Post by
74volfram on Dec 15, 2014 3:44pm
first substantive news in 2 months
the loan re-negotiation is the first substantive news in 2 months.
1) The terms of the IMC deal are re-negotiated ad the commitment to the leveraged participation in the APT JV is gone.
My take: the APT JV never made a lot of sense from Woulfe's side and it looked like IMC was getting the upper hand on a weak partner. A JV operation that only buys from one source (the minority JV owner) and only sells to one customer (the majority JV owner) makes no money at best ("and there was no assurance of a revenue stream to Woulfe as a minority, leveraged participant in the APT operation") and can easily be the doom of the junior partner (previous management had planned to give extra equity in the mine to IMC to pay back the JV financing they were going to get - from IMC - to enter the JV). This JV was a complex leveraged deal from which it is good to be out. It would have added 40% to the mine starting CAPEX (half of it from Woulfe) and in the end it would have diluted (substantially) the current owners equity, for no clear gain to the Company's bottom line.
2) The commitment from IMC to get the concentrate off-take is still there. So I believe they will build the APT plant on their own or use one of their existing facilities (they used to have an APT plant in Daegu, don't know if they still do). Most importantly the $35M for 25% of the mine has not changed, even though the share price has dropped in half. Which puts an important future valuation point to the Woulfe Company.
3) The loan is only extended for 9 months, and the reasons for the extension are clearly spelled out ("to complete the advanced, amended feasibility study and to complete the ongoing Phase VI drilling program on the wide, high grade, Hangingwall Deposit"). These are well defined and close-ended tasks. One could be tempted to think the parties are seriously engaged in the process and they may be getting close to a deal.
I think a new Dundee placement is coming to cover the next nine months. But it could be less.
If anybody from the board attended the AGM I would like to hear what happened.
Comment by
chizzles on Dec 15, 2014 3:59pm
Wasn't the advanced feasibility study supposed to be completed before the end of 2014? Therefor, why extend by nine months if completed within two weeks? Thank you by the way for your in-depth take on the IR, always enjoy your posts.
Comment by
74volfram on Dec 15, 2014 4:15pm
I have two answers: 1) The phase VI drilling program at the hanginwall is not finished (they kept postponing the end of the drilling, and winter in Sangdong is harsh with lots of snow) and they may want to have that in the feasibility study. 2) Dundee is not done getting cheap shares for cash. BTW I think it will be less than 9 months.
Comment by
gereynolds on Dec 15, 2014 5:21pm
I dont think winter is any problem , the drilling is done underground !!!! Not from surfece ! On 2) I agry with you 100 %
Comment by
74volfram on Dec 15, 2014 5:45pm
I was thinking about access to the site being difficult in the winter because of much snow in teh area. But I agree (2) would tend to make it even more difficult and time consuming. BTW did anybody notice the former IR Nick Smith now officially signing the release as a Woulfe person?
Comment by
chizzles on Dec 15, 2014 7:32pm
Where do you see in info on Nick Smith? Can't find it anywhere. Thanks in advance, Chizzles
Comment by
TechOne on Dec 15, 2014 8:13pm
Interesting.. This news release was not on CSE website when I had posted the news.. I got mine from TD Waterhouse news release..
OK.. I consider this a positive.. Now we know who to bug.. Sorry Nick.. :o)
https://cnsx.ca/cmsAssets/docs/Filings/2014/2014_12_15_14_59_25_WOF_Woulfe_Mining_Extends_IMC_Loan.pdf