RE:RE:RE:RE:RE:Full Disclosure Time
It's fundamental in takeover bid situations that all shareholders of the same class must be offered identical consideration or choice of consideration. Collateral benefits are also prohibited.
Rio Tinto really pushed the envelope with TRQ and ended up having to make the Pentwater/Sandstorm "dissenting offer" to all shareholders.
SSL/HCU already own streams on HNE from ETG - those streams would survive any consolidation of ETG into OTLLC.
You are discussing HCU's conceptual idea that their ETG shareholdings represent a stream from HNE and they might prefer to swap it for a true stream on HNE production. Legally, problematic. They can take the same cash consideration as any shareholder in a cash takeover bid of course, but any "tied deal" to using that cash to purchase a stream would immediately raise the question of whether they are being given a collateral benefit - even if the stream is calculated as a current FMV purchase.
Somebody else floated the idea that ETG might remain but swap it's JV interests for a royalty/stream over all of OT - which would collapse the JV, but create that equality of interests with OTLLC and Rio Tinto in production from the whole project. Then, presumably, even if such a disposition of interests by ETG for alternate consideration was not a takeover bid it is still a fundamental transaction requiring shareholder approval ... and ETG would immediately be a takeover target by other large streamers. First of all, it misses on Rio Tinto's stated objective of increasing their copper portfolio, it grinds down the Mongolian 34% in real economic terms, and really, it remains a clumsy ownership (ETG as a public listing with a single mine minority non-management interest) that doesn't address the core issue of collapsing ETG. Can't see the Mongolians going for that.
This isn't the only developing copper mine in the world. The jurisdiction itself remains a discounting risk due to political future instability (made worse, perhaps by the location and dependence on Russian and Chinese supply and demand issues for a foreign UK/USA/Australian/Canadian venture).
For a fair price we are all out. As for value issues and whether there is much more at OT in terms of high grade resources, at some point the size of the resources is a footnote - what really matters is the production schedule for the first 25 years, optionality to alter, accelerate and/or expand the schedule, or the ability to substitute higher grade reserves earlier in the schedule.
Of course we believe OTLLC intends to expand production and accelerate Lift 2 and eventually Heruga. But they will never acknowledge that at this stage. All we can negotiate is a premium on the NPV of the projected production on the basis it might be developed and monetize reserves sooner. That can be done by analogy to early development stage mine discoveries where the market does give long-deferred production a valuation which is entirely based on optionality prior to confirmed feasibility and preliminary economic analysis.
its just a number. If the number is big enough, and the attraction of money in hand compared to all the risks and uncertainties of downstream politics, production, metals prices pushes for enough of an attractive discount to still be left on the table for the buyer/operator (and they do need and deserve a substantial premium or high projected return on capital to justify their consolidation purchase) we'll get a deal. The posturing and screwing around has been because the value is so high - just look at the tape for the past month and see how with a few million dollars strategically manipulating the price of ETG stock you could shave or add hundreds of millions of dollars of implied market cap to the company. What gets me about it is how futile some of the gambits are ... reasonable people could sit down and do and handshake deal with all their cards laid on the table in a few days if they dealt in honest good faith with each other. Instead, grind grind grind, delay delay, wrist wrestle wrist wrestle, all the people there being paid salaries to keep it up until the cows come home.
But what came out last week is the truth that was always facing everybody - Rio Tinto and the Mongolians could screw around with everything except the inexorable passage of time, and now they have run the clock down, it is obvious further delay screws over the 80% owners four times more than the 20% owners. "Racing" to get a deal done because they played beat on the brat and their good cop bad cop charade for 18 years. Guess what? Time's almost up!
cg