RE:Are Pentwater and SailingStone in the driver’s seat? You need to wait and see the technical terms of the bid, we are waiting for the TRQ Board's Independent Committee to report ... there will be a bid circular eventually.
Generally for a two-stage going private bid the total ownership after the bid must exceed 90% of all the issued shares in order to trigger squeeze-out rights in respect of the non-tendering minority. So the true threshold is 40% regardless of the "majority of the minority" required in most bids.
The market believes a higher price will be paid. There are two routes for that - Rio ups it's bid, perhaps after negotiation with TRQ's Board in order to win their support for the bid ... or ... Sailingstone or Pentwater are able to attract a white knight bidder to enter as a third party and be willing to hold a minority position. Given the Mongolian politics perhaps a major could negotiate with Rio to come in as a partner if they are willing to pay more ... they could combine their shareholdings into a single entity and complete a squeeze out if they can get 40% in an upped bid.
The mood out there seems to be the bid is low ... but really we need to wait for the valuation and fairness opinion forthcoming from TRQ.
AS for ETG, in 2018 with CU and AU prices 50% lower, and no reckoning of the probable extension of HNE Lift 2 to perhaps as much as double that high-grade ore body ... the Edison Research Group produced a valuation report (paid for by ETG) targeting $3.41/share CDN.
To take out cash in a mineral property you can expect to give a substantial discount to full value on account of long term risks being assumed by the buyer ... here we still don't have tax certainty and IA coverage for ETG (although covenanted by IVN/TRQ in the JV Earn In Agreement - on a best efforts basis to provide substantially similar treatment to ETG). ETG has started to say they are negotiating for stability provided there is no erosion of value - as in, we already threw in 80% of the JV ground and aren't giving a further 33% of our carried interests to Mongolia ... that is a TRQ/Rio obligation. But maybe there is some saw-off. They certainly made plans with SSL in the Amendment of the SSL Funding Agreement on their royalty that if it was cut back by a third they would pay an agreed rebate of the up front SSL money.
Upshot being, although $2.50 looks a far way above current market, it may just be that the share price has been depressed by a false assessment of Mongolian risk for so long that it is a low price and a revised valuation in closer to $4 -$5 share, subject to some discount. Contrary to that is the supposed comment by Nolan Watson of SSL that they considered ETG to have a value in the range of $2 to $3 ... perhaps telegraphing expectations for their key 25% shareholdings. It would be a breach of the Funding Agreement for SSL to even discuss potential take-over bids for ETG with any third party - they agreed to vote with and follow ETG management so long as they owned ETG shares. Possibly you can drive a bus through that contractual commitment with the Horizon Copper transaction - at the end of which it looks like SSL won't own more than 30% of Horizon. Don't ask me by what assessment of fiduciary obligation by SSL's senior people they can move their ETG shares into a vehicle they appear to be doubling-down personal shareholding/ownership ... but maybe Horizon becomes a free agent. Do they have any motive not to get the highest reasonable price possible and structure a sale of ETG? Only time will tell.
My personal view is Rio and Mongolia both want to boot all direct public shareholdings out of OT, so that they aren't subject to as much scrutiny of cash flows and operations, and Rio will be willing to pay a substantial premium to market, partly because they have successfully suppressed the valuations for so long, but also because they have been caught out in questionable financial and management decisions and would like to bury it. The next year should be very interesting. It is probably hopeful for ETG that Rio elected to tackle TRQ first, before the most likely vehicle to take out ETG - OTLLC, makes an offer for ETG. The reason being that absorption of ETG into OTLLC brings all of OT into the IA automatically without the need to reopen the agreement or go back to the Mongolian parliament.
Right now gotta wait for TRQ to respond to the bid along with their financial consultants. If I had to guess, the conniving mind would say TRQ will put up the appearance of a fight because Rio left lots of dry powder so it could appear as if they were pushing on behalf of the minority. Bottom line, unless a truly independent third party comes in to bid for TRQ, they will get it a great price, all things considered ... such as a market valuation back in 2011 or so that accounting for dilution and consolidation might be in the $150 range today. RF, wily old fox, sold out at the equivalent of $280?
OT, forget about the growing pains, it is among the very best mines building in the world. So valuable.
cg