RE:RBC
Those shares have probably been in more pockets than a $5 bill in a one horse town. I mean, where are they getting the paper from if it isn't from spinning the paper around the horn? Seriously I have never owned a small cap with so many long-term long-holding determined shareholders in the minority, management that accumulates and doesn't sell a sheet for years on end, and major shareholders that only add to their position and never ever sell.
Anybody have any idea why that may be? Anybody? Beuhler?
And with the TRQ bid voted YES today @ $43, (subject to a few hoops but 97% a done deal), ETG is now the last public participation standing at the mighty Oyu Tolgoi mine. In the on deck circle for some serious negotiation of outstanding issues like the unsigned JV agreement and IA status. With an arbitration with TRQ pending to ensure some sense of urgency.
My belief is serious negotiation of the value of ETG was impossible so long as the TRQ minority was on Rio's shopping list as bumping ETG up to a more reasonable valuation might have over-encouraged the bigger fish in the TRQ minority.
Just spitballing ... $3.1 billion for 49% of TRQ implies a market cap of $6.2. Most of the higher grade reserve value at OT is on the JV at HNE and Heruga, but it's deferred until later in the mining schedule. With 20% of those two deposits, plus the rest of the JV and the still-100% western ETG land, is it such a stretch to imagine a baseline value for ETG of 10% of TRQ? That would be around $3/share.
Now the long-running dispute about whether IVN/TRQ/Rio's Earn-In Agreement obligation to use best efforts to secure "same as" IA treatment for ETG meant they should pick up any cost of Mongolia getting 34% of the carried interest, or should ETG get its interests ground down as IVN/TRQ did -nultimately at a write-off cost of $2.4 billion USD. There is a good argument that since the 20% carried interest to ETG was the main reason for giving up 80% of their rights, it would be nuts to infer same treatment meant they had not already pre-payed and any IA procural costs would be part of the consideration burden on IVN/TRQ a for getting their 80% base interest. It's a crummy, ambiguous agreement but I lean to "no diminution of value". You can just guess what those pikers at Rio think. Any advantage for another nickle.
BUT EVEN a 34% haircut on $640 million (or really, it could be much more since picking 10% of the value of TRQ is just an arbitrary guess), you're still at $2 or so. Which some clever observers have noted is almost exactly the same premium to market that Rio pony'd up for TRQ when they plodded up to $43 from the pre-biddingmarket price.
Many is the slip, 'tween the cup and the lip, but I will say this about ETG now TRQ is almost tucked into bed at Rio Tinto ... BATTER UP!!!
$1.16 CDN looking cheep cheep cheep duckies.
FMCDH!!!
18 long crazy years and counting on this roller coaster.
cg