Crying Woulfe? 1. None of us on the outside really know what is going on with the offtake agreement.
2. Even Woulfe doesn't know fore sure--they only know what IMC tells them, and until IMC ponies up the money, Woulfe can't be certain of anything.
3. As much as I like Woulfe, history has shown that the dates they give are usually meaningless--they can only cry woulfe so many times before I have no faith in the dates they give--they have now reached that point with me.
4. There has been a binding, legal, offtake agreement in place for many months, but it has this dd escape clause for IMC--that escape clause has legally binding time limitations. It seems Woulfe has put all their eggs in the IMC basket because Woulfe keeps agreeing on allowing IMC extensions of those deadlines without any significant consequence.
5. All of these mutually agreed upon dd extensions have led to wild speculation on this board (buy-outs, re-negotation of off-take terms, bank financing without first getting $35M from IMC, etc). I understand the reason for all these speculations, but in the end, none of us on the outside know what is going on. With this much extension time having been given, it is always possible that a buyout or a renegotiation is happening, but it is equally plausable that IMC (given they seem to have no competition) is just dragging this out to see what the global economy is doing, given tungsten demand is so strongly determined by world GDP.
6. The tungsten supply in Sangdong is certain, the world shortage is certain (meaning a long term demand is certain), IMC's need for a secure supply is still present. Their construction of a facility to double production capacity is well under way. IMC presently has no competition for the Sangdong supply. IMC knows they need a 12-15 month lead time before production at Sangdong, so as long as they have no Sangdong competition, they can stall the offtake out to match up with that window of time. If you were trying to guess when the world economy will yet again be strong, would you be thinking that would be happening by December 2013? The IMC thinktank seems to be of the opinion that the longer they stretch the completion of the offtake, the closer they will be to hitting the mark of lining up the Sangdong supply with the world demand for tungsten tools.
7. In short, Woulfe keeps crying woulfe, but IMC is totally silent regarding public announcements for the offtake. IMC still likes the offtake and they have every intention of eventually completing it (if not a buyout), but it is in their best interest to string the offtake out as long as possible, until they start seeing more signs of a recovering global economy. The only thing that could push their hand would be competition for the Sangdong mine. It seems no such competition is in sight. My conclusion is that the deal will eventually go through, and money will be made by the patient shareholders of Woulfe, but shorter term shareholders likely don't have the patience to wait. My guess is that the last dd extension Woulfe gave to IMC was supposed to end some time in the first week of August. Unless there is big news very soon, it will likely indicate that yet another extension was given. We simply don't know. What would happen if Woulfe simply said "NO" to another extension? Would that mean IMC would no longer be interested? I don't think so. It might mean some other 3rd party might start looking more seriously and offering an offtake. The problem is, Woulfe can only hang in so long before they run out of money and can't stay afloat. Hence, they are at the mercy of IMC.