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The tungsten space got a surprise this morning when Woulfe Mining and Almonty Industries announced that they no longer plan to merge. Little explanation has been offered as to why the plan fell through.
The tungsten space got a surprise this morning when Woulfe Mining (CSE:WOF) and Almonty Industries (TSXV:AII) announced that they no longer plan to merge.
The companies entered into a non-binding letter of intent to combine their businesses on January 27, 2015, and said at the time that the move would create “the leading tungsten company outside of China.” It was to have producing tungsten assets in both Spain and Australia, plus pre-construction assets in South Korea and Spain.
Tuesday press releases from both companies have dashed those plans while offering little explanation as to why the decision was made to keep the companies separate. Woulfe’s states merely that its board of directors “has unanimously determined to terminate the letter agreement,” while Almonty’s quotes President and CEO Lewis Black as saying, “[i]t is unfortunate that we were unable to reach an agreement with Woulfe but we will continue to consolidate global tungsten mining assets outside of China.”
A $150,000 bridge loan provided to Woulfe by Almonty will come due on April 30, 2015, the companies also note in their press releases.
Woulfe and Almonty saw little share price action following the news. At close of day Tuesday, Woulfe’s share price was sitting unchanged from Friday’s close at $0.07, while Almonty’s was at $0.68. It has not traded since February 13, 2015.
That said, it’s likely the news comes as a disappointment to those interested in tungsten. After all, when it was first announced the merger was hailed as a bringing some much-needed consolidation to the space. As Hallgarten & Company’s Christopher Ecclestone said in a research note, “we had been advocating the creation of a geographically diversified Tungsten player for some years now.”
He added, “[t]he mining space has needed a Tungsten champion for some time now” because 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.”
Whether or not a new tungsten champion will step forward remains to be seen. It will certainly be interesting to watch how the situation develops.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.