Woulfe Mining will use the Can$10 million raised in a non-brokered private placement with Korea Zinc to continue exploration and development at the Sangdong tungsten-molybdenum project.
Proceeds will be used to continue definitive drilling, secure mine and process equipment, and fast track design, feasibility and construction plans.
Woulfe will continue to finance the project up to the second placement of Can$38 million by Korea Zinc into Woulfe's Korean subsidiary, Sangdong Mining Corporation. Korea Zinc has further agreed to arrange debt funding of up to Can$75 million to complete the project.
Korea Zinc's investments into Woulfe's subsidiaries remain subject to finalization of due diligence by Korea Zinc which will be followed by regulatory and shareholder approval.
The proposed subsequent transaction will give Korea Zinc a 51% stake in Woulfe's Korean subsidiaries, Sangdong Mining and Muguk Gold Corporation.
Woulfe and Korea Zinc will align their efforts in the management of Sangdong all the way through to production and positive cash flow from operations.
The benefits to Woulfe from this transaction go far beyond the financing as Korea Zinc is a world leader in metals refining. These benefits include utilization of a strong technical and operational team in Korea to assist taking the Sangdong project into production as quickly as possible.
Woulfe's president and CEO Brian Wesson says, “The direct investment into the Sangdong tungsten-molybdenum project means this project will progress as it is fully funded and there is no further dilution to Woulfe shareholders for the Sangdong project. The investment also puts the company in a position to consider other project opportunities.”
Korea Zinc will assume management control of Sangdong Mining Corporation on commissioning the mine, which is scheduled for 2012.