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SERVICES OR DISSEMINATION IN THE UNITED
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TORONTO and VANCOUVER, Jan. 27,
2015 /CNW/ - Almonty Industries Inc. ("Almonty") (TSXV:AII)
and Woulfe Mining Corp. ("Woulfe") (CSE:WOF) are pleased to
announce that they have entered into a non-binding letter of intent
(the "LOI") to combine the businesses of the two
companies (the "Merger") and create the leading tungsten
company outside of China. The
combined business ("MergeCo") will have two producing
tungsten assets located in Spain
and Australia, pre-construction
assets in South Korea and
Spain, and serve as an attractive
platform for further accretive growth and consolidation in the
global tungsten sector. Completion of the Merger is subject to
completion of due diligence process by both companies, expected to
be completed within the next 30 days, and the satisfaction of
certain conditions discussed below.
Under the terms of the Merger, Almonty would acquire all of the
outstanding common shares of Woulfe at a fixed price of
C$0.08 per share to be satisfied by
each Woulfe share being exchanged for a fraction of an Almonty
common share with such fractional Almonty common share having a
fair market value on the effective date of the Proposed Transaction
of C$0.08 (the "Almonty
Consideration"), which fair market value will be determined
based on the Almonty volume weighted average trading price for the
five trading days ending on the third trading day prior to the
effective date of the Proposed Transaction (the "Almonty
VWAP"). Notwithstanding the foregoing, in no event shall the
Almonty Consideration be greater than 0.1231 of one Almonty common
share (C$0.65 Almonty VWAP) or less
than 0.0942 of one Almonty common share (C$0.85 Almonty VWAP).
The C$0.08 fixed price represents
a 22.7% premium to Woulfe's 30-day volume weighted average price
("VWAP") for the period ending January 26, 2015. Upon completion of the Merger,
Woulfe shareholders will own approximately 41% to 48% of MergeCo,
depending on the Almonty VWAP.
Woulfe's principal asset is the 100%-owned Sangdong
Tungsten/Molybdenum Project ("Sangdong") located in
South Korea, located 187km
southeast of Seoul (subject to a
third party which may purchase a 25%-ownership interest in Sangdong
for US$35 million). The property is
comprised of 12 Mining Rights with an aggregate area of 3,173
hectares. Woulfe recently completed a de-risking review of its
final Feasibility Study report based on, the Tetratech 2012
feasibility report, on the Sangdong mine.
Almonty's principal assets are the Los Santos tungsten mine,
producing 1,100 tonnes/year of WO3, and the Wolfram Camp
tungsten and molybdenum mine in Queensland Australia, which produced 700
tonnes of WO3 in 2013. In addition, Almonty is working
towards the commissioning of the Valtreixal tin/tungsten mine in
north western Spain with
anticipated production in 2017.
Lewis Black, President and CEO of
Almonty, commented "This transaction represents the opportunity to
combine one of the world's most promising undeveloped tungsten
asset with our significant portfolio of producing assets, to create
a truly global tungsten powerhouse. Almonty has already established
itself as a leading producer of tungsten outside of China and premier consolidator of global
tungsten assets. With the addition of Woulfe's flagship Sangdong
mine, we are confident about the combined team's ability to unlock
significant value from our collective assets for our combined
shareholders."
Commenting on the transaction, Michel
Gaucher, President and CEO of Woulfe, said "By combining
Woulfe and Almonty, we are creating the premier tungsten producer
outside of China. The
complementary expertise of Almonty's and Woulfe's highly
experienced technical teams combined with an enhanced access to
capital through the merger, will potentially advance the Sangdong
project to production on an accelerated timeline. We believe this
new company will provide investors with an ideal way to gain
broader exposure to the tungsten sector."
