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Message: Here's my comprehensive message to AUMN Mgmt 7/17 following Winkler's "excuses"
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(Winkler--AUMN)
This cash raise gives us a better position and more flexibility while waiting for the Autlan deal (announced June 27, 2019) to close. We reported $2.2M of cash at Mar 31, 2019 and continued to spend on exploration and other items in Q2 2019. Autlan has a 75-day period in which to conduct due diligence prior to concluding the deal, which will take us into September. At the end of that period Autlan has the option to cancel the deal. In the meantime, this raise gives us more flexibility to move Yoquivo, Nevada and El Quevar forward without having to wait for the money from Autlan.
The stock purchase agreements we have in place are highly restrictive in terms of the number of shares we may sell per day, thus the implied timing did not meet our needs.------------------------------------------------------------------------------------------------
(My rebuttal to Winkler)
75 days, which is now down to 54 days is not a long time to wait for closing. Why would you subject shareholders to a 33% decine in the stock rather than delay some drilling expenses. Did you not foresee a shortfall over the past couple of months? That could have been planned for, not to mention my suggestion recently to cut salaries/ expenses.
Silver is soaring and this move has killed all momentum. Collectively, shareholders are shocked which is why the stock remains crushed on high volume ( 5 MM+ shares traded), 3 cents below the offering price. This should tell you that even long-standing shareholders are now giving up on Aumn and management. Silver up 40 cents after a 25 cent climb yesterday. Your timing could not have been worse, and all of this could have been postponed or avoided altogether.
You continue to remind shareholders that mgmt has a large stake. Notwithstanding Sentient, I suspect that 90-95% are free Corp. options.... no real skin in that game!
If mgmt thinks so highly of the potential, every one of them should buy heavily in the open mkt.
Lastly, I’m shocked that in this soaring metals environment, you couldn’t have sold the stock at a much better price... with zero warrants!
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Here's the bottom line...after claiming that they had sufficient cash ($2.2MM end of Q1) with continual income from Hecla's lease, they foolishly accelerated a costly drill program and drained their cash position to the current position whereby they had to approach HC Wainwright and offer their institutional shareholders who bot the 2016 deal w wts and convince them to purchase another 8.65MM shares at .26, down from a .33 close 7/16.
It's hard to know whether the deal gets done on a "best case" scenario because the stock is down to .23. The
prospective buyers not only receive a free warrant at .35 exercise price for 5 years, but they also get to convert their older 2016 wts at a reduced exercise price of .35 with a 6 month extension. AUMN won't answer my question regarding the former strike price of the 2016 options, but I'll bet they are a sweetheart deal!
All of this financiall engineering to sell 8.65MM shares of stock, driving the stock down 10 cents from prior close merely because mgmt. ignorantly didn't plan and budget appropriately for either the drilling costs or the Stock Purchase Agreement with Lincoln Park Capital Fund. (This arrangement was the entire reason AUMN paid LPC alot of money up front to have the flexibility to sell stock to them at a fixed price WITHOUT HAVING TO TAP WALL STREET'S RIPOFF DEALS). Proper planning and forecasting would have avoided a damaging stock offering when you are merely 55 days from the likelihood of receiving $22MM for Valardena.
Yesterday's 10-11 cent decline (33%) on 5MM shares in the midst of a surging silver price is an indication that shareholders have given up on the banality of management.
Nonetheless, like GWR, I too bot stock yesterday on this weakness because its overdone and silver prices are significantly higher and rising.
Yet, without this ignorant mgmt. decision, I suspect that the strong rally to .33 on 7/16 as silver climbed 25 cents would have reached .38 on 7/17 as sliver climbed another 40 cents toward $16/oz.
Silverbull50
2 Recommendations
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