The general consensus on the bullboards seems to be why the share price has fallen today despite the positive news.
While the news was positive, the news was broadly expected by the market. Woulfe has said on many occasions that it expected to lock up financing for around 6% for approximately $100 million. So while the news was welcome, it is by no means the end of the story. Part of the problem is that this is a memorandum of understanding. That means Woulfe and the bank have NOT signed the deal and no money is flowing to Woulfe. It means any funds that might be provided are contingent on something else (i.e. likely the IMC deal)
The one thing the news release does do is take the sails out of anyone who hoped IMC was negotiating a take-out offer. If I was speculating on a take-out, my natural reaction is to sell everything today.
The biggest issue holding back the share price is the lack of commitment from IMC. Unfortunately, management has provided no reasonable views as to when this may occur. Management might not even know. While all indications are that the deal will go forward, I would have said the same thing about Korea Zinc two years ago. If I have learned anything, memorandums of understanding are NOT signed agreements and should not be construed as such. Woulfe wil NOT receive any funds from todays press release if it can not finalize the IMC deal.
The other major overhang that will continue to keep shares low is the lack of clarity with respect to the $20 million financing. For full disclosure, I am still disappointed with the company's action. To give away such a large piece of the company and paying 10% interest, considering the rate granted today, seems unbelievable. Despite openly asking for answers, nobody has been able to adequately explain why this was needed. Please don't tell me that we needed to give up 20% of the company + pay 10% interest to advance the project 60 days? What management would really give up 20% of the company for 60 days? Initially I thought the money was needed for the mine, but todays press release suggests otherwise. $104 (bank financing) + 35 (mine from IMC) + 35 (APT processing plant paid by IMC) = $174 million. Total cost for the mine was $150 million including a significant contingency. Why does Woulfe need $194 million in financing?
I believe (aka hope) Woulfe has a world class tungsten resource. That noted, the company itself has not acted world class of late. Management has put out some very poorly worded press releases of late (today being a notable exception). It has ongoing problems in meeting any reported deadlines. Information on many expected deliverables (as publicly reported in past presentations) has not been forthcoming. Many market participants, myself included, feel ambushed/betrayed by the $20 million financing. What's the next surprise in the works? I don't know? Hence why a world class resource trades like a junior.
For those of you who feel like a big pop is coming, I really hope your right.
Good luck to all the longs.