Oriental Peninsula Resources [ORE 1.08 30.1%] [link], a nickel mining company owned by Carol Tanchay, surged up to P1.20/share in early trading yesterday (+44%), before settling down to close at P1.08/share (+30%).
The sudden surge of interest was due to news over the weekend that Ms. Tanchay had signed a memorandum of agreement (MOA) with Marubeni Corp, a Japanese conglomerate, to develop and construct a 250 megawatt (MW) hydroelectric power plant and a 150 MW solar power plant.
The reporting by Bilyonaryo indicated that the MOA was signed between Marubeni and Oriental Energy, which is also owned by Ms. Tanchay, and is worth US $870 million (P48 billion). According to ORE’s Q3/22 quarterly report, ORE owns 30% of Oriental Energy.
MB BOTTOM-LINE
MOAs are non-binding, and are best thought of as a formal writing down of the things that both parties want to do under ideal circumstances.
There are usually no consequences for either party for failing to follow through on any of the things said in the MOA, and the timelines in a MOA are often soft and act more like guidelines to the evolution of the relationship.
MOAs aren’t nothing, but in the corporate world, they’re about as reliable as plans you or I might make with our friends to meet up at a certain location at a certain time for lunch next week.
Sure, we’re all excited about going to Pobla in the moment, and everyone agrees that it would be great to get together on Saturday at 1pm, but we all know when we make the plans that any number of things could happen that might jeopardize those plans.
Plus, we don’t really know any of the MOA’s details with respect to ownership and operation of the power generation assets.
Will it be just under Oriental Energy, or will ORE have some kind of elevated role in whatever happens?
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