<If there is a buy in to HUGO by some party wouldn't that money go to the mines construction rather than to shareholders??>
Keep in mind that HUGO has a whole series of potential deposits there. The first big discovery is Turquoise Hill, (also called Oyu Tolgoi) but there is likely to be more (Kharmagtai?). Robt Friedland is a completely different sort, more of a visionary. I think he pictures himself as a modern day Cecil Rhodes. He has an enormous ego, but personally I think he has the goods to back it up. For anybody who wants to play this, a read of the "The Big Score" (Inco's buy of Voisey Bay) might be in order.
2iba.com
It's somewhat derogatory toward Friedland (calls him lucky, which is nonsense) but also gives you a sense of what he's like, and is one of the best reads ever about business. I felt although he was ruthless dealing with the majors, he bent over backwards to take care of his backers and shareholders in that one.
So I suspect that given prior history, the majors are being especially cautious about 1. overpaying like Inco did at Voisey Bay (was at the top of the resource cycle) 2. having a Friedland as an equal partner. I think Friedland is keenly aware of this, even though postures (he can't help it). So ultimately, I see TH (not the whole company) being sold pretty much lock, stock and barrel to a major in a stock swap. It may not happen though until copper spikes, which would give Friedland even more bargaining power. Given my view of copper shortage, I think Friedland is in the cat's bird seat, and could care less if ABX has taken a pass on TH. Besides ABX is a gold company, and TH is 85% copper. Right now the majors are just gaining knowledge about a very, very big new mining district, and Friedland is just patiently letting them kick tires, and salivate.
biz.yahoo.com
Plus events (including new discoveries) there are going to evolve fast, now that HUGO has $185m in cash on hand. I think some of the acquirer stock gets paid out to shareholders, and some is retained to develop the rest of the "pearls" as Friedland calls them. So Friedland's vision is a series of these mines, some HUGO's and other's the major miners in an immense mineral district, that just feeds China. It is absolutely essential that this happens if China is to develop further. Friedland knows he needs to bring other majors in to create the right effect, so I just don't see him developing and mining TH (or the others) alone, it's just too massive. Plus when this evolves, all the majors will want a piece of it. Just a question of who goes first, then once "blessed" it will be a flood. HUGO just locks and loads, locks and loads, each one in sucession. |