TRANSACTION RATIONALE
- Creation of the "go-to" global tungsten producer outside of
China
- Almonty's Los Santos Tungsten Mine in Spain is a fully operational, profitable
mine
- Scale-up of tungsten production currently underway at
recently acquired Wolfram Camp mine in Australia
- Almonty announced a special cash dividend of $0.0272 per share in August 2014 (intends to declare on an annual
basis)
- Leverage off Almonty's and Woulfe's disciplined and focused
management and technical teams with a proven ability and track
record of acquiring, operating and enhancing tungsten assets, and
of designing and planning complex mining solutions and processing
facilities
- Almonty acquired Portugal-based Panasqueira in 2005 and
successfully refurbished operations and increased the mine life;
sold the mine in 2008 at 20x earnings for a 30x return
- Ongoing operational enhancement and turn around at Los Santos
Mine over the past ~36 months including improving recoveries by
40%, decreasing costs by 25% and increasing contained
tungsten by ~25%
- The Woulfe team de-risked Sangdong's Tetratech 2012 Feasibility
Study in record time and at a highly reduced costs from those
initially budgeted and announced in 2013
- Geographical diversification of resources with robust
pipeline of near-term production and longer-term development
assets
- Acquired Wolfram Camp (Australia) in September
2014
- Updated feasibility study at Sangdong (S. Korea) in Q1
2015
- Updated resource at Valtreixal Project (Spain) in October
2014
- Potential for significant cost savings and synergies with
additional potential for other operating efficiencies
- Enhanced capital markets presence including increased
analyst coverage, trading liquidity and broader institutional
base
- Greater critical mass capable of financing at a lower cost of
capital
- The combined entity will be an attractive platform for
further accretive growth and consolidation in global tungsten
sector
BENEFITS TO ALMONTY SHAREHOLDERS
- Increased resource diversification and access to a large
tungsten deposit in Sangdong
- Management and technical team proven to be capable of achieving
asset's maximum potential, from construction, to start up and
operations
- Accretive on a EV / Resource basis
- In-line with management's "roll-up" strategy to reach critical
mass and dictate WO3 pricing and/or become a highly
attractive acquisition target
BENEFITS TO WOULFE SHAREHOLDERS
- Resource diversification geographically with access to two
producing assets and one late-stage development asset
- Significant premium on a 30-day VWAP basis
- Management team additions with extensive tungsten operational
and turnaround expertise
- Immediate capital injection and increased access to project
financing for accelerated build out of Sangdong
MANAGEMENT AND BOARD
MergeCo's management and board will reflect the collective
strengths of both companies, having years of experience of direct
tungsten experience across the globe. It is anticipated that the
executive management of MergeCo will be led by a team managing
Almonty's assets with the addition of key Woulfe executive team
members, who will continue to manage and operate the South Korean
operations. Discussions regarding MergeCo's Board of Directors are
currently underway.
SUMMARY OF THE TRANSACTION
It is anticipated that the Merger will be completed by way of a
plan of arrangement, resulting in Woulfe becoming a wholly-owned
subsidiary of Almonty at closing.
Based on the current common shares outstanding of both Almonty
and Woulfe, Woulfe shareholders will own approximately 41% to 48%
of the shares of MergeCo upon completion of the Merger and Almonty
will own approximately 59% to 52% of the common shares of
MergeCo. Based on 30-day VWAP closing on January 26, 2015, the C$0.08 fixed price represents a 22.7% premium to
Woulfe shareholders.
Following completion of the Merger, outstanding options,
warrants and debt convertible to acquire common shares of Woulfe
will be exercisable to acquire common shares of Almonty on the
basis of the above common share exchange ratio.
The transaction is subject to completion of due diligence, the
execution of a definitive agreement reflecting the terms set out in
the LOI, and the approval of the Woulfe shareholders requiring a
favourable vote of 66 2/3% of the votes cast at a meeting to be
held as soon as practicable following execution of the definitive
agreement, in addition to other customary closing conditions,
including receipt of court and all regulatory and stock exchange
approvals. Woulfe has also agreed to non-solicitation restrictions,
including Almonty's right to match any superior proposals, and a
break fee equal to 3.75% of equity value payable to Almonty under
certain circumstances.
Certain members of management, directors and key shareholders of
Woulfe, including Dundee Corp., have expressed their willingness to
enter into support agreements to, among other things, vote their
common shares in favour of the matters relating to the Merger.
Subject to the execution of the definitive agreement and
satisfaction of all closing conditions, the Merger is expected to
be completed in April 2015.
