Member Info for richam

Wolf has got all the time it had been asking for, and then some. May I remind you of what the company had said in summer of 2016? In a press release dated 30/06/2016 it announced a 12 months WORK PROGRAM to rectify the plant's underperformance. The annual report stated "Wolf and GR Engineering Services (GRES) have formulated a work program involving equipment changes and design modifications aimed at achieving continuous operation at design parameters, expected by mid-2017." ACHIEVING CONTINUOUS OPERATION AT DESIGN PARAMETERS by mid-2017! So after these 12 months of work, fixing, upgrading, spending 45 Million Pounds, what is the actual outcome? Throughput: 73% (target 100%) Recoveries: 24%-35% depending on how you look at it (target 58%) Production: 32% (target 100%) Ore treated during these 12 months (Q3-2016 to Q2-2017) was: 505.414t, 462.727t, 459.732t, 490.297t. Do you see any improvement here? There is no other way than considering this 12 months work program a total failure. Now you tell Devon he should wait for another 6 month turnaround plan to be completed. How many turnaround plans are you willing to accept? When does the company, in your opinion, have to actually deliver on its promises? Half way through the latest "turnaround plan" the numbers are less than encouraging. These facts have bitter consequences for the company's financial viability. That's what Devon has pointed out and he is 100% correct! In fact, he put it mildly IMO.

"The loss for the quarter was A$ 17.5m, so on that basis with similar expenditure projected for December quarter, production would have to treble in the next two months to reach nameplate and a break even situation." We're talking cash flow here. In addition to the cash flow one would have to add non-cash items like depreciation and amorisation. Also, repayment of debt has been suspended so once this re-commences and non-cash figures are takin into consideration, loss figures will be much higher.

Devon: "What I cannot square is that the report states that throughput is now 12,370 t daily, tungsten concentrate production is 10.48 t daily and kiln produced 565 t in September. If the recovery was 50-55% the mine would be at nameplate on those production figures." That's right, Devon. I assume the first two are record figures that have been achieved for a short period of time only. Either a 24 hour period or an even shorter period adjusted for 24 hours operation at that rate. Also, most metrics should have performed above the quarterly average towards the end of the period. Average figures are vital. There is no point in running the plant at 100% throughput for one day and then halt and repair it for the next two days. Throughput and recoveries are not independent from each other. If you feed more material per time recoveries generally tend to decline. So the 12.340t figure is basically worthless without mention of the recoveries achieved at that throughput rate. The same is true for the 1.048 MTU figure as the grade of WO3 in the product has not been disclosed.

Ignore the noise. Back to numbers and facts. This is a 3mtpa plant based on a 5,5/7 operation. Accordingly, the amount of ore treated at nameplate should be 955kt on a 24/7 basis. Currently the front end is being shut down between Fridays 11 p.m. and Mondays 6 a.m. That's roughly a 4,75/7 operation. During Q3 adjusted throughput was an improved but still meager 73,2% of nameplate, almost two years after handover! Recoveries are even worse. The refinery continues to be operated on weekends. Previously stored material is being fed during this time so MTU produced must be judged based on a 24/7 operation. The adjusted amount of ore treated (474.170t/4,75*7) * 0,21% WO3 (grade mined) contains 146.743 MTU (even more if you apply a grade of 0,22% WO3 mined during Q1 and Q2 when the now refined material had been stored). Out of these, 35.601 MTU have been recovered. That's a dismal 24,3% as opposed to a 58% target according the the BFS. Even if one did not adjust for 24/7 operation (assuming the refinery would stand still on weekends) recovery would be a very disappointing 35,8%, still. The improvements reported are way too small, particularly recoveries, to suggest the plant could ever attain nameplate production figures. An additional 45M Pounds have already been spent. Another 10M Pounds have been made available. How much more will be needed to make the plant fit for the job? And what does this mean for future debt service and redemption or the number of shares outstanding after a debt to equity swap?

