IMC deal and my opinion on latest newsIMC deal:
Looking back 3 years ago there was a similar deal with Korea Zinc that died and was announced as being terminated. My take on the current IMC deal is that when a deal is dead it does not get modified, extended or keeps appearing on every legal document and official news release. so the deal is not dead.
What I think happened last year between Dundeee and Woulfe:
In my opinion, Dundee approached the Sangdong mine the same way they have approached a number of junior mining companies in the recent past: they get in as rescuers of floundering operations and allow the SP to drop to minimal levels while acquiring ever more shares and eventually full control. This is how financial companies behave in commodities market down-turns. and with good reason as time is on their side. With the Sangdong mine it soon became a bit more complicated. Sure the mine plan needed to be updated and pared back from a previous plan geared for high tungsten prices, but after that was done the Koreans still wanted the mine to open in two years, not twenty. At some point in 2014 Dundee was told either to present a credible plan to start construction in 2015 and production in 2017 or get out (as in permits would be revoked and loans will be called). Gaucher and friends were not the types to wake up all of a sudden and bring a mine to production in two years. They tried for a while with more of the same, but in the end Almonty had to be brought in.
These news from Korea last year can help explain the situation:
- December 11, 2014. Local news media of Gangwon province. Title: development stalled, frequent CEO changes. Local community is worrying about stagnation of Sangdong mine development during last 2 years. Worry is increasing due to 5 times CEO replacement during last 2 years. According to Yongwol county, Sangdong mining will prepare design contract and civil construction project at the end of this month to start construction from next May.
New CEO of Sangdong Mining Company (Woulfe subsidiary in Korea) Sun Sang-Churl, who is successor of Lee Sang-bum, presented the same position of preparing the construction of sorting and crushing facilities for mining. However, observing just planning construction without any progress during last two years, people are suspecting some hidden intention.
There was big hope when, Feb. 26, 2012, Warren Buffett announced the investment of 80M USD on the Sangdong mine company with headquarter in Canada. On Aug.20, 2012, former CEO Kim Yong-woo ("Tiger Kim") presented vision of environmental friendly developement with local.
However, CEO Kim was replaced on Jan. 2013 suddenly, Canadian CEOs Brian and David Constable were replaced after 2 months. Mr. Lee Sang-bum stayed from May 2013 until Aug. 2014. There was 5 replacements during last 2 years. Sangdong Mining staff said, "6 stages of mine drilling were done, HQ is evaluating the amount and the grade results. We are preparing for construction of selection and crushing facilities." County official said, "We recently got reply on the official query on the progress of development," and explained "Expection from local community is high but the progress is very slow." There were more than 30 staffs on the site, but now it is less than 20. https://www.newsis.com/ar_detail/view.html?ar_id=NISX20141211_0013351225&cID=10805&pID=10800
- January 6, 2015. Mayor of Sangdong town said if Sangdong mine redevelopment plan is not started in June he will make important decision. He will not be called a liar anymore. Mayor Baek said in (January) community meeting that since 2012 the redevelopment program of Sangdong mine has not progressed. in 2012 (August) he had said he would start redevelopment in second half of the year (2012), but the mining company has changed CEO 5 times up until last November. this causes many suspicions. That day he lied to people because he believed the statements of Sangdong mining company. So if development is not started by June the county will take special action.
German poster visit to Sangdong
One month ago the German poster, expecting to find a deserted site was able to get in un-announced and actually ended up talking to the mine manager (CEO of Sangdong Mining Sun Sang-Churl). Based on what is transpiring, I have no reason to believe the visit and conversation did not happen. The original ws-online post is now deleted - my translation here: https://www.stockhouse.com/companies/bullboard/c.wof/woulfe-mining-corp?postid=23712677
Highlights from the post:
(Pre-update of Feasibility Study): IMC was ok, SRK Consulting (large mining planner) asked for further review
(Post-update): SRK Consulting is now okay, IMC looking in detail and currently expected to confirm by mid-May.
TaeguTec (IMC Korea) would like to directly participate in the financing as soon as IMC agrees on the terms of its contribution ( "willing to match immediately - the next day").
Registration of Sangdong mine as a "Foreign Investment Zone" (with subsidies and tax incentives) is currently underway,
Local and regional administrations maintain their support on infrastructure needs. and other items.
Today's metal-pages has Almonty talking about he Sangdong mine:
Almonty eyes production at Korea, Spain projects in 2017. Almonty Industries has said production at the Sandong tungsten project in South Korea could start at the end of 2016, but is more likely to launch in 2017.
Believing that Almonty is in to destroy the Woulfe company value is not productive and not warranted, particularly as Almonty will be giving 1M to Woulfe and 2.6M to Dundee in cash for Woulfe shares and options, plus 500k in installments and will be taking a four-yeear 1.6M loan from Dundee, in addition to giving them 5.7% of their own AII shares I believe in fact that this is the limit of Almonty's cash availability at this point (as it was made clear by the Ormonde correspondence a month ago). In retrospect it is very possible that the original merger deal in January was unanimously rejected by the Dundee Board (likely after Constable resigned) only because it did not have enough cash in it for Dundee. Almonty is not a large company and will need IMC/TaeguTec to be on board to succeed with Sangdong mine, and most likely they are.
Now, how Almonty will be able to manage collapsing the value of the Woulfe SP so they can take the company in for nothing, while at the same time promoting the mine development as they already seem to be doing even before closing the deal, and embarking on the 2-year project to bring the mine into production by 2017 on top of that, it escapes me at this point.
The more logical scenario is that this is finally an earnest attempt (no doubt forced on Dundee by the Korean stakeholders) to get the Sangdong mine to open, based on a realistic mine plan by technically competent people with a proven track record. Not saying that it will be easy.