Entrée, approached by 'stressed' rivals, may make acquisitions
miningweekly.com
By: Liezel Hill
Published on 16th December 2008
TORONTO (miningweekly.com) – TSX-listed Entrée Gold, which is exploring properties in Mongolia, China and the US, will consider buying assets, as difficult market conditions make acquisition valuations too good to resist.
The company has about C$58-million in cash and no debt and, having been approached by a number of “stressed” companies, is starting to look seriously at potential targets, president and CEO Greg Crowe said in an interview.
“There are an increasing number of them... and they have some interesting assets,” he said.
Vancouver-based Entrée will consider adding copper and gold prospects, possibly with molybdenum as a byproduct, and is also interested in coal and nickel-sulphide deposits.
The firm would like to gain a bigger footprint in the south-west US, but may also look at acquisitions in Peru, Brazil, Chile or Ecuador.
Entrée's flagship asset is the Lookout Hill property in Mongolia's South Gobi region.
The property is right next to Rio Tinto and Ivanhoe Mines' giant, albeit delayed, Oyu Tolgoi project, which has been touted by Rio as the world's largest undeveloped copper/gold project.
The Lookout Hill property has been split into two: the eastern half is owned in joint-venture with Ivanhoe, which gained a controlling interest through an earn-in agreement, while the western portion is wholly owned by Entrée.
Ivanhoe and Entrée have completed NI 43-101-compliant resource estimates on two deposits on their jointly-owned property - the Hugo North Extension copper-gold porphyry and Heruga copper-gold-molybdenum porphyry.
Entrée also has the right to ask Ivanhoe to fund its share of joint venture costs through to production, to be repaid from production cashflow, which means that its treasury is freed up for exploring other assets or for potential corporate activity.
'ALL THE RIGHT STATEMENTS'
Meanwhile, Entrée is closely watching the process towards an investment agreement between the government of Mongolia, Ivanhoe and Rio Tinto.
Ivanhoe said earlier this month that the Parliament had set a deadline of February 1, 2009, for the completion of a draft investment agreement.
Based on previous drafts, Crowe said he expects that the agreement will govern all Ivanhoe-controlled property that surrounds the Oyu Tolgoi mine, which would then include the eastern half of Entrée's Lookout Hill property.
Although the company is not privy to the talks between Rio, Ivanhoe and the government, public statements by government officials indicate that the country realises that delays to the agreement resulted in potential revenue being lost during the resources boom of the last couple of years.
“The Prime Minister is making all of the right statements...and the government has now set the stage for changes to the mining law and for the finalisation of investment agreements,” Crowe commented.
Prime Minister Sanjaa Bayar has also indicated that the review of the country's minerals law does not need to be completed before the investment agreements can be finalised.
After five years of negotiations, the Mongolian cabinet last year approved a draft deal for Oyu Tolgoi, which would give the government a 34% interest in the property.
However, Bayar, who was elected in November last year, withdrew the document for further review.
In the meanwhile, there has been speculation that the government will push for a much bigger stake in the project, but Crowe said the latest indications are that it will return to the originally-proposed 34% interest.
Ivanhoe owns approximately 15% of Entrée Gold, and Rio Tinto holds 16%. |
