TORONTO (miningweekly.com) – Woulfe Mining, which is advancing the development of the Sangdong tungsten mine, in South Korea, late last week said it was facing a cash crunch following a company-wide investigation after the resignation of the former executive management team in February.

The board and acting CEO Hubert Marleau initiated a comprehensive investigation into the company and its subsidiaries to ensure business continuity. The investigation had identified issues relating to liquidity and the ability of the company and its subsidiaries, including Sangdong Mining, to meet various payables beyond the next few months.

Woulfe said its board and interim CEO recognised the seriousness of these issues, including the potential impact on its ability to advance the Sangdong project “in the manner and timing anticipated”.

The company said it had started an internal review to further preserve cash, reduce costs and enhance corporate efficiencies.

Woulfe, which, in February, was named to the TSX Venture Top 50, which identifies the top 10 companies in each of five major industry sectors, said it was in negotiations with various parties to provide a short-term financing solution to meet its obligations and to provide funds to advance the flagship project, although there was no guarantee that such financing might be available.

In the longer term, the company, with the substantial assistance of its largest shareholder, Dundee Corporation, continued discussions with IMC International Metalworking Companies, to successfully complete the strategic transactions between the parties.

This partnership, entered into in February 2012, was aimed at realising strategic advantage, given Woulfe's mining and processing technical abilities and IMC's downstream manufacturing skills, high level of innovation and quality products sold into the global tungsten market.

Under the terms of the partnership agreements, IMC was to acquire a 25% interest in Sangdong Mining for C$35-million, which was to be used for developing the mine.

Woulfe and IMC had also planned to establish a Korean joint venture (JV) company, in which Woulfe would hold a 45% stake and IMC the balance. The JV company would build a tungsten refining plant to produce ammonia paratungstate.

IMC had also agreed to subscribe for C$19.25-million in equity in the JV company and to lend Woulfe C$15.75-million, all of which would be used by Woulfe to pay for its 45% interest in the JV, and which could be repaid in tungsten concentrate produced by Sangdong.

Meanwhile, the current board review also investigated, with the assistance of Dundee, the technical aspects of the Sangdong project and identified “considerable” additional testwork that was needed to bring the project to commercial preparedness, which was deemed to require more funding to complete.

Meanwhile, all staff and employees remained on site at Sangdong, planning further technical work and assessment.

Woulfe’s announcement late on Friday sent its TSX-V-listed shares plunging by more than 35% on Tuesday, to trade at C$0.13 apiece in the afternoon.