Proposed acquisition of Woulfe
Almonty Industries Inc. (TO:AII) has announced its intention to acquire Woulfe Mining in an allshare transaction, potentially creating one of the largest independent producers of tungsten with annual output of more than 400kmtu of WO.
Almonty has announced that it has entered into an agreement to acquire Woulfe Mining by way of a court-approved plan of arrangement. According to the offer, each Woulfe share will be exchanged for 0.103 shares in Almonty, valuing Woulfe at C$26m, or C$0.07/share, a 17% premium based on the pre-announcement price. On completion of the transaction, which is now expected in early September, Woulfe shareholders will control c 40% of the combined company. We also understand that Almonty will start consolidating Woulfe from Q315, as, despite currently owing c 8% of the company, it exercises full control over Woulfe’s board of directors. This may have a short-term dilutive impact on Almonty’s earnings until it completes the acquisition and reorganises Woulfe to reduce its overheads.
Woulfe’s flagship asset is a past-producing Sangdong tungsten project in South Korea. According to the updated FS, it is expected to produce 290-300kmtu of WO3 per year over 10 years, potentially tripling Almonty’s current tungsten output. The project is estimated to have a capex of US$63m, implying a low capital intensity of c US$215/mtu, and a very competitive opex of c US$110/mtu. Importantly, Woulfe has a JV agreement with IMC, one of the largest consumers of tungsten, which we understand is still supportive of the project. IMC could provide an offtake and cofund the project.
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