Post by
74volfram on Jan 29, 2015 5:45pm
some numbers and thoughts
Options
Previous management: Wessons had multiple millions of low-priced options which they exercised In 2012 using a 1M+ loan from Woulfe. That was a questionable deal but nobody objected to it because SP was going up.
Current management and insiders: Gaucher has 5M at 10c. All other officers have 500k at 10c. All other insiders (Dundee, KZ) have options and convertibles that exercise at higher prices (from 13c to 30c). So all the current options are above 8c.
Almonty
All Almonty projects are brown sites. That is their specialty. But they are not nearly "played out" and have life of 9+ years. As it is profitable, Almonty is looking for acquisitions in this down market. They tried to acquire Ormond (a mine which was supposed to be financed last year but is still apparently lacking) and gave up on it just last month. Sangdong is a better prospect in my opinion, and it makes it an obvious target. It is bigger than Ormond and would more than triple the current production of Almonty. It has a lot of "under water" resources that are not financially actionable at present but nonetheless exist. The mine is high-cutoff, which means it can be re-mined later at low-cutoff when tungsten prices recover. Plus the remaining not yet assessed hangingwall. The Sangdong mine life is much longer life than the very conservatively projected 12 years. Even at the estimated 75M full CAPEX (no IMC) Almonty could easily finance the current mine plan without much damage to their cash flow. This is a no-brainer for Almonty.
All financials for Almonty are on their web site (they have been public since 2011) and they have had 3 MD&A per year for the last three years. Their site is quite good actually.
Dundee
Which all begs the question: why is Dundee letting go of all this?
I do not buy the backroom deal theories. Dundee acting as financial advisor will not get them much more than a finder's fee from Almonty. Maybe some new options. These guys do not let anybody under their tent it seems. Why would they allow Dundee in? It looks to me like Dundee either cannot or will not do the financing themselves. Or they are putting up the Almonty LOI as a way to get IMC to move.
Looking back at the company announcements, i see that in July 2014 Woulfe started paying employees and debt with shares. Equity is the most expensive form of financing and that was a heavy hint that Dundee may not be going to support this project to the end. They would not outright kill the project because they would be losing their entire investment, but they would be looking for alternative solutions. And with big companies, if a corporate decision is made at the top, like to stay away from new mining projects, the policy is implemented all the way down the line without much second thinking.