RE:Turquoise Hill, bid too low !!!More from the Pentwater letter to Turquiose Hill. Classic response...
even with this offer and maybe being low ball....i think Turquiose Hill owns 33% and this asset is 50B lbs of copper and 20M oz gold so their share is 17B lbs copper and 7M oz gold so similar to Casino - for $2.7-B? Is my math right? Yes...I realize it's an operating mine - but it is also quite a hairy project with lots of complexities. I like the comment from Pentwater...where they imply that now Rio made this offer - they believe that's the new floor in share price. Perhaps, just perhaps, if Rio offers $4 usd a share (totally hypothetical) and our BoD rejects then that is new floor for WRN and we go up from that baseline for eventual buyout?
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Dear Independent Directors:
Would you agree to sell your house to your corrupt banker for less than the equivalent of one and a half years of rental income? That is what Rio Tinto is asking you to do.
Rio has offered to purchase the shares of Turquoise Hill it does not own for $2.65 billion. Based upon current gold prices of $1,945 per ounce and current copper prices of $4.65 per pound, we believe that Turquoise Hill will generate over $17 billion of after-tax free cash flow between 2025 and 20301:
| Year | Free Cash Flow | Minority Shareholder Free Cash Flow |
| 2025 | $1.732 billion | $844 million |
| 2026 | $1.772 billion | $868 million |
| 2027 | $2.944 billion | $1.442 billion |
| 2028 | $4.070 billion | $1.994 billion |
| 2029 | $3.713 billion | $1.819 billion |
| 2030 | $2.895 billion | $1.418 billion |
This means that Rio’s current offer to the Board of Turquoise Hill is 32% of the amount of free cash flow that Turquoise Hill will generate between 2025 and 2030. Rio’s offer is also equivalent to less than 17 months of after-tax free cash flow
Dear Independent Directors:
Would you agree to sell your house to your corrupt banker for less than the equivalent of one and a half years of rental income? That is what Rio Tinto is asking you to do.
Rio has offered to purchase the shares of Turquoise Hill it does not own for $2.65 billion. Based upon current gold prices of $1,945 per ounce and current copper prices of $4.65 per pound, we believe that Turquoise Hill will generate over $17 billion of after-tax free cash flow between 2025 and 20301:
| Year | Free Cash Flow | Minority Shareholder Free Cash Flow |
| 2025 | $1.732 billion | $844 million |
| 2026 | $1.772 billion | $868 million |
| 2027 | $2.944 billion | $1.442 billion |
| 2028 | $4.070 billion | $1.994 billion |
| 2029 | $3.713 billion | $1.819 billion |
| 2030 | $2.895 billion | $1.418 billion |
This means that Rio’s current offer to the Board of Turquoise Hill is 32% of the amount of free cash flow that Turquoise Hill will generate between 2025 and 2030. Rio’s offer is also equivalent to less than 17 months of after-tax free cash flow