RE:RE:Turquiose HillClark - Thanks for your review. I think you are SPOT on with the points each side would make during the negotiations.
Rio:
High capex; not permitted;WRN market cap; infrastracture needs in Yukon
WRN:
Jurisdication; mine life; massive amount of metal; 3-4 year payback; add'l exploratoin potential; relations with FN's; everything in FS and as advertised has been proven accurate; solid IRR even with at soft metal prices; etc.
The other thing i found quite entertaining was the back and forth negotiations with Turquiouse /Rio. Rio - "It's my final offer and it's fair". Turq - "No it's not and we are going to make announcement to market of formal rejection"....back and forth over and over. Bottom line....seems like most on this chat take little to no importance to MARKET CAP that the equity is trading at during the negotiations....unfortunately i think they are WAY off base on that and it's more than just P/NAV during the negotiation!!!! Case in point is this example. Anyway,
Paul's response to my questions:
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"Thanks for the interest.
We have retained as advisors industry leading banks to help us as we potentially move forward with Rio. They have run a number of metrics on the company similar to those that you have identified below.
Unfortunately, I can’t share those metrics with you, but you can get a good sense of the values by taking the NPV of the project from slide 20 of our latest corporate presentation and running through the math – certainly higher than where we are trading now!
Cheers,
Paul"
My response to him:
"Thanks for feedback Paul. Yes, you can see on the Turquoise Hill circular that WRN is noted as peer developer just for benchmarking purposes on P/NAV and that group has range of 0.14-0.67. Clearly WRN is the 0.14 so hopefully that starts moving with upcoming news to help us get closer to trading at “fair” value.
For my benefit, if I use same assumptions as the TD Securities review of Turquiose Hill at 10% /$3.5 copper/$1600 gold I get NAV right at $1B usd —-so applying the same 0.75 multiplier they used gives $750M or $4.5 usd/share…which I believe is also consistent with what our analysts have put our share target at recently.
Obviously, lots of give and take between projects (we aren’t even permitted but we don’t have Mongolian govt to deal with, etc).
Anyway, appreciate your response and looking forward to upcoming news about drill anomaly results, met work wrap up, and hopefully something with Rio (or another major) to further drive market cap!"