Post by
74volfram on May 13, 2015 10:46am
still waiting for news ...
From whatever small indications and clues that are available, it looks like the company Woulfe may be getting close to secure needed financing to start construction of the Sangdong mine. And yet the company is silent. By now everybody on this board knows that Woulfe does not promote the stock and does not even really tell what they are doing unless they have to. Maybe they have their reasons to keep this lowest profile. Maybe there is value in not alerting the competition before the local public absolutely needs to be notified. Promotion after all is done only to produce capital out of equity by selling shares. There is no such inclination here.
FInancing may be in the final stage of negotiations but there is no communication. If one wants to know more, a site visit may be the only way like the german poster grauermeutze (greycap). He had planned this visit to Korea over the April/May holidays in part to find out about a possible lead on Woulfe financing happening in mid-May and was apparently successful in talking with the mine manager. He likely speaks Korean or at least knows his way around and how to talk to people and to read road signs. His report is specific and insightful, looks and feels authentic. If the information he provides is accurate, it is very good news for Woulfe.
I am not overly worried about diution by monthly charges. Besides the shares issued to the corporate secretary / CFO (about 120,000 shares per month to a deep insider) the directors have options that vest at 10c as compensation, and funding for daily operations is taken care by the bridge loan. The loan itself is not convertible to shares, has no priority over other obligations and it is not secured. Which means that in order for the lender to get back its money the Sangdong mine needs be successful. Being that the lender is Dundee / Dundee Resources (with control of the Woulfe board) one can reasonably assume they know what they are doing and they are not throwing money away.
All things considered, there should be no reason to sell at this time and this level. And yet the stock is under pressure, with (relatively) relentless andrepeated take out of top bids immediately followed by lower asks at the former bid prices. This is not how a large seller gets rid of his shares. At such low volumes, the bid needs some time to rebuild before selling again. And why would anybody want to sell his shares at a loss at this point in the first place?
is it possible that Woulfe SP is kept down by purpose? All it takes is 40-50,000 shares for every 0.5c drop, less than 3k CAD. As for the reason to do so, here is a possibility: a mixed (equity + debt) financing of the Sangdong mine would likely involve on the order of 50-100M new shares or convertibles to be issued to the lender. If by selling 200,000 shares (10k CAD) the lender can keep the SP low enough so he would get 10M extra shares, the payoff to the lender would be 50x (very large). it is probably illegal due to insider knowledge being used. But for such low trading volumes, how does one prove it is the lender that is keeping the SP down? Rather than some distressed retail holder selling because he is worried the company may be "strangling itself with inaction" or other such concerns?
Comment by
jambola16 on May 13, 2015 11:41am
Great post as usual Volfram. It is troubling to me also what you say about SP possibly being kept down for lenders gain. I feel maybe a compaint or inquiry to OSC about this matter would at least make these guys more accountable or careful. I have never filed a complaint with OSC before and dont really have a lot of faith in Canadian Regulators.
Comment by
GaiusGermanicus on May 13, 2015 12:17pm
A succinct summation, which is why I'm not selling any. If I'm wrong, I'm wrong, that happens, but . . . frankly its one of the largest sources of one of the most important strategic metals on earth, someone is going to want to get at it, even if they have to park North Korean or Chinese tanks on it.