Almonty Industries Inc. (TSX: ALL) Is Acquiring Woulfe Mining Corp. to Create Largest Tungsten Producer in Multiple Jurisdictions
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By Dr. Allen Alper
on 7/28/2015
Lewis Black, President and CEO of Almonty Industries (TSX: ALL), took a few moments away from operations to chat with the team from Metals News about Almonty acquiring Woulfe Mining.
Said Black, “Obviously, the consolidation we are trying to achieve is one step closer. We feel that we are almost at a point where we can declare a victory in the first stage of the consolidation, which is to identify and acquire certain projects that we feel are economically viable. By that I mean projects that can be competitive. I feel that we have just a short way to go before we can declare victory on that point.”
Part of the acquisition includes adding an entirely new jurisdiction to the company in South Korea. Black said, “The Sangdong project is affectionately known internally by us as the ‘Great Lady of the East.’ The project is by far the most interesting and exciting project that exists outside of China. She was, in her time, the largest tungsten mine in output in her heyday. According to the bankable feasibility study that we have just released to the market, the project has 9,300,000 tonnes of NI 43-101 compliant indicated resource with a grade of 0.53% and 34,700,000 tonnes of inferred resource at a grade of 0.39%. She also has the benefit of essentially having a workforce which is tremendously proud of her achievements and wishes to see her return to her glory.”
The next stage in the consolidation is to present the deal to the Woulfe shareholders and the public. Said Black, “We have announced that the two Boards of the two companies have agreed that coming together makes a great deal of sense. The next process is now in the hands of the shareholders of both companies. We will be, in due course, asking both sets of shareholders if they feel that this marriage is as good an idea as the Board members think it is. Assuming the answer is yes, then our next step is to start work on the project as soon as possible.”
The price of tungsten has challenged Black to ensure profitability. He said, “Obviously, the price of tungsten has not done anybody any favors but I think that the one favor it has done is to highlight those that have the ability to produce at a Chinese-competitive price, create the product and still make money, which we are doing. We look forward to the challenge of seeing the Great Lady of the East reopen. With regards to the market, I can only really talk about tungsten. I realize that all of the commodities have taken a beating in relation to the cycles that we all have worked in during our professional lives. This is merely another cycle that tungsten is in. Every project looks good in great prices+.”
Black believes his team can complete their work regardless of the pricing. He said, “Our operational team has spent more time in low prices than in high prices. They are very well adapted to the viewpoint that you cannot always rely on a great price for the material. Your project has to be designed and built to exist in lower prices and then you are in the best position to capture the upturn when prices come around the next time. We look at this as what we would expect in tungsten. Prices are sometimes good and sometimes they are not. The trick is to have the depth of knowledge and experience to be able to survive and thrive even in lower prices. I think it is absolutely essential, as an operational team, that their knowledge has been borne out of low prices. At low prices you can say that they can honor the contract because they know we will survive and continue to thrive. The shareholders are the natural winners in this as they see we are constantly chasing value and that there will be a big win when the price goes up.”
Working profitably in this environment is something that the team at Almonty has proven. Black said, “Los Santos is still making money at this price. It is now fully optimized and has achieved the levels we expected. We are restating all of our 43-101 reports this year. We feel our numbers will demonstrate to our shareholders that we have significant generational reserves. It is not easy at this price. We are operating at prices half of what we expected, but we are honoring our contracts. It was a little easier when we had higher prices, but we must and can honor our offtakes.”
Adding another project, Valtriexal, to their holdings will provide more information to shareholders. Said Black, “The data that will be shown to the market in October will give a good look at why we believe this project to be the star. We have the benefit of knowing this project. We are not sure that there is another mine that could be presented at this cost. We expect Valtriexal will produce at a higher rate than Los Santos. The capex is also anticipated to be really miniscule in comparison to other projects. We have completed 10,000 meters of exploration drilling at the project and are in the process of analyzing the results. The value will be revealed to the market in October, when we anticipate filing an updated technical report on the project. Valtriexal has tin as well, but we will focus on tungsten. We see these as standalone tungsten projects and if they have a byproduct, that is good. We are currently producing at a rate of 1800 tons of tungsten per year. When all of our four projects are optimized, we expect to produce up to 8000 tons per year.”
Black and his team are working on current demand, not projections. He said, “We are not mining on spec, we already have customers. We are a build-to-order operational team. If there is demand, we will build. We will not follow the mantra of ‘build it and they will come.’ We only build if there is demand to do so. We are the only multi-jurisdictional mine in the West. We are the only proven, operational team that makes money in tungsten. The industry demands a Western, non-Chinese, supply of tungsten concentrate to meet their demand. We are very fortunate that we have been borne out of a mine in Portugal that has 125 years of experience.”
http://www.almonty.com
Almonty Industries
100 King Street West
Suite 5700
Toronto, ON Canada
M5X 1C7
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