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The Future of Oyu Tolgoi

There is quite a dance underway at the Oyu Tolgoi complex with Turquoise Hill (TRQ), Rio Tinto (RIO), Entree Resources (ETG), the Mongolian partner and other government authorities all attending. Are the government interventions part of a negotiating strategy? How about the project re-engineering, delays and additional costs? Logic would have it resolve into a new arrangement that will unlock the true value of this gold copper giant instead of devolve into a battle of egos and perpetual conflict. Sandstorm Gold (SAND) is a significant stakeholder as well. It has streams on Hugo North and Heruga and a near 20 percent shareholding in Entree. Entree recently delisted its shares on the senior exchange and it appears that Turquoise will do a rollback to avoid the same fate. I am already an owner of TRQ, ETG and SAND. I am buying another tranche of ETG as a Speculation and will consider it an opening position in keeping with the formalities of this blog. The delisting created additional selling pressure as not all entities can own OTC or CAN listed shares. Recently, the share price has improved. Increasing gold and/or copper prices will be beneficial, but the real prize will be a takeover or some other form of M&A that will unlock the deposit’s true value. I will consider adding TRQ after its rollback as prices typically drift lower after that kind of event. Or I might wait for TRQ to announce a financing that could pressure share price. It is on radar in either case.

Bought tranche at $0.365 (CAD).

 

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