Subject:
Stockwatch: Tahera Corp - Heard on the Net
Date:
Tue, 03 Aug 1999 02:08:24 -0700
Tahera second most active conference
Tahera Corp TAH
Shares issued 159,300,000 Jul 30 close $0.14
Tue 3 Aug 99
Week ended July 30th
by Stockwatch business reporter
This is the first review of Tahera Corp. in Forum Watch, as it vaulted into
second position among Canada Stockwatch's most active conferences. Tahera
was formed following shareholder approval on Feb. 5, 1999, of the
amalgamation of Lytton Minerals and New Indigo Resources. The shares of
Tahera began trading on the Toronto Stock Exchange on March 2, 1999. Tahera
is another active player in Canada's fledgling diamond mining industry,
with large landholdings in the Northwest Territories and Nunavut. On May
14, Tahera announced the completion of a $2-million financing comprised of
10 million flow-through shares at 20 cents, with the proceeds to be used
for part of the Jericho diamond project feasibility study. As outlined in a
Canada Stockwatch article of June 28, recent interest has centred on the
company's Jericho and Contwoyto claim blocks. Tahera envisions a small open
pit operation for the Jericho project, tentatively suggesting it could be
in operation in 2001.
On July 23, the company announced that it had entered into an agreement
with Dundee Securities for a private placement of special notes
exchangeable for secured convertible debentures for approximately
$3.5-million. The convertible debentures will have a five-year term and an
8-per-cent coupon with interest payable semi-annually. Tahera may elect to
satisfy its obligation to pay the interest portion of the convertible
debentures through the issuance of common shares. Of the convertible
debenture, $3-million will be convertible into common shares on the basis
of 8,000 common shares per $1,000 convertible debentures at the option of
the holder. The conversion price for the remaining convertible debentures
is subject to regulatory approval, but will be not more than 8,000 common
shares per $1,000 convertible debentures. The convertible debentures will
not be redeemable before July 31, 2000.
On July 23, a Canada Stockwatch article reported on the tentative
settlement of Canadian securities violations by The Crabbe Huson Group, a
Portland, Oreg., mutual fund and money management firm. The firm and its
managing director, Mr. Crabbe, had engaged in some unusual dealings with
respect to the predecessor companies, Lytton Minerals and New Indigo
Resources. More than a year ago, Crabbe Huson revealed that it had sopped
up a 25.9-per-cent stake in Lytton just after Mr. Crabbe had boosted his
personal stake in New Indigo to 20 per cent. No proceeding is anticipated
against Mr. Crabbe for his personal trading. The Stockwatch article, which
will be appended to this issue of Forum Watch, notes that the proposed
settlement will leave a number of questions unanswered.
The Tahera conference is the latest in a series of diamond company
discussions to break into the most active conferences. Early in the week,
discussion between James35 and WillP centred on trading strategies and
philosophies and the possible impact of the recent news releases on
Tahera's share price, with James35 indicating that he expected a sharp drop
in price. WillP responded: "Personally, I think you're over-reacting just a
bit. But I'll tell you this...I'll be watching closely Monday morning. You
could well be right." On a new thread James35 again posted comments on his
trading strategy, commenting: "I find trading no more risky than investing,
but it can be. I think the key is to trade in stocks that you would
consider investing in. Tahera is that for me. Make up your own mind whether
it is for you." He also suggested a scenario that Tahera might follow in
developing a small mining operation and funding further exploration. WillP
interpreted some of those comments as suggesting that Tahera had a better
chance of becoming a mine than Aber Resources or Winspear, but James35
restated his opinion: "The point I was trying to make was that it is far
more likely that big mining concerns would be interested in mining the
Winspear property than the Tahera property, and that because of this and
the relatively small capital cost of a mine on the Tahera property, that
they may be more likely to operate the mine themselves, rather than being
bought out by one of the majors."
Great Slave joined the discussion, arguing that the Tahera pipes were "too
small for a large company to mine, but not too small to include in an
existing operation." He also seemed to open the question of the possible
impact of land claims, a topic picked up by Ziggy: "As I was sitting at the
breakfast table this morning, I was idly perusing pamphlets distributed by
the new Nunavut government. On the one hand I was reading that Inuits had a
sacred duty towards the land to preserve it and respect its integrity,
which of course had me thinking about diamond exploration by Tahera. On the
other hand, the Government of Nunavut is eager to develop Nunavut's land
potential to be as independent and self-sufficient as possible, which seems
to open the door to mining exploration plays. A question of balance that is
not easily achieved." He went on to suggest that transportation costs would
be a major consideration. WillP acknowledged the uncertainty with respect
to Nunavut, but suggested that concerns over transportation costs might be
excessive: "First off, the transportation costs to Taheraland will not be
much different than the costs to Ekati, or Diavik. Other than air
transport, most bulk goods will be shipped via winter roads. All that you
are looking at is the cost of ground transportation from, say Edmonton. If
a diamond plant is coming from South Africa, the additional 1,200 miles
ground transport isn't a significant expense."
Discussion turned to the 2001 production timeline, with Great Slave
expressing some doubt that it would be met: "The big snag in the permitting
process is environmental impact studies and native land claims issues. For
Tahera the land claims issues should be a lot easier than it was/is for
everyone else. The potential stalls will be in the EI studies...Caribou
migration and fishing habitat will be the key issues...I'm positive the
mine will come, but I think a 2001 start-up is unrealistic. In this case
however, I would love to be proven wrong." John Stern raised some concerns
over "the 'seasonal' factor that seems to affect many of these stocks,"
noting that the stock price was in a steep decline when it should be at its
seasonal high. "I realize that there are more factors at work here than
merely the time of year, nevertheless, I think that it is an important
consideration...I am more apt to think that we will see new lows tested as
we head into the fall or at best a long period of sideways movement." While
agreeing that there was a "seasonal nature" to pure exploration plays,
James35 added: "However, there are several diamond mining companies,
including Tahera, which are moving from exploration to mine development
stages. Therefore, I think it will be the news updating the progress
towards mine development that will drive the stock prices, and should be
less seasonal if the 2001 to 2002 targets of being in production are to be
met." Tahera closed out the week at 14 cents.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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