Post by
74volfram on Jul 16, 2015 8:06pm
merger considerations, trading volumes and dutchmann
Merger considerations
- Woulfe is quite valuable, but at some point Mr. Ned Goodman decided that his own team was not going to work this out for him on this one and requested/accepted Mr. Black's bid. There are many reasons for that: the technically challenging mine, high local demands and expectations, low global commodity prices, etc. If a deal with IMC was imminent under previous management, Dundee would not have given up control. Now Mr. Black maybe is naive and does not quite know what he is getting into. Or maybe he knows a lot about tungsten and off-take deals to pull this one off for Mr. Goodman as well as for us. One thing for sure: he is putting real money in the deal, and maybe the market is starting to pay attention.
- On the retail side there are Woulfe shareholders that have been invested for a long time and still remember the days when this was the best TSX-V stock. Judging from the posts some of them would rather go down alone than consolidate with another company into a viable entity. I have been an owner for a little over a year so I do not feel the same pain, but I also know very well that Woulfe is worth a lot more than 7c.. It is precisely why I think the merger is a good idea.
- The 40.3% merger offer from Almonty is what we have at this point. Unless somebody puts down a clearly better offer for long-term appreciation, I am ok with the merger (i will not agree to a low-ball cash out). Shareholders are free to vote no, but at the very least they should make sure there is a better option on the table.
- I think this merger is synergistic and I expect the market will reflect that in the SP appreciation of both companies as the merger is confirmed.
- After the merger the potential for appreciation will depend on: 1) the profitability level of current operations, 2) the price of tungsten and 3) the execution of plan to get the new mines (Sangdong and Valtreixal) to production. $10/share for the combined A&W is my long term objective, based on tungsten price back to $350 (APT price one year ago) and on 8000 tons/yr combined production).
Trading volumes, share price and conversion ratio
- Almonty has a low float (5M loose shares) and a small share buyback program, designed to keep the SP from disintegrating during downterms. As a profitable mining company it is their right (and a good thing) to use some of their earnings to keep the SP from dropping at bad times. The AII trade volumes are low ($ wise) but the trend is clear. There were 110,000 AII shares bought in this latest move from 55c to 80c in one month. This is similar to what happened in January. AII is at year-high because there are very few sellers.
- After the merger there will be over 40M of loose shares (as opposed to currently 5M). ALmonty cannot possibly buy back 40M shares to return to same level of low liquidity that they have now. I think the new number of shares (about 100M) will make for good size trading volumes for a growing company getting out of the junior league.
- Woulfe shareholders will not receive 7c per share. They will receive 40.3% of the merged company shares, which is 1/10 of one AII share per WOF share or 1/10 of ALMTF share per WFEMF share, regardless of the relative SP of WOF or ALL at the time of the merger. As TechOne points out, the SP collar is thankfully gone from the merger offer. This is a very simple merger agreement.
- At these depressed levels and thin volumes the SP structure of both AII and WOF is fairly brittle. Still it does not make much sense to put up Woulfe shares for sale at 6.5c when Almonty is up to 80c. unless one is tired of the stock, or fears the merger and wants to get out, or is maybe Resinco trying to keep some lights on.
To the dutchmann (what a joke..) poster.
I checked back what you wrote last november and again this past february and may. What you got from your Korean sources is mostly old information from local news. I know from experience it is not easy even for Koreans to find out what is going on there. A lot has happened since you sold the stock, including a change in management, a final feasibility with very attractive price points and a merger proposal with a producing tungsten miner. This is when being a contrarian can really pay off: manufacturing is in the tank and commodity prices have fallen like "tungsten bricks", and yet Woulfe SP is about what it was when you sold five months ago. I think you could do much worse than getting back in.
Comment by
kilgor on Jul 17, 2015 8:58am
Volfram, you keep pushing $10/share post merger (and in the long run)....... I don't see it, so show us your numbers...