Thoughts: 1. Forecasted Cost Per MTU Has Been Steadily...

Thoughts:

1. Forecasted Cost Per MTU Has Been Steadily Increasing.
.
According to most recent investor presentation (“Inv. Pres.”) (pg. 21) the ever increasing forecasted cost per mtu is now at $170. (If you will refer to the definitive feasability study presentation (“DFS”) (pg. 16) that number was closer to $105 per mtu). Somebody either missed the boat or the numbers were being scrubbed over.

2. Forecasted Annual Production Has Not Altered One Bit

Forecasted annual production (345,000 mtu) has not been altered one bit since the definitive feasability study (DFS pg. 8, Inv. Pres. pg. 15). I hope they are right because that have invariably forecasted annual production at 345,000 mt.

3. Net Present Value

In the early stages of marketing the company they routinely touted a post tax ungeared basis present value (“APV*”) of 74 million Pounds or $113.22 million Dollars (see DFS pg. 7). The APV was based on a cost of $105 per mtu, a sales price of $360/mtu and a mine life of 9.25 years. Based the recent changes in: forecasted cost per mtu (increase of 62%); decreases in the price of tungsten (decrease of 16.66%); and, the fact that the company is now relying on debt ($114.75 million Dollars) to finance a large portion of project; I suspect that the calculations should dramatically change.

*APV - Adjusted present value is an investment appraisal technique similar to net present value method. However, instead of using weighted average cost of capital as the discount rate, ungeared cost of equity is used to discount the cash flows from a project and there is an adjustment for the tax shield provided by related debt capital.

Based upon my calculations the company has raised approximately $175 million Dollars from shareholders and has borrowed $114.75 million Dollars. Accordingly, the all in cost for the project is roughly $290 million. Assuming annual sales of 345,000 mtu and a sales price of $300/mtu, the company will generate gross revenues of $103,500,000.00. Estimated annual costs are $58,650,000.00. Resulting in pre-tax net income of $44,850,000.00. Based on an estimated mine life of 9.25 years a discount rate of 5% , the net present pre-tax value of the project is $35,669,304.51. If you up the discount rate to 7.6228 the net present value is $0.00. If you up the discount rate to 12% then the net present value is -$47,417,871.92. Given these numbers, the stock price should be around $00.04 a share.

4. Debt Service, Share Price, Dividends, Net Present Value

The total amount of debt is 75 million Pounds or 114.75 million Dollars. The repayment term is 5.5 years. That means the company is obligated to pay in principal alone the sum of $20.86 million annually. That is income and it gets taxed (I believe the corporate tax rate in GBB is 21%). So that means that WLF has to generate $25.24 million annually to cover its principal repayment terms and corresponding tax obligations. Accordingly, in the first 5.5 years there will only be $19,610,000.00 per annum to pay dividends to shareholders. There are approximately 808 million shareholders. Accordingly, the stock will only generate an annual dividend $00.024 for the first 5.5 years and a dividend of 0.55 for the remaining 3.75 years. Even at a discount rate of 5%, the npv is negative on an invest at $00.30 per share. The NPV goes to zero at around $00.25 per share.