Critical Metals

Almonty’s merger with Woulfe Mining recently fell through. Now the company is back with a new plan — it said Tuesday that it’s made an indicative non-binding proposal to acquire the entire issued and to-be-issued share capital of Ormonde Mining.

Almonty Industries (TSXV:AII) has been in the spotlight frequently in 2015, announcing plans to merge with Woulfe Mining (CSE:WOF) at the end of January, then breaking off that deal just a few weeks later.

Now Almonty is back with a new plan. It said Tuesday that it’s made an indicative non-binding proposal to acquire the entire issued and to-be-issued share capital of Ormonde Mining (LSE:ORM).

Companies keep mum

Explaining the decision, Lewis Black, Almonty’s chairman, president and CEO, said in a release, “Almonty believes that the strategic fit between Almonty and Ormonde is excellent and that there are significant advantages to combining the companies.”

He added, “[w]e believe the combined entity will be ideally positioned as an attractive platform for further accretive growth and consolidation in global tungsten sector,” noting that Almonty sees itself as “ideally positioned to finance the build-out” of Ormonde’s Barruecopardo project.

For its part, Ormonde has kept fairly quiet, merely confirming Wednesday that it has received the bid from Almonty and noting that the proposal “does not include any material detail as to how the necessary  project financing for the Barruecopardo Project would be secured.”

The company’s share price had a much stronger response. At close of day Wednesday it was sitting at GBX3.40, up 44.68 percent. Almonty’s was flat at $0.67.

Focus on Spain

Some were no doubt surprised to see Almonty jump for another deal so soon after the one with Woulfe fell through; however, it’s worth noting that when the Woulfe deal came apart, Almonty emphasized its plan to “continue to consolidate global tungsten mining assets outside of China.”

That said, Ormonde is undoubtedly a different beast than Woulfe. Notably, Barruecopardo is located in Spain, while Woulfe’s flagship asset, the Sangdong tungsten-moly project, is across the world in South Korea. That’s a pretty big leap, but it’s not hard to see why Almonty made it — after all, the company’s producing Los Santos mine is also located in Spain, which is home to other tungsten-focused companies like Plymouth Minerals (ASX:PLH) and W Resources (LSE:WRES).

They’re all looking to kickstart the country’s tungsten industry, which fell into dormancy in the 1980s, but has enjoyed renewed attention in the last few years. With Almonty clearly bent on consolidation, a more solid resurgence may now be in the cards.

Whether that’s what the industry needs remains to be seen. While Hallgarten & Company’s Christopher Ecclestone praised the Almonty-Woulfe deal when it was initially announced, he was a fan of the fact that it would have created a “geographically diversified Tungsten player,” and noted that a “series of one-mine/one-country Tungsten plays have come to grief due to their mono-focus and their failure to look beyond the mine-life of their main asset.”

Ormonde does have other projects in addition to Barruecopardo, but they are not tungsten plays.

What’s next?

In Wednesday’s release, Ormonde indicates that it will provide shareholders with another update on the Almonty situation “in due course.” No word yet on when that may be, but investors will no doubt be watching to see if Almonty has better luck with this new deal.

 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 

Related reading: 

Woulfe and Almonty Abandon Plan to Merge

Ormonde Mining Gets Approval for Spanish Tungsten Project, Joins Small Club

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