Woulfe Mining Corp WFEMF

my two cents for the day

[74volfram]

The circular is very detailed and worth reading carefully. I am putting that off to the weekend.  but I will try to address some points raised in the many posts today. This was a very high volume day for Woulfe and the posts certainly reflect the intensity.

The Sangdong mine turned out to be a lot harder to develop than Wesson and Dundee thought.  Technically difficult and with demanding local conditions. IMC is in no hurry to acquire new sources of tungsten due to the wide availability of low price material and the lowered demand for its own products.

The downturn in metals is very severe and may continue for a while.  It is driven by China manufacturing slow down and in the specific case of tungsten also by the slow-motion collapse of the FANYA minor metals exchange. Seasonally the metal market, already slow, will slow down even more until september. There may be signs of recovery possibly later in the year or next year, but one must look hard to find them at this point.

The "sleep option" Gaius mentioned (keeping the mine as is for the next 3-4 years) inmy opinion is a non starter.  Before the mine can be put in sleep mode for the next 3-4 years, there is the matter of local county and province that could revoke permits and make the place into a nature park if the mine is not opened. They are counting on 20-30M per year coming from the mine in salaries, sales and taxes.  I do not believe IMC will give 25M to Woulfe to keep the mine in standby, no matter how much tungsten is in the mountain. IMC has a secured loan and will not take shares in payment, not at 30c for sure.  If IMC is not on board or its demands are unreasonable, Woulfe will need to pay off its 10M loan and somehow finance the construction of the mine ASAP.  Raising 10M may be hard for lone Woulfe and the eventual financial "savior" may end up owning the company. In this low tungsten price environment, there will be no asset sale that values the company at 75M.  If the debt is not paid off in September, the default position which the Korean courts will be happy to enforce is TaeguTec (the original operator of Sangdong) will take ownership of the mine.  WOF shareholders may get a few Buffet BRK shares out of it or nothing at all.

I do not take for granted that a deal is in place between IMC and WOulfe.  Even if the two are talking (as must be the case), the merger will make a large difference in the negotiations.  In my experience, ease of financing is directly proportional to the size of the company.  For a 30M company, it is not simple to obtain 50M financing on reasonable terms, no matter how good the ROI prospects are.  When Woulfe was a 100M company, it would have been much easier, now it is a different story.  A 80M company (like A+W would be) with multiple properties will be able to obtain the 50M on much more favorable terms.  this is simple economics.  
A company (A+W) with multiple properties and more than one off-take alternative will always be able to get a better deal to sell its product than the single-option company with one property and one customer.  I see the upside potential of a one-mine junior company as much more limited than for a company that has 4 mines and is looked at the next major in the space.  this is simple market business.  

The Dundee management failed majorly in the December-January time frame.  I remember Gaucher announced in January that the Sangdong mine was on track to open late 2016.  That should have been major trade news, but it only got one headline in Metal-pages. I guess nobody beleived him, least of all the Koreans who apparently revolted at a couple of meetings in the spring due to lack of activity.  Sure he got the low-cost mine plan in January and delivered it to IMC immediately. We were all very hopeful about that.  But we never saw the actual January feasibility study (never made it to SEDAR as we were promised) and nothing more was said of that plan afterward.  I guess IMC was not overly impressed either.  Almonty came in with the merger proposal, at the request of Dundee.  and the proposal was cancelled because of who knows what.  We though it was because the offer was too low and there was a better one coming, but others thought that the deal breaker was the IMC take-off deal terms.  The board was changed with fewer technical and more financial types. Then in June Almonty comes back with investment and cash injection.  Shortly afterwards the new final feasibility is released.  Everybody seem to like it and it is a better plan (at least this time we get to see it) but lost in the excitement is the fact that the new study largely disregards the previous January feasibility.  I am sure that among the many things we were not told in the January - June period there were several failed meetings with locals and possibly negative reactions from IMC to the January study.  To me these are all signs of a company that does not have its act together, so I welcomed the arrival of adult supervision (Almonty).  If it were not for ALmonty continuing interest in the mine, Woulfe would likely be a 2-3c stock by now: look at the SP descent since January of junior tungsten miners NCF (similar size as Woulfe) or NTC (producing mine now in receivership) or even Ormonde (Almonty's rivals with financing in hand to a brand new mine). As much as I would like to see a better value for the mine, these are realities.  I am not buying conspiracies and secret deals and I am not putting my shares on the line on account of rumors and maybes.  Chrisp has a point: if there is a better deal out there, now is the time to come out.  If there is no better deal on the table I will take Almonty.

