RE:RE:Getting closer One of the attractions of Arbitration and why it is included in commercial contracts is privacy for the parties. No public filing of allegations, no disclosure of specifics unless they are required by securities law to put out a NR if the arbitration is settled or a material decision reached. But it drives us nuts not having exact information about what is happening.
Last year there was that "loose lips" comment out of Rio Tinto that they had reached some form of agreement about Entree ... just small details to be worked out. Then silence and no comment by ETG.
What is consistent with some material confidential information is there haven't been any insider transactions filed in respect of ETG for a long time - it's one thing for there to be no sales on the open market (although unusual because typically even a rising stock has management individuals who for personal reasons might want to raise cash - new home, kids going to University ... personal expenses), but no purchases when with rising metals prices, cashflow approaching, things looking very promising, not a single management purchase either. Suggests a blackout because some material information might be in hand.
However, there may be substantial resistance on the ETG side to selling out unless a very attractive price is on offer - with metals prices rising, the possibility of further resource discoveries on the JV ground, the possibility Rio and Mongolia want to accelerate and expand the mining plan ... it will take an attractive revaluation price to get management and HCU to sign on to a sale deal, if that is what is in the cards.
To me a toss-up whether the arbitration and it's possible outcomes put sufficient pressure on Rio Tinto and Mongolia to put up a fair price and structure a buy out of ETG.
In my mind one issue is pretty clear - that the promise to use best efforts to procure tax stability for ETG's income from the JV shifted the risk of any costs associated with that result to the Rio/Mongolia side of the JV. ETG contributed 80% of their entitlements in return for a relatively small exploration budget, financing to production, and tax stability equivalent to what IVN could negotiate for themselves. That sure looks like an agreement intended to create a clean 20% income stream, de-risked. If the Mongolians believe they are entitled to acquire 34% of ETG's 20% carried interests, then they and/or Rio Tinto should have to shoulder the costs themselves. Because that was the deal made in 2004.
Rising price trend finished last week nicely - this observernpleased to see volumes have not been substantial - the price has not been sufficient to bring too many shareholders onto the ask.
Looking pretty good with copper and gold giving a mighty tailwind.
cg