RE:RE:Lumpy ; The Company does very little self-promotion but they have a long-standing Investor Presentation slide deck (tweaked and revised every few months) that gives a good overview of the Oyu Tolgoi structure and ETG's interests.
Note especially the longitudinal cross-section of Hugo North/HNE and the "open" arrows at the North end on the JV ground. The current stated 43-101 compliant resource statements for Lift 2 terminate approximately 625m North of the JV line, where Rio Tinto/TRQ have stated a fault truncates the ore body. What people new to ETG may not be aware of is a February 1, 2006 NR from ETG that included the following:
"The initial inferred resource estimate includes the results of drilling up to and including holes EGD053, 053A, 053B, approximately 625 metres onto Entre’s Copper Flats project area. Drilling northward from these holes (and daughter hole 053C), is continuing to test for possible extensions to the mineralized system.
Significantly, Hole EGD081B, located approximately 750 metres north of the 053 series of holes, has intersected 48 metres averaging 0.45% copper and 0.02 g/t gold, commencing at a downhole depth of 1,724 metres. The hole is believed to have located the top of the mineralized system, thereby extending the potential strike length of the Copper Flats mineralization to a total of approximately 1,300 metres. Hole EGD081, the original hole collared at this location, penetrated the hangingwall stratigraphy, but passed over the top of the target. Daughter-hole EGD081A was lost due to technical difficulties.
Hole EGD082A (previously reported on January 16, 2006) was collared approximately 150 metres north of the 053 series of holes and drilled to a depth of 1,429 metres. This hole was abandoned in a fault zone interpreted to be in the hangingwall of the deposit. It is believed that this fault may offset the mineralized zone to the west.
Greg Crowe further comments, “The step-out drilling not included in this initial resource estimate indicates that the system could extend for at least another 700 metres. The ongoing drill program should continue to increase value for Entre shareholders by both upgrading this initial resource and testing for the northward extension of the mineralized system.”
Oyu Tolgoi is a very unusual project for a discovery 22 years after the initial major discovery drilling. Robert Friedland's Ivanhoe mines undertook a massive multi-drill drilling campaign to outline the initial discovery on the core deposits (then 100% owned by IVN, now 100% OTLLC as a 1/3 Mongolia 2/3 Rio Tinto owned, Rio Tinto managed operator). In 2004 it became clear the deposits were increasing in grade heading North towards ground owned 100% by ETG, which owned the exploration licences that completely surrounded IVN's licences. Supposedly Friedland had contracted all available deep core drilling rigs in East Asia at the time. ETG entered into a joint venture agreement to de-risk their retained 20% (or 30% if the mineral deposits were shallow) interests with full non-recourse financing of all exploration and development costs to only be repaid from production. ETG abandoned its independent drilling and exploration over the JV'd portion of their land. Later, they abandoned huge Western tenements as well. They retained 100% of Shivee West - the ground to the immediate West of OT.
It may seem strange that a 22 year old project could be "underexplored". However the history shows OT was a bitterly contested prolonged negotiation among multiple parties, especially Mongolia, where the development has been in the political spotlight for a long time. So once sufficient resources to move ahead with infrastructure were delineated, there were some material strategic reasons to slow up on further exploration or increasing the mineral resource estimates. One of which was Rio Tinto only owned half of Turquoise Hill Resources (TRQ) - in 2009 the initial ownership structure negotiated with Mongolia had OTLLC owned 1/3 by Mongolia, 2/3 by TRQ. TRQ was owned 51% by Rio Tinto, 49% by TRQ's public listing shareholders. OTLLC was also the holder of 80% of the JV with ETG holding 20%. Mongolia and Rio Tinto pursued a long game to consolidate ownership as cheaply as possible for both of them. For Mongolia, that meant pursuing forgiveness of the substantial loans plus compounding interest associated with their acquisition of 34% of OTLLC. For Rio Tinto it meant acquiring all of TRQ as cheaply as possible. Both had accomplished their goal by 2023 - Mongolia was given forgiveness of all loans ($2.4 billion USD), Rio Tinto bought out the half of TRQ they didn't own for $3.4 billion USD. Keep in mind all through this period it suited both Mongolia and Rio Tinto not to draw any attention to the JV with ETG and the fact that the JV ground had numerous unexplored additional targets for further deposits/mineralization. Some went all the way back to exploration targets identified by ETG pre-2004 which were never pursued following the Earn-in Agreement which would transform into the JV.
Rio Tinto as the obvious ultimate buyer of the largest share price of the entire OT project had motivation to suppress interest and an appreciation of the open-ended value of the JV ground. That "up value" not only extended to the strike length of HNE Lift 2 (no follow-up confirmation of what the mineralization drilled in 2005/2006 interpreted as top of the same system might be) but also a mining plan with a significant time lag between Lift 1 (now under development) and Lift 2. That time lag could be closed and mining of Lift 2 accelerated. His is particularly the case should OTLLC decide to expand the Mill/Concentrator capacity to expand production of all OT, including the massive Heruga deposit to the South, also on the JV.
Rio Tinto and Mongolia bickered and negotiated and flung allegations at each other from about 2011 to 2022 very successfully getting the market to brand OT a "troubled project", and ignoring the huge upside of pension potential as things deteriorated to focus on cost overruns and engineering delays, so far that some Mongolian politicians were calling for OT to be shut down completely. It was all a hugely profitable charade for both of them. The TRQ buyout was incredibly cheap. Several shareholders dissented and rumours now circulating suggest the main dissenters, the American hedge fund/spec investors Pentwater and Sailingstone have procured something like a 40% premium to settle their valuation dispute (unconfirmed but not surprising if true).
Throw in the variations in opinion of the mid-term pricing of copper and gold, the optionality to accelerate and expand production out of the JV ground, including a massive potential increase in high grade resources, and growing valuation in any event because time to production cash flow is now shortening day by day, and you start to see the potential revaluation of the JV and ETG's interests by a significant amount.
cg