*** Mr. Price has assumed the position of Manager/Legal Affairs and will oversee all the legal involvements of Medinah Minerals and all subsequent contracts.***
HEH: "this is rich"
By: gb2kool $$$$$
05 Nov 2002, 07:25 PM EST Msg. 53917 of 53921
Message from the President
November 5, 2002
medinahminerals.com
Dear Shareholders:
After having a period of time to extensively query, review, and analyze the situation with Medinah Minerals, I’d like to summarize your Company’s progress.
The “Bermuda Short” FBI sting, and the subsequent arrest of our former Chief Executive Officer Mr. Les Price in August, has hurt Medinah greatly. Of this, there’s no question. The sting not only deprived Medinah of Mr. Price as CEO but also slapped us in the face with the truth that there wasn’t a “Group B” financing and that thanks to the FBI, all the time, money and effort spent in closing this financing was “misdirected”.
As a consequence of this event, a new cooperative team has been assembled with Directors Russell Godwin and Gordon House, managers and associates, to continue to move Medinah forward into active development of the Alto de Lipangue gold/copper project.*** Mr. Price has assumed the position of Manager/Legal Affairs and will oversee all the legal involvements of Medinah Minerals and all subsequent contracts.***
One of our first priorities is to answer the question as to how does Medinah maintain the financial integrity of the corporation and also continue the development of the Alto de Lipangue? The answer may be one or a combination of two choices 1.) Issue common shares or preferred shares in a series of private placements or 2.) Sell a percentage or joint venture the Alto de Lipangue project.
With regards to private placements, at what price do we issue shares vis-à-vis further dilution of the total issued shares of the Company? And since the SEC doesn’t allow us to actively solicit financing from the shareholders, how do we inform the shareholders who wish to help us with financing but aren’t in active communication?
With financing of the Company in mind, the Board of Directors recently authorized a $0.02 per share private placement and has received “indications of interest” from a number of current shareholders. We’ve also received positive responses from a number of shareholders regarding purchasing large blocks of shares (They understand that they’ll be receiving “real” shares and not “bogus electronic credits”). In addition, many of the shareholders and management who’ve graciously maintained the Company with cash infusions awaiting the completion of financing from “Group B” are converting their debt into shares of Medinah at this price.
Confusing the question of Private Placement pricing is the problem of share dilution through the “naked short selling” component of the equation. There’s no question that a large portion of the trading during the past years have been “naked short selling” and that this selling pressure has artificially depressed the share price. That there are brokerage houses that are falsely representing to their clients that the brokers have bought and received shares for the client, there is no question.
As an example, the following is a list of the brokerage houses that failed to deliver a guaranteed client list of holdings by the April 30, 2001 deadline of the exchange of Medinah Mining to Medinah Minerals. These houses haven’t received either the shares and dividends or the dividends. The attitude and response from many of these houses is an attempt to “bully” Medinah into breaking the rules regarding their April 30, 2001 deadline and allow an exemption for them. This won’t happen. The following is a partial list of the miscreants; National Investors – shares and dividends, Spear Leeds – dividends, NBC Clearing – dividends, Scottrade Inc. – dividends, Citibank NA – dividends, Boston Safe Deposit – shares and dividends, Northern Trust – dividends, TD Waterhouse (Canada) – dividends, RBC Dominion – dividends.
Many other houses are slow or not dealing with the problem of “failed delivery” at all. Their thought is that if they “stonewall” the client long enough he or she will sell and move the problem to another house or that Medinah will go broke and the client therefore won’t care about getting their shares. Considering the vast number of companies that are experiencing “naked short selling” pressure and are unable to maintain themselves, the broker’s odds are good. This conduct may be despicable and ignorant but is common and has become systematic within the industry.
Medinah is not the only company experiencing “naked short selling”. In fact, over 800 companies are estimated have had this problem in conjunction with so called “death spiral financing”. There are two excellent and recent news articles regarding this problem in circulation, one from The Toronto Star/Canadian Business Newsmagazine by Matthew McClearn and one by Mark Brown in Canadian Business Newsmagazine. Reprints can be found at (http://www.rgm.com/shortselling.html).
With regards to the selling of a interest or joint venture of the property, the first financing group, the so named “Group A”, has been maintaining close contact as they arrange their corporate financial structuring and are to this day indicating that they’re close to culminating their arrangements. Notwithstanding this assurance, and for whatever the reason or reasons, the fact remains that they’ve had trouble completing their transaction in a timely manner.
In addition to “Group A”, a mining group working out of Chile has contacted Medinah and have expressed interest in the Alto de Lipangue project. They’ve read the geological reports and would now like to view the property and drill core samples. Negotiations are at an early stage but look promising. As well, several offers of Private Placement funding in smaller increments are being actively pursued with the prime object of an early start to drilling.
Medinah Minerals has been trying to have an independent financial audit done for the past 3 years, and although much progress was made, the auditing firm of Hansen Barnett & Maxwell, Salt Lake City, has constantly procrastinated completing the audit by changing case employees and refusing to accept valid legal opinions. Now, as a result of the passage of the Sarbanes-Oxley Act of 2002, and the impact this bill will have on junior companies, the expense of this audit isn’t warranted by the advantage it gives. Therefore, Medinah Minerals, as a non-reporting company, will prepare its financial statements internally to GAAP standards and post the results on the Company web site.
The legal suits initiated by Medinah against Dayton Mining, the numerous parties of the Nevada defamation suit and the suit for securities fraud and stock manipulation are all on hold pending financing.
With regards to the property, we retain an one hundred percent (100%) interest in the Alto de Lipangue property, Chile, and have verified that our titles and ownership remain in good standing.
At this time, let us give a word of caution regarding the holding of Medinah Minerals certificates. It is and has always been the intention of Medinah Minerals to develop the Alto de Lipangue to the point where Medinah would merit being sold through an open market tender offer to a major mining company. If we’re successful in doing so, only registered shareholders and the clients of brokerage houses who have taken delivery of shares can be assured that they will receive their money from the tender. All brokerage house clients, where the broker didn’t take delivery of the shares, face a potential problem when the time comes for the
broker to submit the client’s shares to the tender.
The purchaser will only pay for real certificates and not for “bogus electronic credits”. These unsuccessful “shareholders” will now have to litigate to try and access
their money from their broker. As insurance against this future problem, we therefore STRONGLY recommend that all shareholders hold their Medinah shares in certificate form. If you’re not a registered shareholder or trying to be such, Medinah Minerals can’t be of help to you.
On behalf of the Directors, Company management and associates, we would like to thank the shareholders for their patience during this trying time and assure them that we expect that all the hard work that’s being done will be reflected in the market shortly.
Sincerely,
Russell K. Godwin
President
Medinah Minerals, Inc.
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