Daily musings from some very long term travellers on the Trans-Gobi Cannonball over at the ETG BB at Investor Village.
For those that might be kicking tires here, there is a lot of back history, but let's just say for now, without all the peculiarities and complications:
Read the corporate presentation on the ETG website. Note that the prime assets are a key 20% interest in the Hugo North Extension at Oyu Tolgoi - currently in ramp-up to a full sustainable production mega block cave mine where ETG is JV'd on the highest grade ore ... with much more to come.
Plus 20% of the Heruga resource to the South that will be another mega copper/gold/moli mine, with massive optionality to advance its development if Rio Tinto and Mongolia so elect.
Plus ... given the long wrangle over terms of ownership and financial interests between Mongolia and Rio Tinto, the better part of 15 years has passed with delayed/deferred drilling and exploration in the remainder of the massive land package around Oyu Tolgoi. This is extremely unusual. What would have been a hot camp play in many jurisdictions with multiple companies drilling around OT has instead been on ice. The best may be yet to come for ETG, believe it or not!
Copper and gold prices used in prior disclosure ... look like they are set to stay up and better for some time to come.
Every major shareholder - Sandstorm/Horizon with 25%, Rio Tinto/TRQ with 17%, managemnet with somewhere like 8%, has been in accumulation for years, nobody sells.
Legs up on share price are being pushed by smaller volumes - have a look at the six month chart and how few shares have sold into the rise or taken profits, notwithstanding the volatility generally in the junior miners. It's impressive and suggests a tight-gripped shareholder base that has been accumulating for a long time and committed to higher valuation opinions. No major shareholder has sold in years. Management is solid accumulation of both shares and options with almost zero sales - ther was one recent director's sale to plow the proceeds back into exercise of additional options to grow his position.
Note how little institutional holding there is - they literally can't build a position of any size notwithstanding the green blinking lights for the last public participation at Oyu Tolgoi where both Rio Tinto and Mongolia want it all for themselves and perhaps a hand-picked senior partner if they have an aggressive expansion plan in the back of their minds.
This stock has been suppressed and kept under the radar for a good reason for a long time - it's much more valuable and they didn't want any free riders on the train. But there is a small group of retail nibbles who you might call "shrinkage" or "leakage" on that plan.
Leverage. Great assets in hand. Pathway to cashflow and production clear. Incredible free ride on additional exploration and probable expansion of high grade resources, especially the extension to HNE Lift 2 which was purposely stalled to keep a lid on ETG for almost 18 years. Sounds incredible? It is.
This is worth a lot of DD. Prospects and probabilities for a buy-out of ETG in the near to mid term are very good. And it will be at a substantial premium if not multiples of current SP. My settled opinion.
Do your own DD. I have banged the drum here for years and at the end of the day it is going to pay off very well indeed, substantially up from where we are at now notwithstanding the run from 90 cents or so caused by the TRQ buy-out last year, black swans and other catastrophes excepted. But then, there is always risk in every great enterprise.
Okay. I have tried to tell people for fifteeen years. Still not too late.
cg