BRIDGE LOAN
Almonty has today provided Woulfe with a C$150,000 unsecured bridge loan, and up to a
further C$150,000 unsecured bridge
loan will be made available upon the execution of the definitive
agreement (the "Bridge Loan") which will be used for basic
working capital needs. The Bridge Loan will mature on the
earlier of April 30, 2015 or closing
of the Merger, subject to extension with the agreement of Almonty,
will bear an interest rate of 12% per annum payable at maturity and
will rank pari passu with Dundee Corporation's existing
unsecured convertible debt of Woulfe.
ADVISORS AND LEGAL COUNSEL
Dundee Capital Markets is acting as financial advisor to Almonty
and Wildeboer Dellelce LLP is acting as legal counsel to Almonty
and its Board of Directors.
Woulfe has retained, for its due diligence of the Almonty assets
and operations, the services of Micon International UK. A
fairness opinion will be provided to Woulfe's Special Committee and
Board by a yet to be chosen expert. Armstrong Simpson is
acting as legal counsel to Woulfe and its Board of Directors.
ADDITIONAL INFORMATION
Additional information about Almonty Industries Inc. and Woulfe
Mining Corp. is available by visiting Almonty's website at
www.almonty.com or Woulfe's website at www.woulfemining.com or
under their profiles on SEDAR at www.sedar.com.
This announcement is for informational purposes only and does
not constitute an offer to purchase, a solicitation of an offer to
sell shares or a solicitation of a proxy.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Forward-Looking Statements
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news
release contains "forward-looking statements" within the meaning of
the United States Private Securities Litigation Reform Act of 1995
and "forward-looking information" as such term is defined in
applicable Canadian securities laws (together referred to herein as
"forward-looking statements"). Except for statements of historical
fact relating to Almonty or Woulfe, information contained herein
constitutes forward-looking statements. Forward-looking statements
are characterized by words such as "plan," "expect", "budget",
"target", "project", "intend," "believe", "anticipate", "estimate"
and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements in
this news release include, but are not limited to, statements
relating to completion of the combination of Almonty and Woulfe and
the expected timing of completion, statements regarding the cash
balance of MergeCo at closing, statements regarding the expected
benefits to Almonty shareholders and Woulfe shareholders of the
proposed transaction. Forward-looking statements are based on the
opinions, assumptions and estimates of management considered
reasonable at the date the statements are made, and are inherently
subject to a variety of risks and uncertainties and other known and
unknown factors that could cause actual events or results to differ
materially from those projected in the forward-looking statements.
These factors include (i) that Almonty and Woulfe will complete the
proposed transaction described herein, (ii) political developments,
whether generally or in respect of the mining industry
specifically, in Spain,
Australia and South Korea, not consistent with Almonty and
Woulfe's current expectations, (iii) Almonty's and Woulfe's
expectations in connection with the projects discussed herein being
met, (iv) the impact of general business and economic conditions,
global liquidity and credit availability on the timing of cash
flows and the values of assets and liabilities based on projected
future conditions, fluctuating metal prices and currency exchange
rates, (v) the value that MergeCo will realize from its portfolio
of advanced resource equity positions, (vi) changes in project
parameters as plans continue to be refined,(vii) the continued
employment of key Almonty and Woulfe employees, as well as those
risk factors discussed or referred to in Almonty's and Woulfe's
respective annual Management's Discussion and Analysis and
Almonty's Annual Information Form for their respective most
recently completed year ends filed with the applicable securities
regulatory authorities and available at www.sedar.com. Although
Almonty and Woulfe have attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be anticipated, estimated or intended.
There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such statements.
Neither Almonty nor Woulfe undertakes any obligation to update
forward-looking statements if circumstances or management's
estimates, assumptions or opinions should change, except as
required by applicable law. The reader is cautioned not to place
undue reliance on forward-looking statements. The forward-looking
information contained herein is presented for the purpose of
assisting investors in understanding Almonty's and Woulfe's
expected financial and operational performance and results as at
and for the periods ended on the dates presented in their
respective plans and objectives and may not be appropriate for
other purposes.
Information herein with respect to Almonty has been provided by
management of Almonty, and information herein with respect to
Woulfe has been provided by management of Woulfe, and neither
Almonty nor Woulfe assumes any responsibility or liability with
respect to the other party's information set out herein or any
obligation to update such information, except as require by
applicable securities laws.
SOURCE Almonty Industries Inc.