Post by
74volfram on Jan 28, 2015 1:18pm
possible event sequence
Without going under the table looking for crooked deals, here is a possible "what happened" scenario, driven primarily by the falling APT prices. This is all hypothetical of course, but I think Mr. Aurelius has something this time.
1. APT at 400. Everybody love tungsten. Dundee grows impatient and ousts the Wesson team who has not managed to open the "biggest tungsten mine in the world" in 4 years of high APT prices and has finally run out of money (including 10M+ Dundee investment). Dundee continues investing in Woulfe, puts in new management team including Gaucher. BTW, Gaucher was a famous entrepreneur in Quebec in the 80s and 90s, and CEO of billion-dollar companies before his Mexican fiasco. He has had quite a history and was mentioned as "Quebec's troubled hero" on major newspapers, including the NYT. good or bad, he is NOT the retired pensioner he looks.
2. APT at 350. Dundee sees the trend and stops making cash available to Woulfe. Mine plan is changed to low-cost high-grade. Gaucher is told not to expect more share placements and starts paying employees in shares.
3. APT at 300. Dundee (heavily invested in gold, energy, commodities and probably short USD from his public speeches) decides they do not want to manage this mine after all. Gaucher contacts Almonty (a natural choice from what we know of them).
4. APT at 280 (December) Dundee does no longer trust IMC to finally close the loan deal and invest in the mine. The price of tungsten has dropped too far and now the NPV of Sangdong (which is strongly tied to tungsten price even at low CAPEX) is only a fraction of what IMC had signed on. Woulfe agrees to the LOI with Almonty as plan B. WOF share price is set at 8c (almost 100% premium at the time). Sangdong is a big fish and Almonty wants it, but this is what they can afford to give away to take on the mine without losing control of the company (and I do not blame them, as they seem know what they are doing).
5. January. Gaucher rushes to complete the final feasibility cutting short on the non-essential parts (hydro study). Sends it to IMC. NR is out (they have to disclose since they sent it out to IMC). SP goes up 60% on a one month worth of volume.
6. January next day. The LOI is disclosed. Reasons: 1) SP has gone up way too much after the announcement, now is well above the LOI set price (they obviously needed to change the indicated premium - they would have liked to keep it higher). 2) Public knowledge of the LOI was needed to put IMC on the spot for a decision on the 25M.
7. The NR stil mentions IMC - without naming it: "Woulfe’s principal asset is the 100%‐owned Sangdong Tungsten/Molybdenum Project (“Sangdong”) located in South Korea, located 187km southeast of Seoul (subject to a third party which may purchase a 25%‐ownership interest in Sangdong for US$35 million). Apparently the deal (in USD now it seems) is not off yet. Right now the ball is in IMC's court.
Concerning Almonty. I know them from trade articles. They have a reputation of not talking a lot but actually bringing mines up to profitable production. They specialize in tungsten only, have a proven model and good cash flow, which is unique outside China these days. They clearly see an opportunity for growth at this point when everyone else is withdrawing. They are a new company, went public in 2011 and they were valued over 1 CAD about 2 years ago. They are small but highly profitable with P/E 10. If they can run Sangdong as profitably as the other mines, they will break out of their league and could get in the 5-10 CAD in a few years (500M market value). This is not a bad merger. Not happy about the price and conditions right now. but LOI is not definitive and I think conditions could be tweaked (not much, but some).
Comment by
chizzles on Jan 28, 2015 1:52pm
Volfram, I was thinking the same thing, maybe we didn't have much of a choice, you just make it sound better!! And as I said yesterday (and like you just posted), if Almonty goes anywhere between $5-10, that means that is equivalent to WOF going to $.63-$1.26...which would possibly even be better if we did this alone with further dilution.
Comment by
JCMO2013 on Jan 28, 2015 2:41pm
Only vetting, but Volfram came onto this board recently and travels to Korea could he maybe be a consultant working for Almonty or works directly for Almonty? Think about this for a minute Almonty would have done their reserch and last thing they need is for us retail investers to consider a class action lawsuit or block this proposed merger between WOF and Almonty.
Comment by
kilgor on Jan 28, 2015 3:46pm
If you were told that IMC was still interested in WOF, would that change your view of the merger deal?
Comment by
chizzles on Jan 28, 2015 4:01pm
I think another issue for us is time. Three months until the merger...the SP has already dropped from $.10 to $.075 yesterday to $.065 today...that is just rwo days. During the same two days, Almonty's SP went from $.62 to $.69. What will happen to each SP in three months? It will only get worse unless we get other NR's making the situation more clear to us
Comment by
kilgor on Jan 28, 2015 4:25pm
Yeah....the share priced droped, but on what volume?????? What???? On 1/5th of 1%!!!!..... Quit fear mongering!!!!!
Comment by
chizzles on Jan 28, 2015 6:11pm
Kilgor, I understand your frustration but I am not fear mongering. If anything, I have been the one trying to look at the positives with this, which you have also accused me of. As far as my comment on the SP dropping, if anything, I am trying to keep WOF shareholders to NOT sell their shares...
Comment by
MarcusAurelius on Jan 28, 2015 4:58pm
Good point! Plus Almonty might suddenly decide that Woulfe Mining should sweeten up the deal for them even more. Cheers!
Comment by
TechOne on Jan 28, 2015 4:32pm
Get real.. Class action lawsuit.. lol.. All you can do it vote against it when you are asked to vote and see how far that gets us.. Unless a big block by couple of institutional investors are against the merger, likelyhood of a merger are good.. Only issue will be what fraction of AII.V will be paid for 1 share of WOF.V
Comment by
abc111 on Jan 28, 2015 1:59pm
I concur with your "possible" scenario and thanks for your thoughts. Also with the currrent overall soured commodity market situation Dundee may be in deeper financial trouble than anyone can guess. I am not against the merger either, it's the current terms.
Comment by
chizzles on Jan 28, 2015 2:08pm
And with tungsten trading at $280/ mtu (as I have been saying for weeks now), this is the one thing that can mess us up.
Comment by
chizzles on Jan 28, 2015 2:39pm
Volfram, your knowledge is very respected on this board. If your possible scenario is the case, and we voted against the proposed merger, what do you think would happen next for us? I am worried that the alternative is worse. Thank you in advance. Chizzles
Comment by
GaiusGermanicus on Jan 28, 2015 2:51pm
Heh, lets all order a few metric tons of APT each and see what that does to the market ;-) Seriously though, at these prices, if the dry barn were already built on my ranch, I imght be tempted . . . Just store it for 5 years then sell out what I couldn't find a use for.
Comment by
sage4hus on Jan 28, 2015 2:24pm
Were you under the table? Haha Interesting time lines according to APT. Hope for the best.