Woulfe Mining Corp WFEMF

Waiting for news ...

[74volfram]

Being that the company Woulfe has a habit of not saying much of anything going on good or bad, here is a review of recent events and estimate of what is ahead:

- Final Feasibility Study
Final Feasibility was completed and delivered to IMC/TaeguTec in January, just in time for the release of Almonty merger proposal. The immediately accessible levels have been fully assessed except for the hangingwall level which is only partly surveyed.  That was the purpose of the one-year drilling program so that a less expensive mine plan could be produced.  The plan is now done and ready to be financed.

- Almonty Merger Proposal
In January, right after release of final feasibility, Woulfe received a merger proposal from Almonty, a very active tungsten miner with aggressive acquisition strategy to challenge the large Chinese operations. The proposal seemed to come out of the blue, but in fact the two companies had been talking for a while (according to Almonty's CEO). I liked the merger idea because it would have taken the mine into technical management without much damage, even at the cost of a low cash valuation.  From what we know it looks like half-way through due diligence Woulfe management pulled the plug on the merger proposal.  this can be interpreted in many ways and the reason is not yet clear.  Almonty is now again chasing Spain Ormonde mine, so there is little chance of them coming back for Sangdong. After the termination of the LOI  Woulfe replaced its only truly independent director Constable with two Dundee Resource people to add to the other two already on the board and the Gaucher/Marleau duo that are also well known acquaintances of Mr. Goodman.

- Promissory Note from Dundee Resources and March Report
Judging from the latest Woulfe monthly report, it looks like Almonty was not pleased with the outcome of the merger negotiations and in March requested immediate repayment of the 150k unsecured loan two months earlier than its original due date (end of April).  Near the same time Dundee Resources provided Woulfe with a 450k unsecured promissory note (3x as much as Almonty loan at similar conditions). Dundee Resources is the wholly owned subsidiary of Dundee Corporation that manages its natural resource investments. BTW, no shares for service were issued in March: this could mean nothing, or maybe a shift in operations with cash preservation no longer a do or die issue.

- Project Financing and Mine Startup
The mine plan has low capital cost, there is an off-take agreement with IMC for 90% of production, Korea has recently started a well praised policy of lower interest rates to stimulate the economy.  So financing should not be a problem for Dundee. Dundee actually has the option of moving the project fast or wait for a more optimal entry point to get started. Right now the iron ore price war (driven by decline in Chinese market and oversupply from Australian miners) is pulling down prices of all iron alloy metals, including tungsten. Tungsten prices are at 5-year lows but this may or may not be entirely justified by supply and demand conditions. Production is dominated by Chinese mines, which may be the biggest but they are not the lowest cost producers. So prices will bottom and reverse once they reach the point where Chinese mines stop selling into the market and instead sell to Chinese Government for strategic stockpiling.  Correctly anticipating that point of price reversal is crucial to the success of tungsten mining operations.  And there are no hedging instruments like future contracts to help out.  Especially the starting of a new mine should be done at a time that will maximize profits over its life span. Typically boom-bust cycles in mineral commodities are 10-15 years. Being now 5 years into the downturn, some are now going ahead with construction of new mines, anticipating a new up cycle to start by time of first production in about 1-2 years, which would be optimal for a mine lifespan of 10-15 years. This is the case of Wolf Minerals, with a mine in UK roughly equivalent to Sangdong.

- Korean Interactions
Sangdong people have been waiting almost 10 years for the mine to finally reopen with clean operations and sustainable new jobs for the area. To Korean standards this is not a rich place, with the exception of the recent boomlet of skying/golfing resorts and casinos that latch on the 2018 Winter Olympics. The mayor of Sangdong has said that he wants construction at the mine site to start by June 2015 or he will have the regional government look into why it is taking so long to get started.  Dundee 360 is involved in large scale real estate development not far in Gangwon province, so I think something will happen by June to indicate that things are moving and a commitment has been made to start the mine. Continuing through the summer, the IMC loan ($10M) will finally come due in mid-September, as I think will also the option to buy 25% of the Sangdong mine for further 25M.  If construction were to start in June, Sangdong mine could reach first production by late 2016, according to Gaucher's January interview to Metal-Pages.

[Markidesad]

Thanks Volfram for this excellent and neutral overvieuw of the real facts.  You should be hired as PR for WFEMF, you do the job they aught to do. Also an excellent revieuw for newbies and future investors. Regards from a sunny Antwerp.

[chizzles]

I agree with Markidesad, I vote for Volfram being hired as PR for Woulfe! Reading Volfram's posts always seem to calm things down (for me anyway) in my mind while we wait and wonder what is going on. Just because the process is slow doesn't mean it is bad, Volfram always reminds me of that. Thank you. Chizzles