The amount of rubbish being posted by the Three Stooges is unbearable. Do the math. Yeah. If you did do the math, how could anybody come up with nonsense like the turnaround was "on track"? This is a 3mtpa plant based on a 5,5/7 operation. Accordingly, the amount of ore treated at nameplate should be 955kt on a 24/7 basis. Currently the front end is being shut down between Fridays 11 p.m. and Mondays 6 a.m. That's roughly a 4,75/7 operation. During Q3 adjusted throughput was an improved but still meager 73,2% of nameplate, almost two years after handover! Recoveries are even worse. The refinery continues to be operated on weekends. Previously stored material is being fed during this time so MTU produced must be judged based on a 24/7 operation. The adjusted amount of ore treated (474.170t/4,75*7) * 0,21% WO3 (grade mined) contains 146.743 MTU (even more if you apply a grade of 0,22% WO3 mined during Q1 and Q2 when the now refined material had been stored). Out of these, 35.601 MTU have been recovered. That's a dismal 24,3% as opposed to a 58% target according the the BFS. Even if one did not adjust for 24/7 operation (assuming the refinery would stand still on weekends) recovery would be a very disappointing 35,8%, still. The improvements reported are way too small, partucularly recoveries, to suggest the plant could ever attain nameplate production figures. And additional 45M Pounds have already been spent. Another 10M Pounds have been made available. How much more will be needed to make the plant fit for the job? And what does this mean for future debt service and redemption or the number of shares outstanding after a debt for equity swap?

MB reports another price reduction for APT, now at $280/MTU, down slightly from last week's $282,50. In addition WLFE receives another GBP10M injection from its lenders and reports unquantified plant improvements.

MB price as of today is $282,50/MTU, down from $287,50 last week.

Devon, I think currently there are mainly two drivers behind the share price. 1. tungsten price and 2. expectations regarding production improvements. While 1. certainly was very positive in recent weeks, one should be aware of the fact that much of the rise was due to environmental inspections in China. These inspections won't continue forever and once producers return to the market the W price will most probably decline. I am of the opinion this process has started already with W declining from $323 on 07/09 to $298 today. I don't expect this decline to necessarily take W back to where it was in June but additional supply will have an effect for sure. Regarding 2. we just don't know. Both throughput and recoveries were roughly 50% below where they should be. That leaves much room for improvement. How much improvement has been realized so far is the 10.000 Dollar question. I am not overly optimistic. The annual report states: "The operating turnaround plan is on schedule, with further changes to come targeting availability and recoveries in the dense media separation and gravity fines circuits and availability and throughput in the refinery." So it appears to me most of the plan is still ahead of us. Should breakthrough improvements have been attained, I assume we would have been informed already. It would be considered material information that has to be released to the market immediately. A few percentage points of improvement would be welcomed but won't cut it. The plant has to run close to 100% nameplate for Wolf to make a profit. The upcoming quarterly report should provide us with further information on how the turnaround plan progresses. This will be most important IMO.

You are convicted making up things to prove your case.

That's for sure. What you present is hearsay. I know first hand it's not been a short.

Someone has lied in your face. It's not been a short.

You wish but they are both wrong.

The whole issue is being made up. It was not a short selling these shares. For some it is hard to accept that others might have a different view on things. In order to make all that fit in their picture they resort to making up things. Like shorts "pushing down" a stock, with an evil plan on their mind. Just like people hundreds of years ago made up witchcraft in order to explain what they were unable to understand.

How do you know it was a short selling these shares?

https://stockhead.com.au/columnists/big-aussie-tungsten-project-could-finally-get-underway/?ct=t(StockheadBigAussie)&mc_cid=54a2e62529&mc_eid=d762487a9e

http://www.londonstockexchange.com/exchange/news/alliance-news/detail/1502959473059185900.html

Wolf, in stark contrast to all the tungsten wannabies, will profit from soaring APT prices in terms of revenues and profits. For those who are years away from production (Northcliff, Ormonde, etc.) this is a theoretical discussion at best. Soaring APT prices combined with significantly improved production figures during the second half of the year should give Wolf a much needed boost.

