Woulfe Mining (WOF.V) - independent valuations released

Comment by Objective Capital , Aug 17, 2011
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This week Woulfe Mining Corp received the valuation opinion concerning the Sangdong tungsten-molybdenum project in South Korea that it had solicited in mid-July. The valuator, Glanville and Associates of Vancouver, Canada, is of the opinion that the after-tax value of Sangdong, net of a 2-percent net smelter royalty, is approximately US$300m, within a likely range from US$200m to US$400m. The valuation opinion takes into account a 50-percent reduction from the net present value, discounted at 8 percent, given the project has yet to clear feasibility or prefeasibility.

Glanville’s input parameters include a projected sale price of US$375 per metric-tonne-unit of ammonium paratungstate (APT), a mine operating at 1.2 million tonnes per annum over a 21-year lifespan, averaging 0.41% WO3. Glanville also used a capital cost estimate higher than Woulfe’s latest estimate of US$135m.

Woulfe also received a valuation estimate from PricewaterhouseCoopers (PwC), also solicited this summer. The estimate has been received but will not be released because it contains confidential information. Woulfe’s management states the conclusions of the PwC report are consistent with the Glanville document.

Objective's view:

In our initiation note of April 2011, we estimated the current value of Sangdong at C$146.6m, a value we believe is in line with the lower bound of the Glanville valuation, based on recent positive developments, which include lower interest rates, rising prices for APT and the delineation of a NI 43-101-compliant resource on the upper portion of the Sangdong deposit.

We view the primary impact of the Glanville and PricewaterhouseCoopers valuations as providing assistance to Woulfe’s ongoing negotiations with Korea Zinc, concerning that company’s tentative agreement to acquire a 51-percent interest in Sangdong in exchange for a cash investment, currently set at C$38m, into a Woulfe subsidiary holding title to the project.