A small note on buybacks. saying that stock buybacks depress the share price is simply not correct.  the idea of buying back stock is to increase the share price when management decides it is appropriate to do so.  It is one of the best ways to preserve and return value to investors.  Having said that, Almonty buybacks stopped about two weeks ago and the recent activity has been market driven: much fewer asks than bids.  low activity overall, compared to Woulfe trades.

Finally, replying to what Gaston says " Nothing about this proposed merger makes any sense.  Almonty is a struggling junior mining company with a questionable track record and a total market cap of 40 million Canadian dollars - about 25 a few weeks ago before their amazingly effective share buy back program. WOF had a market cap of 80 to 120 milliom dollars for an extended period of time before dundee took a keen interest and decimated the value of the company. What the real plan between dundee and Almonty is I have no idea. But this merger plan as outlined to shareholders makes no sense."    
As far as I have been able to find out, here are some facts:
- Almonty, although a small company, is the highest cap tungsten miner on the TX-V.  
- It has a very successful track record of developing profitable tungsten mines and delivering value to its shareholders.  
- Right now Woulfe is valued 30M. Four years ago WOF was worth 120M.  this fact may reflect bad management of the past four years or bad market circumstances, or both. it is however irrelevant to the merger making sense or otherwise.  
- A few other examples of recent mining market cap downsizing:  four years ago NTC was worth 100M, it is now worth 2M; NCF was worth 60M, it is now worth 10M; PDL was worth 800 M, it is now worth 2M; even almighty Barrick was worth 40B, it is now worth 8B.  
- Four years ago Almonty was worth 40 M, it is still worth 40M.  I guess it speaks volumes as to who is the struggling junior miner here and whose management has the questionable track record.

[GastownGuy]

74volfram: Your posts are very thourough and you do an excellent job of explaining the developements in the Almonty - Woulfe merger proposal. It is my opinion that it has not only been poor management and difficult market conditions that have brought the value of Woulfe Mining down from 120 million dollars to it's present meager value. When Dundee began to take a close look at taking control

[GaiusGermanicus]

I'd buy difficult market conditions as a reason if they'd have gotten to the point where they'd had something to market . . . But at the time they bought the time prices were high and the only thing keeping them from just digging it out of the ground were Korean environmental regs.  But by the time everyone was happy with derisking that element the prices had altered and the banks

[kilgor]

Sure market conditions are tough now, but all the tactics is to take control of this resource away from us. The could have gotten minimal production up and running to generate some income, but they didn't even do that. Their focus was on dragging this out, suppressing our share price, and more dilution. Everything they said they do, they didn't. Are they that inept? No, this was part of

[steamerlane]

I tried not to,but I have to say something.Dundee used WOF,simple.He came here,made some loans,all the while being issued shares(future money)collects interest on loans,does a stock exchange,which results in him now owning shares in a"new" company.Oh,don't forget about his moneray compensation,while being part of management,or should I say"part time" management,as previous

[GastownGuy]

Yes Steamerlane, it is possible that it was always the plan to turn the mine over to Almonty to bring it to production....that is of course after the activities described in your post.

[steamerlane]

Possible??Almonty may or may not have been in the plan,it doesn't matter.Dundee was here to make some money,not to own and operate a mine.Do you think this is unusual?Some may not realize how close to the truth the movie"Wall Street" is.

[GastownGuy]

I do not think it is uncommon but I do find it unusual, for in this case I think they could have made more money by playing it straight and developing the mine. There is after all a very long term resource here.

[steamerlane]

That falls under ,coulda,woulda,shoulda.To make sure money,those are not the guidelines used.And,Dundee is still in line to benefit form owning shares,while the focus is somewhere else.

[chrisp6712]

Okay, we got screwed. How is complaining about the past going to solve anything? What's your solution going forward?

[kilgor]

Making a lot of money wasn't enough...... They got to have everything plus the satisfaction of booting us to the curb. You shareholders think you have control....lol. Have we been schooled?

[chrisp6712]

Many here feel they got screwed by former/current management. For me, that is water under the bridge, so where do we go from here? I am pleased with the speed and efficiency of Almonty since the latest deal was announced. The filing for the proposed merger was completed quickly. There have been more updates on the Woulfe website this month than Woulfe made in 2 years. I feel like progress is

[kilgor]

Thats it.... keep your eye on the bouncing ball while they pick your pocket dry.