Woulfe Mining Corp WFEMF

merger views - pros and cons

[74volfram]

-  Ecclestone's view.  from a bit of research, Ecclestone has been a strong supporter of Woulfe under previous management, and a friend of the Wessons. So I am not surprised that he takes the view that the Dundee takeover in 2013 was not really justified.  I do not believe the Wessons were outright dishonest people. It seems they did take shortcuts in the technical management of the mine and performed business dealings that benefited themselves.  and the bit about using low cost Fiji construction crew.  I am sure that made them very popular.   In the end they could not deliver what they had promised to the local community and were almost literally thrown out of town.  Besides the support for previous management, the opinion of Ecciestone is spot on when he advocates the consolidation of the tungsten mining sector and Almonty having the right thinking and havingthe means to do it now.
-  IMC option. If I were Almonty management, after the merger I would pay off the 10M loan to IMC and cancel the 25% equity deal.  The merged company can negotiate much better terms for the off-take. With the very plausible likelihood of using commercial loans (backed by existing positive operations cash flows) the giving up expensive equity may no longer be necessary.
-  Dundee's past role.  In retrospect, it is clear that Dundee wanted full control of Woulfe.  I have looked up a bit of history and it seems they tried to give themselves "preferred shares" with special voting rights. Usually preferred shares have no voting rights in exchange for interest and seniority.  I am sure Dundee wanted to further de-risk its continuing investment, but I am also sure the attempt did not go well with the other large shareholders. That seems to have marked a turning point for Dundee vs. Woulfe. to the point that now they see the merger with successful tungsten miner Almonty as the best value forward for their Woulfe investment, wheres according to Ecclestone, the original plan was for Woulfe to acquire other mines.  
-  Dundee new role.  Dundee is now doing no more and no less than what financial companies do allthe times to make money. It provides financial services that allow financial deals to close. And I am sure they will get well paid to do that. Will they get special deals from Almonty?  Dundee was in the team that provided the funds to get Almonty started 4 years ago, but not the lead underwriter. As such they probably currently own Almonty shares.  The distribution of the initial17M Almonty shares sold to the "Almonty Subscribers" at company start is not known. The track record of Almonty however seems to be to keep the institutions that provide financial services away from the conduction of business.  I do not expect and certainly do not wish Dundee to be involved with Almonty's management after the merger.
-   Price manipulation:  So far the AII SP has been stuck at 70c.  there has been much buying interest (400k shares traded in past 2 weeks) but there seems to be an unusually large supply of shares available at 70c.  There is no point in selling Almonty now unless one owns Woulfe as well.  It could be somebody that owns both AI and WOF shares has figured 70c is the optimal level to maximize post-merger value

Adding things up:

In favor of the merger:
1.    reaching critical mass + geographic diversity. reduced risk going forward
2.    focused new management team with proved track record.
3.    strategic vision. more acquisitions likely
4.    moves mine out of the hands of financial institutions and off-takers
5.    high share value of offer

Against the merger:
1.    no consideration of Woulfe's other assets
2.    low cash value of offer
3.    less blue sky potential.  not going to see another 60% jump in SP anytime soon.

There will be more happening I am sure inthe next few weeks, but even without looking at disaster scenarios, at theis point the pro arguments make more sense to me.