Woulfe Mining (WOF.V) - ownership of Sangdong increases to 100%

Comment by Objective Capital , Nov 25, 2011
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Woulfe Mining has purchased a 2-percent net smelter royalty on the Sangdong tungsten-molybdenum project in South Korea for C$3.5m. A C$0.5m payment has already been made; the remainder is due on Dec. 19 2011. Further, upon payment of the remaining C$3.0m, Woulfe’s interest in Sangdong shall increase from 70 percent to 100 percent. Woulfe intends to make the final payment from existing working capital. This transaction is the final obligation under the 2006 purchase agreement between Woulfe and the property vendor, Se Woo Mining Company Ltd.

As well, Woulfe has assays for the first batch of samples collected during its Phase 2 drilling programme at Sangdong. This second round of drilling is designed to upgrade the inferred resources in the upper portion of the deposit to indicated or measured status.

Woulfe drilled 5,000 metres during its first phase of work earlier this year, which allowed the company to upgrade approximately six million tonnes of inferred ore to indicated status, whilst delineating a further 18 million tonnes inferred. The new drilling, expected to total 3,800 metres, will focus on this new inferred material.

Significant assays from the Main zone include a 16.7-metre true width intersection that averaged 0.91% WO3 and 3.4-metre true width interval averaging 0.69% WO3. Significant assays from the Hangingwall zone include a 38.1-metre true width interval averaging 0.76% WO3, an 8.9-metre zone averaging 0.47% WO3 and a 6.4-metre interval averaging 0.59% WO3.

Objective's view:

We view the royalty purchase and increase in ownership as a logical progression of development at the project. Our previous valuation modeled both actions as occurring in the approximate timeline. Accordingly our valuation remains unchanged.

We view the new round of drilling as a positive development based on a realistic assumption that a significant portion of the inferred resource can be upgraded to indicated or measured status through infill drilling. In the meantime, we continue to hold our base-case and optimistic valuations for Sangdong and Woulfe Mining.