our due diligence suggests that the short position on Medinah Mining may be
two to three times greater than the number of shares in the public float.
Having such a huge short position overhanging the market can have a
tremendous impact on expected trading patterns and prices, particularly in
a firm where the majority of the stock (> 80%) is held by a relatively
small number of investors with a long-term perspective.
On the question of the MDHM short position, we encourage readers to do
their own due diligence and draw their own conclusions. A good site
specific to Medinah is the "Short Squeeze of a Lifetime! Medinah Energy
MDHM" thread on SI:
(https://www.siliconinvestor.com/subject.aspx?subjectid=27948). It is
imperative that any potential investor in this stock understand the
implications of the potentially huge short position in MDHM and its
possible impact on market prices before getting involved in this stock.
WHAT's LIKELY TO HAPPEN NEXT ??
-------------------------------
The next key milestone for Medinah Mining is going to be the release of the
GeoDatos geophysical survey results - news is anticipated within the next
few days.
We believe that the IP results should give everyone a better idea on
exactly how many breccia pipes are on the Alto de Lipangue Plateau, and how
deep they go - do they extend to the limit of the IP survey depth (about
1,200 meters), or does the IP indicate an intrusive or porphyry at depth?
During our site visit to the property last month (in the midst of the IP
surveys), our interpretation of the preliminary field data was that there
might be one (possibly two) additional potential breccia pipes on the Alto
de Lipangue plateau.
The IP results are very important because the last survey correlated
extremely well with where the breccia zone was actually intersected. In the
discovery drillhole (L99-03), information from GeoDatos indicated that the
breccia would be intersected at about 100 meters; Medinah Mining
intersected the breccia at a depth of 92 meters. With the experience of
last spring's drilling, we expect that the most-recent IP survey will be
even more accurate at defining and hitting drill targets.
Following release of the GeoDatos report, we expect that things will get
very interesting in regards to the major mining companies and mutual funds
looking to get involved in the properties. We expect that a strong,
positive report from GeoDatos will precipitate one or more significant
financing / joint venture offers from one or more of the major mining
companies and mutual funds that have signed NDA's.
Investors should be aware that MDHM is a prime takeover target. Medinah
Mining is one of the few junior companies that has been able to raise
significant exploration funds in the post Bre-X era, and with the money
they have raised, MDHM has made two major discoveries this year, each of
which have the potential to host a world-class deposit. In the current
climate of low metal prices, major companies are looking for large,
potentially low-cost deposits to replace existing, higher-cost mines with
limited reserves, and, quite honestly, Medinah Mining is one of the few
quality opportunities available.
Assuming positive results from the geophysical survey and follow-up
drilling program this fall, we believe that Medinah Mining will be "in
play". Investors should review what happened to Argentina Gold, as the same
scenario may unfold with MHDM. We view Medinah Mining as a STRONG BUY at
current prices, with potential for very significant capital appreciation
over the next six months.
For more information, please contact:
-------------------------------------
RGM Communications Inc.
Toll-Free: (800) 547 - 9375
DISCLAIMER
Patagonia Capital Corp. ("Patagonia Capital") is not a Registered
Investment Advisor or a Broker / Dealer. Readers are advised that this
report is issued solely for information purposes and is not to be construed
as an offer to sell or the solicitation of an offer to buy.
Reproduction of this report, in whole or in part, by any means, electronic
or otherwise, including via the Internet, without prior written permission
of Patagonia Capital is strictly prohibited.
Patagonia Capital has independently prepared this report, drawing upon a
range of public news and information sources, as well as data and opinions
provided by Medinah Mining Inc. ("MDHM" or the "Company"). Prior to
Patagonia Capital issuing this report, the Company reviewed and approved
the contents hereof. Patagonia Capital has not independently verified the
Company's representations. Any opinions expressed in this report are
statements of judgment as of the date of publication (8 September 1999) and
are subject to change without further notice, and may not necessarily be
reprinted in future publications or elsewhere. Neither Patagonia Capital
nor its officers, directors, partners or employees / consultants accept any
liability whatsoever for any direct or consequential loss arising from any
use of this report or its contents.
The information contained herein is not intended to be used as the sole
basis of any investment decisions, nor should it be construed as advice
designed to meet the investment needs of any particular investor. The
opinions and analysis included herein are based on sources believed to be
reliable and in good faith but no representation or warranty, expressed or
implied, is made as to their accuracy, completeness or correctness. The
foregoing discussion also contains forward-looking statements that are
based on current expectations and differences can be expected. The
information and opinions contained herein is not intended to be a complete
discussion of information regarding some of the current and/or intended
business activities of the Company, and all information contained in this
report should be independently verified with the Company. Readers are urged
to consult with independent financial advisors with respect to an
investment in the shares mentioned herein. Investors should review a
complete information package on the Company which should include, but not
be limited to, the Company's annual report, quarterly report, press
releases, as well as all regulatory filings.
In order to be in full compliance with the Securities Act of 1933, Section
17(b), Patagonia Capital advises the readers of this document that it has
received 250,000 common shares of Medinah Mining under the terms of an
eight-month consulting / marketing services contract, pursuant to which
Patagonia Capital will be periodically writing and disseminating research
reports on MDHM, in addition to providing the Company with public
relations, investor relations, broker relations and other equity market /
Internet consulting services. Patagonia Capital, its officers, directors,
partners and employees / consultants may profit in the event the shares of
the Company increase in value. These positions may be liquidated from time
to time even after Patagonia Capital, its officers, directors and employees
/ consultants have made positive comments regarding the Company.
THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE
INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN SECURITIES IS
SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. INVESTORS MUST ALSO
INDEPENDENTLY VERIFY THE "BLUE SKY" ELEGIBILITY OF THE SECURITY MENTIONED
IN THIS REPORT BEFORE MAKING ANY INVESTMENT DECISIONS. TIMING OF, AND ANY
BUYING OR SELLING DECISIONS, ARE THE SOLE RESPONSIBILITY OF THE READER.
We encourage U.S. readers to review the investing information available
with the Securities and Exchange Commission ("SEC") at sec.gov
and/or the National Association of Securities Dealers ("NASD") at
nasdr.com The NASD has published information on how to invest
carefully at its website. Medinah Mining is not yet a fully-reporting
company with the SEC. The process is expected to be completed later this
year, at which time, readers can review public filings (including financial
information) at edgar-online.com
SAFE HARBOR DISCLAIMER
Certain statements contained herein constitute forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act. Such statements include, without limitation, statements
regarding business and financing plans, business trends and future
operating revenues and expenses. Although the Company believes that the
statements are reasonable, it can give no assurance that such expectations
will prove to be correct. Forward-looking statements are typically
indicated by the words: believe, expect, anticipate, intend, estimate and
similar expressions, or, which by their nature, refer to future events.
Patagonia Capital Corp. cautions investors that any forward-looking
statements made by Medinah Mining Inc. are not guarantees of future
performance, and that the actual results may differ materially from those
in forward-looking statements as a result of various factors, including,
but not limited to, the ability to continue its substantial project growth,
or to be able to fully-implement its business strategies.
(c) 1999 Patagonia Capital Corp.
patagoniacapital@hotmail.com
----------------------------------
Medinah Mining Inc. (OTC BB: MDHM)
medinahmining.com
----------------------------------
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