RE:RE:RE:RE:RE:If the stock price gets to 70 cents Canadian
If people understood the 18 year press ... ever since the still not performed 2004 Earn-in Agreement with IVN gave away 80% of the massive JV lands at OT. Not performed and still no fully negotiated JV Agreement today because there was a covenant to use best efforts to secure "same as" stability agreement on taxes and duties with Mongolia for ETG in respect of its carried interests. Now ETG has commenced arbitration with TRQ (soon to be Rio but what's the difference, really?) and as usual with the opaque disclosure surrounding OT they won't say what it is specifically they are seeking. And ETG does have a little leverage as it still holds the licences over the JV lands - lawyers would say in constructive trust for the yet to be consummated JV Agreement ... but it is security.
The IA, when it was procured by IVN in 2009, was executed at the same time as the creation of OTLLC as holdco over all of the interests of IVN in OT, including their share of the JV. BUT ... Mongolia was given 34% of the shares of OTLLC at a price which was kept secret for a long time. And ETG away left out, probably because they refused to accept a 34% haircut on their carried interest - their reading (and mine!) of the poorly-drawn wording of the Earn-In ... we gave up 80% in return for a 20% carried interest and similar tax treatment. If you needed to grease Mongolia to accomplish that, don't put it on our account, we've already paid, and paid generously.
So it sat, unresolved. In the meantime, all the Mongolian political shenanigans essentially made TRQ (on the departure of Friedland when he lost effective management control to Rio) down tools on all major exploration of the JV, they concentrated on firming up Hugo North and Heruga sufficient to prove up the reserves and a mine plan to go to market for financing, but nothing more, it would only ETG on the Mongolians. Entree did some drilling and prospecting out on the 100% retained (non JV'd) portion of their licences, but it then became apparent with the stoppages in development caused by Mongolian-Rio bickering and disagreements that ETG would run out of money, so they folded the exploration tents as well. Enter SSL with a royalty streaming deal and lifeline of cash to keep the lights on at ETG and wait out the building of the block cave at Hugo North.
Among other nuggets lost to most of the TRQ world ... in 2002-2003 the IVN geologists and ETG's consulting geologists, and some world renowned porphyry experts - particularly Richard Sillitoe - the geological model for a very large and unusually high grade intrusive deposit like OT suggested there should be "halo" deposits in addition to a lengthy structural periodicity of "string of pearls" along the principal SW to NE corridor upon which the main discoveries lie. In 2004 ETG had recommended some additional drilling to the East of OT at a target known as the X-Grid. Then there was interest to the NW of Hugo North, and further SW beyond Heruga, all on the JV. And additional trace mineralization along a flanking corridor on ETG's 100% owned lands to the West (the Western non-JV'd portion of the two mining licences). Shallow precious metals deposits, particulalrly gold, surrounding the main intrusion, are part of the standard model for large copper-gold porphyry structures. So hunt for elephants in elephant country. Except, there was no follow up after 2004.
In 2006 as IVN was drilling North on the JV, they did a series of holes at approximately 1325mN a of the northern IVN property line, where ETG's President, Greg Crowe said they (ETG) interpreted the mineralization and the stratigraphy as indicating they had hit the top of the same system as at HNE, which only runs to 700mN in the TRQ reserves model ... TRQ says the deposit is truncated by a fault immediately to the North. They have no expiation what was hit at 1325mN. Yours truly believes the Northward dipping HNE high grade deposit continues with a slight fault offset. No substantive drilling due to depth and the supposed technical difficulties caused by a granite cap above the deposit ... for 16 years!
Which is a long and convoluted story about why many don't recognize that OT is both a mine build-out into huge known reserves, but also, not as well understood, a massive camp and area play where exploration has been suppressed pending Mongolia, and perhaps the TRQ minority, being placed on ice with a fixed deal. With regard to the Mongolians, and Rio's desire to tie up more of the known cashflow, you can appreciate how a discovery of a shallow high grade deposit might have blown up the whole ownership structure, if not precipitated a nationalization of OT by Mongolia who wouldn't need so much capital or expertise to get a big open pit up and running.
So now we might find out what has kept ETG around as a bit player for all this time. One thing is for sure ... there is probably a lot more in the OT area than just what is in the known deposits to date.
Buh-bye TRQ a will help move the ETG agenda forward. The Mongolians know they don't have a full 34% of the whole production, and ETG apart from the value of its share of cashflow, is also sitting on valuable ground and might be an "Entree" for a second major mining partner to help pay the capex for an accelerated expansion of the mill and either or both of Lift 2 HNE and Heruga or .... ??? Some grand surprise under the magical shifting sands of the Gobi.
Anybody who votes "yes" for this Rio offer is making the wrong choice if you ask me, the preferential treatment of Pentwater is outrageous. I'd retract my proxy and vote NO, sell my TRQ at market (small haircut) and come over to the ETG Trailer Park where the Amigoes expect a big weenie and brewski budget to be coming their way.
Happy speculating to all.
cg