Should the convertible note be approved, the outstanding bridge loan of GBP 45M can be exchanged into common shares at the 20 days VWAP. Currently the minimum conversion price is A$0,07 which is roughly 4,3p. Hopefully the share price will increase in lockstep with APT so dilution can be minimized.

What as far as I can see hasn‘t been discussed here... - Who pays for the plant upgrades and repairs? The contract with GRES provided for guaranteed performance of the plant which most certainly hasn‘t been met. Does this mean GRES has to pay for all repairs and upgrades? (of course GRES will get some of that money back from their suppliers who delivered the faulty equipment) - The price reduction that was triggered by the production shortfall, is it still in effect? Given the fact that Q1 and Q2 production rates were almost the same, one could do a back-of-the-envelope calculation like this: Assuming tungsten sales during a quarter were roughly equal to the amount of tungsten produced during 3 months… Revenues of $6,746 ~= US$5,2M / 29kMTU sold (Q1/Q2 average production) → US$179,31/MTU. That‘s 81,8% of the average price for APT during the June quarter (US$219) which appears to be slightly better than the standard discount for concentrate vs. APT and suggests no additional discount was in effect. The same calculation with 31kMTU sold (June quarter production) however delivers US$167,74/MTU = 76,5% of APT which would suggest there IS an additional discount in place. So I simply can‘t tell whether or not an additional discount still applies. I assume it does because Wolf would not have held back the good news.

Devonwolf, here are my thoughts re the current state of affairs. I hope they complement yours. Regarding "high ranking officials'" commments about a "massive turnaround" over whatever time frame I would like to remind everybody of what such "high ranking officials" had said 13 months ago: "Consequently, Wolf and GRES are discussing a work program involving equipment changes and design improvements aimed at [b]achieving continuous operation at capacity[/b], enhancement of recoveries and general plant improvements. Production improvements are expected during implementation of the program, however completion of all elements of the program [expected in the first half of 2017] is required before the full impact on processing plant performance can be ascertained." (30.06.2016, the part in brackets was added in a later version, i.e. in the Sept. quarterly report) 13 months later the plant is running at 51% throughput (target is 100%) and 28,8% recovery (target is 58%). So much for their command of the crystal ball! According to the BFS the plant was built for treating 3Mtpa (5,5 days per week operation). Since last fall it has been running 24/7 which puts capacity at 3,818Mtpa or 955ktpQ. In fact throughput in the June quarter was 490,297t, hence 51,4% of capacity. Head grade was 0,22% WO3 * 490kt ore treated means 107.865 MTU were present in the ore treated. Actual production was 30.996MTU, hence 28,75% of the WO3 in ore has been recovered. Wolf's target for recovery in soft granite is 58% so they came up 50,4% short. The BFS predicted "Plant ramp up in throughput & recovery over 6 month period." (Page 9) The fact, however, is this: 21 months after handover the plant is running at 51,4% of nameplate throughput, at 49,6% of planned recovery rates and 25,4% of planned production (@0,22% head grade). That is, frankly, a full-blown disaster. The company stresses these numbers were an improvement of 7% (throughput) and 15% (production) over the first calendar quarter but that doesn't take into account the fact that there have been two major plant shutdowns during the March quarter and none during the June quarter. Adjusted for 12 days of standstill, Q1 throughput would have come in at 530.460t and production would have been 31.042MTUs, both [b]better[/b] than the June quarter numbers. The silver lining is trial production results. Average daily throughput in week 4 of June was 9927t. That‘s a surprising 94,6% of nameplate capacity! I would like to caution everybody that we don‘t know what recoveries have been achieved during this time of high throughput (presumably lower than the June quarter average). But nevertheless it demonstrates the plant is basically able to handle that amount of material which provides a glimmer of hope to me. Given these guys‘ track record though, I remain cautious. (tbc)