RE:If you like ETG, HCU is an even better deal Well, although a buyout scenario is the most obvious solution to ETG's status, the parties sure haven't been able to find common ground on a valuation.
My guess would be in 2022 when Rio Tinto supposedly solved "all issues" they quietly promised Mongolia they would take care of the outstanding issue of Mongolia gaining a 34% in all of OT production - including ETG's 20% carried interest.
One of the potential valuation issues for ETG was whether or not the promise of tax stability through "best efforts" of IVN ... which was assigned to OTLLC ... relieved ETG of any obligation to bear the economic cost of giving up a further 34% of their retained interests. Now in May the Mongolians have announced they will take 34% of all strategic deposits without compensation. That mirrors the settlement reached with Rio Tinto in 2022 where they forgave the acquisition cost of Mongolia's 34% interest in OTLLC.
That would seem to remove that issue from the table - Mongolia is telegraphing it will take 34% of ETG without compensation. They are potentially responding to the arbitration proceeding.
But bottom line the only real issue is Rio Tinto and ETG agreeing on a fair valuation price for ETG that Rio is willing to pay, and would be acceptable to HCU and management. Surely it can't be that difficult. I don't believe the trading price of ETG really is much of a factor, it is so thinly traded and a convoluted ownership situation. Maybe the amongolians are also pressuring Rio Tinto to follow-through on a promise to lock-up ETG and consolidate all of OT into OTLLC?
When you look at the potential increase in the size of Lift 2 resources, in the optionality to expand the mill and bring forward both Lift 2 and Heruga, in the recent increases and projected forward price curves for copper and gold, surely given the size of the assets involved and the relatively small portion ETG represents of the whole, it is not a huge nut for Rio Tinto to crack. They are just being their usual, difficult, penny-wise and pound foolish selves in not paying out a critical JV partner fairly? You might think locking-up those mining licences and ETG's carried interests might be a big win for all parties.
cg