Woulfe Mining Corp WFEMF

RE:merger views - pros and cons

[lonade]

74volfram,
 
I liked your comparison table and just added a few thoughts myself:
 
In favor of the merger:

1. reaching critical mass + geographic diversity. reduced risk going forward
 
Comment: This is not so evident yet: I would prefer to receive some commitment from Almonty by providing a timeline for Sangdong till production. This will give me the confidence that my yes vote would actually lead to construction and significantly de-risk Sangdong.
 
They have some mines, but how many of them are really running smoothly and making profit….I think it’s one (I need to look into that). Has someone looked at the planned production costs of all the existing or planned mines; it wouldn’t surprise me if they are much higher than Sangdong. At which tungsten prices are they profitable at all?
 
So there are still a lot of uncertainties here as well.

2. focused new management team with proved track record.
 
Comment: Partially, the acquisition of the Wolf Camp in Australia still needs to prove itself

3. strategic vision. more acquisitions likely
 
Comment: After the bargain of Sangdong I do not see Almonty buying other assets in the near future, if they really do want Sangdong to produce quickly( which I doubt) then they would need to utilize all their finances to minimize further dilution and loans from banks.
 
In my opinion it is more likely they will wait with Sangdong and try to increase their lost stake of 41-48% first. By doing nothing for some time they would make frustrated WOF shareholders sell the shares at a cheap price. If the other mines all produce, then they would be in no hurry to get Sangdong up and running. They also have the simple option to sell Sangdong again with a nice profit, not difficult with a bargain price of 0.08 cad. They would just wait for the tungsten price to increase (which will happen on the long term) in order to maximize their profit.
These are the things I would consider, if I were part of Almonty management.

4. moves mine out of the hands of financial institutions and off-takers
 
Comment: We simply do not know the background information on the IMC deal and the South Korean bank loans. I would prefer to have a offtake agreement at reasonable conditions than be fully exposed to market fluctuations. As for Dundee…they would have nothing much to complain about would we have the IMC agreement and the loan. I would also not be easy for them to manipulate certain terms and conditions, since the shareholders would reject them (as happened before on the preferred shares)
 
Surely the South Korean banks and government would prefer to have the Sangdong mine running as per the current company structure, in order to support the local community and government. Being part of Almonty there is a risk that it will just disappear into a bottom desk drawer for some time….

5. high share value of offer
 
Comment: This is for everyone to judge for themselves, since it is also depending on the average share price of the each WOF shareholder. A shareholder having an average of 0.06 cad would have a more positive attitude towards this merger, than someone who has an 0.25 cad.....

On the other hand our price is fixed at 0.08 and Almonty has a spread. There is a high likelihood that the price will be manipulated in their favor just before the completion of the merger.

Against the merger:

1. no consideration of Woulfe's other assets

Comment: The current of offer does not even consider the real proven value of Sangdong (deducting all the debt that WOF currently has). The 0.08 offer has no backup from that point of view. Just to sell it approx. 22% above the current share price is a "nice" try of management to at least provide some sort of justification to it... so management will still need to deliver on this point.

2. low cash value of offer

3. less blue sky potential. not going to see another 60% jump in SP anytime soon

Comment: I would not say less, simply gone....
 
 
To Summarize:
 
WOF Management and Almonty still have the chance to make this merger a real success by outlining all the details to this deal, updating us on the IMC agreement / bank loans and provide a clear path forward for the new company (including planned production date of Sangdong)