China Sam Enterprise Group has agreed to a phased investment in Wolf of up to $3.2 million, and will in turn nominate up to three directors, with two existing board members expected to make way.
Beijing-based Sam Group was founded in 1985 and is involved in oil and gas exploration and production as well as in investment, asset management, information technology and international trade.
"Securing Sam Group as a new cornerstone investor is a milestone development for Wolf and its shareholders," executive Chairman Matthew Wood said.
"In this current downturn in the petroleum industry, well-funded investment groups such as SAM Group, who know Mongolia and know the Wolf assets, deciding to join Wolf is a vote of support in the work that the company has been doing for a number of years to develop our interests in these blocks."
Wolf has been working on the SB Jinst and BU Blocks in Mongolia since 2012.
The staged investment will see an initial placement for four million shares at $0.01, while the second will inject a further 72.4 million shares issued at the same amount.
Wolf traded at $0.007 per share before the announcement, and its shares have surged more than 70% this morning to $0.01.
The third and final placement, for $2.43 million, will require shareholder approval for the issue of 243 million shares and almost as many options.
Wolf will put the question to shareholders in September, and an independent expert's report will be prepared to assess the fairness of the deal, which will effectively move control of the ASX-listed company into Chinese hands.
Wolf, one of many mineral explorers to re-invent itself as an oil hunter during the last boom, had just $71,000 at the end of the March quarter.
It is hoping to farm-out its SB Block to a partner from China this year, although the low oil price has hampered attempts to close the deal on what remains frontier exploration.
The company has 23,000sq.km in the SB block in Mongolia's east, between 195 million barrels of oil found by Sinopec and 2.25 billion barrels found by Petrochina.
To date it has completed 450km of 2D seismic to define eight targets with the potential of between 460MMbbl and 2.2Bbbl within the SB Block alone
The oil is likely to be reservoirs in the Upper and Lower Zuunbayan and Tsagaantsav formations.
Previous work has defined six highly prospective basins controlled by Wolf, including the 3500sq.km Toson Tolgoi Basin and the Talbulag, UU and TV sub-basins, and there is support for a working petroleum system within the SB Block with a number of high quality light oil seeps within seismic shot holes.
The SB Block covers the second largest area of Wolf's Mongolian prospects, with the BU Block spanning 10,000sq.km and the Jinst Block covering an underexplored 41,000sq.km.
Wolf is seeking a production sharing contract with the Mongolian government for the 100% held BU and Jinst blocks with an award later this year.
The proposed transaction is subject to satisfaction of conditions precedent and to finalisation of formal documentation.
