Sell-off and ValuationThere is obviously somebody trying to get out of is old Woulfe shares. I have followed level 2 action yesterday and today after hours (I am on a different work schedule altogether from Can/Am time). There has been a 50-60k supply of AII shares on the ask between 70 and 60 c initially, progressively being pushed down and getting partially sold among competing lower asks. The block seems to originate with TD Securities and it is now down to about 10k shares at the 52c ask. As to why shares would be dumped at this level, I can only think these are liquidation type trades. Maybe a large holder like Resinco calling lights out. As Tech One notices, the selling has gone on since the day the merger was announced and did not stop even after the vote.
I cannot see a rational connection between the current 27M market cap of AII+WOF and the underlying value of the combined companies, although one could make the argument that Woulfe would probably be in receivership by now or the property of IMC already without ALmonty intervention and so it is worth nothing or negative to Almonty. But this is a very superficial argument and should only last a few days: the company has real, large assets with full economic feasibility and/or already producing. For the long-term investors, the company has given out a substantial dividend when profits were good. For speculators, there are rumors the company may acquire yet other properties in the down market. Tungsten prices will not stay low forever.
The Edison analyst believes that the partial payment to TaeguTec is a positive development that will increase the value of ALmonty in the long run. I agree with that. The continuing engagement with TaeguTec through the 6.2M remaining loan also hints that the off-take agreement is still on and being negotiated. Which is where Black wanted to steer the company: a straight off-take dal without equity financing from the customer. The Edison analyst has a new target price for A&W of 1.26 CAD, and a fairly good argument on how the number is derived. This may be a good opportunity to add, although there may be not a whole lot more to add at these levels, judging from level 2 action today.