My sources here in DC say it was not a "fake coup" by Erd. It was just a truly incompetent one by a small faction within the military. Erd is taking advantage of it though to clean out opposition. We won't recognize Turkey in 10 years. Likely sooner.
Communicated with the IR at CG. Nice guy. Seems more on the ball than TC. Asked some questions. Provided some unsolicited comments/suggestions. Including the selling of Kumtor. I'm sure he appreciates us giving them strategic business advice. Lol.
Btw, he confirmed that they do NOT have political insurance for Kumtor!! Just the collateral there for the $76m EBRD "debt". I'm not so sure about selling the Turkey mine. That still could be a keeper.
The coup is a good thing in this case. The military is secularist by tradition -- as is the country. Erdogan is a crazy dude that is more sympathetic to theocracy. He'll be arrested soon enough. If CG dips, buy the dip!
Might as well just start using this board.
Welcome everybody. :-).
So we move from debt maturity problem to a expropriation problem. We must be masochists!?!?!?
I think there's no choice now but to support the deal. I hate it. We got raped. Just hope that CG respects shareholders more.
3crew it. Let's just go to CAGDF mb then. This is gonna be a done deal anyway.
The only thing that MIGHt chg is the share ratio but that's a wish.
I vote CAGDF board. It's clean. Good start.
There is no economic insurance on Kumtor. The only "insurance" in a manner of speaking is that the $76m in existing debt at CG is all collateralized with some of the assets at Kumtor.
Here's a faint silver lining though.
That debt is from the EBRD. So CG does potentially have not only the Canadian Gov but also the EU to help with any political pressure. EBRD will be very helpful as they could put a plug in any more loans that involve Kstan. That will help!
I was probably being too lose with the term arb. Optimal might be better.
The risk at CG is smaller than at TC. A lot is already priced into the CG pps. But if Kstan take it over, pps could go to $2. The nice part is that they have some new mines coming on line which is a catalyst. CG has a big advantage though.... No debt. That cures a lot of the risks.
I put all of the blame on the c-suite idiots, haddon, and later the new stooges bmo and moelis. None of us thought that mgmt could literally be so dumb. We all bought into the notion that with a rock star mine even a semi trained monkey could deal with the situation.
I gave them benefit of the doubt to be at least just as smart as a monkey until Q2 2014 cc where they announced in epic botched fashion the hard rock problem. That was the come to Jesus moment for me on that whole thing. After that... I doubted everything they did or said because I knew better. I became a realist on that call despite the obvious path fwd for them. But instead they go off and do Ike deal and all that other nonsense.
Perron is either a felon fraud/scamster doing all he could to have his "friends" buy TC on the cheap or is a titanic moron. In his case.... Likely both actually.
A CG board seat goes to someone on TC BoD. I just hope CG is not stoopid enough to give it to Perron or Haddon.
I am wrestling what to do as well. I'm keeping eye on all the prices and exchange rates to see if an Arb opportunity or optimal timing presents itself. CG mgmt seems far far far smarter than TC clowns. But that's a low bar. Sadly.
The only thing holding me back with sticking around with CG is Kumtor / Kyrgyzstan. If Kumtor gets nationalized (actual or effectively) then it's just another fresh train wreck. Contrary to wishful thinking on this MB-- there is no political insurance policy on Kumtor. Cost prohibitive. It's not there. They only mini-hedge is the $75m debt is collateralized by the mobile assets at Kumtor. Not ideal but it's something. CG should sell their entire stake (all of it) back to Kstan or other parties and get out! Use that cash to buy yet another troubled miner.
This deal is going to happen. I just wish at a little higher price.
I hate told-you-so's but.... I was right. There is no expropriation insurance policy on Kumtor. That should've given the 3 stooges a little more backbone during the john Kerry style negotiation with CG.
Like I said the other day-- if CG had such a policy it would effectively be a put option on Kumtor which means the CG pps would not have nose dived (20 to 5 usd) when Kstan started playing dirty again. CG would sell the entire mine to the Kstan Gov and then implement negotiation a mine mgmt type agreement to actually operate the mine without owning it.... Or get out altogether.
Bottom we jumped out of the debt maturity boiling pot into the mine nationalization boiling pot. Ugh.
3 stooges (moelis bmo Perron/saxton/haddon) = worst negotiators and execs on the planet!!!!!
Consider yourselves "warned" with regards to CG/Kumtor. On the slight positive side, the $75m used in the credit facility is collateralized by assets at Kumtor. So a minimal hedge there. CG at least seems to be far far far smarter than TC clowns / 3 stooges.
Well remember- there were other bidders. But id rather CG sweeten the pot a lot but instead.