Billiysnap I think your question is: Why has the share price of...

Billiysnap I think your question is: Why has the share price of ERG gone down since Westpac bought 10%?

The answer to this is in the Notice of AGM posted yesterday 16 Oct 2007: 7. Resolution 6. Approval of Restructure of Loans from Ingot Entities.

The proposal is to merge Ingot Loan 1 and Loan 2 into one debt (given to ERG by Saville in Jan 2003 and Feb 2004). These would be worth about 49.7 million dollars.
//OR// shareholders can aprove to allow this "loan" to be converted into options to buy shares at a value of of 14.5 cents exercisable by Sep 30 2010.

Page 13 of the report shows that Ingot (Duncan Saville) currently owns 30% of ERG. If the proposal is approved his ownership of the company will increase to 51%. Effectively Saville will be increasing his shareholding of ERG.

The reason why the price has remained aroun 13-15cents now becomes clearer, does it not? The 49.7 mill that he has lent ERG will now effectively buy him another 20%+ of the company at 14.5 cents. If the share price was higher say 70cents it would cost him a lot more...

What does this all mean? I personally think as soon as this resolution is approved (and IT WILL be approved) some really good announcements will be coming out about ERG's projects (see p.11 Section 7.5 paragraph 1). They dont want the SP going up before he gets his options at 14.5 cents. It also probably means that if Saville wants to own 51% of ERG then he is expecting big things in the future. I.e Shareprice going up --> which means a big big return on his investment!!!

By the way, that would also mean whoever has bought shares at 15cents or thereabouts would be experiencing the same kind of returns...

I know this was a very simplistic way of putting it, but I think it may help.

Cheers,
Nick