Countrygent wrote:
Even though it has been a cushy billet passing GO every year and collecting a pay check for very little activity, you have to ask yourself if ETG was going to go out for a small payment why it wouldn't have been dealt with by management long ago if they were beholden to RioTinto.
They couldn't fully value ETG in 2008, and the discussion (or call it a standoff) has waited 14 years so far. They say they have been negotiating all that time. Please.
Greg Crowe told me Friedland was upset with him when they published the NR in 2006 stating their supposition based on drill intersections at 1300mN (about doubling the HNE ore body), that they had intersected the top of the same mineralized body.
There are other unresolved drill indications and targets all of which are company makers quite apart from the huge resources already attributable to ETG. So perhaps the holdup has always been that there was just too much there - too much for either Mongolia or the TRQ minority to understand the degree of discounting required, or too much to expand to a much greater production level without bringing in another major partner. Who knows, but ETG sure has had staying power for a company that has been valued as low as $20 million CDN by market cap and never much more than $200 million in all that time.
For 20% of some of the highest grade reserves at OT, plus multiple opportunities for expansion and discovery? What has been spent to date to build out the mill, infrastructure, just Lift 1 HNE ... over $10 billion? A throw in to the Mongolians of $2.4 billion? We are talking peanuts for ETG at every valuation it has been given since 2004. Rio Tinto would have snapped up further security for their reserves many times over at any price, and more, the market has given ETG, ever,
And would management now fold the tent and disappear for peanuts? With a pretty conservative opinion of value from Edison they engaged saying well over $3 a few years further away from cashflow then we are now? And SSL, the pro full-time valuators of preliminary mineral deposits going deep for 25% of the float, which taking away the Rio/TRQ a and determined minority holders is more like 50% or more of the available paper at any price to date?
I'm pretty confident the market has completely lost the thread of this story - too long, too complicated, too overshadowed by TRQ and Mongolia, yet ETG has been kept in play for a reason. The price will be much higher than where we are at today, the only question is just how much.
I don't think I'm the only person who has concluded that Rio Tinto didn't want the TRQ valuation tainted by a recognition of greater value in the JV which would flow from full valuation of ETG - so we have had to wait, but now the prospect of underground production has pushed the TRQ issue forward, there is no question Rio Tinto will pay whatever the price required - especially now they have an embarrassing court case proceeding. Then ETG comes next. I son't believe they will ever let cashflow determine ETG's price - if the copper and gold prices run the cashflow is ridiculously good, and they may well be intent on shifting the mining plan to attack the high grade HNE ore sooner rather than later and clean up their balance sheet, make the Mongolians happier ... maybe even get Heruga development underway.
Hang on.
cg