Woulfe Mining Corp WFEMF

IRR NPV and share value

[74volfram]

Dependency on Tungsten price.
Final feasibility pre-tax values are IRR at 26% and NPV at 156M.  Both depend heavily on Tungsten price. The Tetra Tech preliminary feasibility study (2012) has good info on this (the study is still available on the Woulfe site).  The figures 22.2 and 22.3 show the sensitivity of NPV and IRR to APT price.  The "Old Sangdong" mine plan had 400M NPV and 46% IRR with 12 year mine life and 13 MT resource.  However this was at 400 APT price.  At the current 300 APT price (25% drop) the NPV of the old mine plan would be about 130M and the pre-tax IRR  would be 22%.  Both would be lower than for the current mine plan.

Share value
I have not done an estimation beyond very basic. Assuming the IMC deal works out, as financing is finalized, the value of WOF shares should adjust to the price paid by the large shareholders. My guess is 25-30c.  This would give a value of about 120M to the company. Afterwards, the share price will track the price of Tungsten, hopefully higher than current, as the mine starts production.

Attractive range for IRR
Preliminary feasibility studies will usually have inflated IRR numbers because of optimistic assumptions on resources and costs. With a mature project and final feasibility, a 20-25% pre-tax IRR would be quite good.  If the investor is very familiar with the sector and the risk of failure is low, a 10-15% IRR (pre-tax) on a project is normal. IRRs in the 40% and higher are sign of highly speculative projects (VC type investments).

Korea taxes.
Generally IRR is given on a pre-tax basis. Corporate taxes in Korea are low (11% on the first 100k, 22% up to 20M and 24% above 20M). These includes both local and state taxes. There is also a 10% VAT, which is paid by the customer.  I think after Korea tax the IRR take a 5% hit (from 26 to 21%.