RE:RE:Arbitration Who knows what pricing is realistic, certainly more than $2, I'd be shocked if it was that little.
In another discussion somebody made the point it would be difficult to prove TRQ had not used their best efforts to procure IA treatment for ETG.
I'd respond that the test of what could be accomplished is demonstrated by the advancement of OT on ALL negotiated points required for THEIR benefit. There is nothing special about ETG's interests that couldn't equally be procured by similar efforts for their benefit.
The sticking point is no doubt that the wording of the Earn In provision doesn't make clear who should pay the Mongolians if they have a price to grant similar benefits to ETG. I'd say people are missing the context - the agreement is an agreement the primary and essential purpose of which is to divide entitlement to the JV lands 80/20. One of the considerations in return to ETG is TRQ procuring IA treatment.
The fact TRQ had to finance and then waive a discounted purchase price to grant the Mongolians 30% of their interests in connection with the OTLLC shareholder agreement that was executed at the same time as the IA is just a measure of the cost and value of the IA benefit to TRQ. To suggest similar treatment means ETG should also have to surrender 30% of their retained 20% of the JV cuts against the main purpose of the Earn In agreement (establishing an 80/20 JV) without any explicit reference to ETG having to contribute to gain that benefit. It makes little sense to imply a loss of equity is required by ETG - ETG was to throw in 80% of their licence benefits and retain 20% getting similar treatment to TRQ, procured at their (TRQ's) expense is how I read the Agreement. If TRQ had to shave down their interest and bring in Mongolian equity participation, that was their business and the cost of procuring an IA - their obligation. Tough beans. Recall they entered the Earn in with nothing and set out what they would do to earn 80% - pay for exploration expenses and procure similar tax protections as they got for themselves for ETG at their expense.
Game, set, match. And if the Mongolians baulk - well, the IA would cover all the JV if it was thrown into OTLLC. Given that Rio just gifted $2 billion of OT buy-in to Mongolia, surely that was enough to cover ETG's treatment if they had insisted on it.
cg