Hi Lorne,
The difference between our two opinions on what Turner will do, could come from what we have done personally. I have talked to the following Winspear people on several occasions, in person in the last year,...Randy Turner, John McDonald, Melissa Kirkley, Hugh Morris, John McConnell, Don MacDonald, of course Sophie and many of the geologists working for the company. They all share a common thought,...this company is serious about putting this mine into production, and if a buyout comes, the buyer will have to place a value on the resource far higher than it is right now.
You imply Turner is not serious in producing this mine. That is not consistent with what is happening now. No big company is stepping forward to JV with Winspear,...and the company is quickly taking all the steps to bring the dyke into production. Perhaps you could detail what steps Turner has missed, or what steps make you think he is not seriously trying to put this resource into production.
As an armchair consultant, you have a small part of the picture, and don't know what demands have been placed on the company to get financing, permits, environmental approvals, and political backing. The main point we seem to agree on, is the stock is worth more. A sale at a fair price makes sense for all of us,...but any senior would want to grab this company for far less than fair value to assume the risk of the project. Turner is acting in all our best interests, by bringing the resource to production, and not accepting a crappy buyout.
The nature of the deposit, is the problem. Most diamond producers are use to working on pipes, and go underground in the latter stages of a project. To them, dykes are risky and generally unprofitable business. The evidence indicates the unique geology of the Winspear dyke could run counter to that dogma,...but it clearly needs the work that is currently being done to substantiate its economic potential. I would think that you would be correct if RT simply did nothing but negotiate with majors, and drill a few more holes, as per Murray Pezim, but he is not. He is marching full speed ahead, and with the professionalism, expertise, and sureness of conviction of any major, and with an eye to costs. Buying the processing plant and moving it to Snap Lake, results in processing that is cheaper, faster, and more efficient than trucking the kimberlite somewhere else. It also jumps the gap from bulk sampling to test mining,...which is a nose ahead of Diavik.
All I care about is what should Winspear's stock be worth, and can I make some money. The bulk samples and test mining conditions will tell the tale, and there will likely be a speculative run up in shareprice towards the release of those results by the end of this year. In the meantime there appears to be a base under the stock of $2.00, so buying in this price range should be a good deal. Canacrap continues to slam the bid,...could be insiders selling, but the reasons for selling are many and varied. The question is, will that selling slam the price down below $2.00. I don't think so, because I think funds will step up and add to their positions, given the listing on the TSE now,...and so will one semi-squished hamster(got some today at $2.20).
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Previous hamster calculations at 1000 tpd processing rate,
http://www.siliconinvestor.com/readmsg.aspx?msgid=13687479
1000tpd x ($300 cdn$/tonne revenue-87cdn$/tonne costs-$30 cdn$/tonne marketing costs) x 350 days x 68% - $20,000,000/year (office overhead, principle payment&interest, misc business and mining costs)= $23,550,000 per year before tax.
With 65 million shares outstanding, when we start production we get earnings per share per year of $.36 before tax.
So let's update a bit and assume 120 million shares outstanding, $Cdn 95/tonne processing costs, and 3000 tpd:
3000tpd x ($300 cdn$/tonne revenue-95cdn$/tonne costs-$30 cdn$/tonne marketing costs) x 350 days x 68% - $20,000,000/year (principle payment&interest, misc business costs)= $104,950,000 per year before tax.
Divide by 120 million shares,.....CDN$0.87 earnings per share. Now for a multiple, well Diamet's multiple is around 10, so let's use it.
10* $.87 is $8.70 for a fully functioning diamond mine. If Turner succeeds, all shareholders succeed. |
