RE:Entree question for Countrygent or others familiar with EGI
Not sure how to explain it other than exactly what you have set-out: Sandstorm made an upfront payment, and can pay a discounted price against future market price, of ETG metal credits mined from ETG's 20% interest in the JV mining if and when it occurs, to the extent only of the percentages you set out - ie. if ETG is entitled to 100,000 ounces of gold mined in a given year, then Sandstorm is entitled to 27,500 ounces at a price of $220 per ounce. A much smaller interest in the copper credits.
There was also provision made for Sandstorm to participate in a private placement of approximately 12% of ETG's common shares, and for the repayment of a pro-rata amount of the $40 million cashdeposit in the event (probable) of a partial expropriation event - which would be the anticipated equity position given up to Mongolia in return for participation in the IA or similar treatment, paralleling the 2009 deal with IVN/TRQ.
ETG has greater leverage to expansion of resources and potential valuation lifts - it incorporates a partial camp play in the adjoining 100% ground at OT to the West, it participates in Heruga and any further JV resource expansion in the JV, and it has its American Ann Mason development. But there are more risks of delay and non-control of the development timetable, and no ownership of the concentrator or existing, producing pit operation. Futhermore, ETG has a much smaller market cap and has had a far more severe disount to market cap from asset values than TRQ - as recently as two months ago it was trading at a heavy net disount to cash in hand at the 20 cent level. At 45 cents CDN on Toronto- now that US-CDN exchange is getting so pronounced, all ETG's assets are still only being valued in the sub-$30 million US range today. There are several scenarios or possibilities which could see high multiples of current market value paid for ETG's several assets.
NPV calcs of the HNE attrutable to ETG based on current drilled resources are in excess of $100 million US. What would you add for potential expansion of resources, the rights to Heruga, the remainder of the JV ground, ETG's 100% camp play at OT, and Ann Mason in Nevada? You can very quickly begin to see huge upside potential ... if and when underground development gets moving, if and when Heruga comes into play, if and when Lift 2 begins to look possible, if and when there are additional drill results and resource discoveries (something the IVN team said were certain - that only a fraction of OT had yet been deliniated).
For a piece of a mine that will soon have almost $10 billion of capital and development costs sunk in, amazingly paltry valuation, you might say ETG flies under the radar.
cg