yOU GUYS MAY HAVE SEEN THIS ALREADY and lots of it is just review. But anyway I came across it and it seems to answer some questions that keep coming up so some people may find it interesting, so here goes. It is dated Sept 30/98 but was file Nov 30/98
SCHEDULE C: MANAGEMENT DISCUSSION
Transactions with related parties – see Note 10 to the attached unaudited financial statements.
The Company is without any legal proceedings or contingent liabilities.
Investor relations- Commencing January 10, 1997, Winspear entered into an agreement for investor relations services to be provided for a monthly fee of $3,500 for a two-year period.
Deferred exploration expenditures – see Note 6 to the attached unaudited financial statements.
WINSPEAR RESOURCES LTD.
QUARTERLY REPORT - FORM 61
SEPTEMBER 30, 1998
SCHEDULE C: MANAGEMENT DISCUSSION (cont'd…..)
Winspear Resources was listed on the Vancouver Stock Exchange in 1988 and has been under present management since 1991. As of January, 1997 the Company was designated as an Advanced Company by the Vancouver Stock Exchange.
Winspear Resources Ltd. has been involved in diamond exploration in the Slave Province of the Northwest Territories since 1992. Winspear and its partners in several joint venture projects throughout the Slave Province have spent approximately $21 million on diamond exploration covering 1.6 million acres. During this period, the Company has been involved in the discovery of three kimberlite occurrences, all of which are diamond-bearing.
Although the Quarter to which the accompanying financial report apply ended September 30, 1998, this Management up-date will summarize on-going activities to the present.
Winspear Resources is actively engaged in diamond exploration, mainly in the Northwest Territories where most of its efforts have been directed to date. This work has resulted in not only the discovery of three diamond-bearing, but uneconomic kimberlites, it has also generated an excellent data base over selected areas in the southern half of the Slave geological province where diamond exploration in the NWT has been concentrated.
Background:
Winspear Resources Ltd. has been involved in diamond exploration in the Slave District of the Northwest Territories since 1992. Winspear and its partners in several joint venture projects throughout the Slave District have spent approximately $21 million on diamond exploration covering approximately 1.6 million acres. During this period, the Company has generated an excellent database over selected areas in the southern half of the Slave geological district where diamond exploration in the NWT has been concentrated. It has also been involved in the discovery of three kimberlite occurrences, all of which are diamond bearing. The most interesting of these occurrences is the kimberlite complex discovered in 1997 in the Snap Lake area of the Camsell property, a property controlled through a Joint Venture between Winspear (the Operator) and Aber Resources Ltd.
During 1997, two areas of kimberlite were found on opposite sides of Snap Lake, which occupies an area of approximately 4 km by 4 km. On the northwestern side of the lake, a shallow-dipping hypabyssal dyke (the NW dyke) was intersected in thirteen drill holes over an area of approximately 800 m by 800 m. This dyke, which averaged 2.46 m in thickness, returned an average grade of 3.96 carats per tonne for all diamonds with one dimension greater than 0.5mm from a small sample of about 137 kg, a value that represented one of best reported from early-stage samples of kimberlite in the NWT. In addition, a small complex kimberlite breccia approximately 100m thick was intersected in two drill holes on the eastern side of Snap Lake. Although not as rich as the NW dyke material, diamonds and indicator minerals returned from this body suggests that it had been derived from a similar source. This inference was enhanced by a new discovery of a kimberlite breccia boulder train on the south side of Snap Lake during the 1997 summer program. The boulders, some of which contained coal fragments, also proved to contain significant diamonds. Again, a source similar to the previous two occurrences of kimberlite was indicated by the nature of the diamonds and indicator minerals derived from them. It thus became apparent that the several kimberlite occurrences at Snap Lake may have been derived from the same, as yet undiscovered, body. As these known kimberlite occurrences contain significant diamonds, exploration for the postulated source common to these kimberlites became a paramount objective of the 1998 spring drill program.
1998 Exploration Program
The 1998 exploration program was again focused on the Camsell Lake property although preliminary work has been initiated on the recently acquired Hilltop and Carat properties. An outline of the program is discussed below.
WINSPEAR RESOURCES LTD.
QUARTERLY REPORT - FORM 61
SEPTEMBER 30, 1998
SCHEDULE C: MANAGEMENT DISCUSSION (cont'd…..)
Camsell Lake Property
By sole-funding the 1998 program of about $2.5 million on this property, Winspear's interest increased to approximately 68%. This exploration program was planned in two phases. The 1998 Spring program, which ran from January 1 to June 30, 1998, had two main objectives:
· To obtain a 200 tonne bulk sample from the NW kimberlite dyke.
· To locate by drilling the source of the kimberlite boulders found on the south shore of Snap Lake.
Bulk Sample:
Winspear obtained 100 tonnes of NW kimberlite dyke material from each of two sites about 235 metres apart for a total of 200 tonnes. This material was flown to Yellowknife for treatment in Diavik's kimberlite processing plant. Diavik personnel under Diavik's security procedures operated the plant. One consultant acting on Winspear's behalf together with a Winspear employee experienced in diamond identification / sorting were also involved during sample processing. Brinks transported diamonds recovered from processing this sample directly to Antwerp where three independent valuers recommended by our joint venture partner valued them.
Diamonds recovered from the kimberlite processed in the plant indicate a grade of 1.14 carats per dry tonne of kimberlite. Valuers in Antwerp valued these diamonds at an average of US$301 per carat. Several aspects of this diamond parcel are noteworthy:
· Per carat values obtained for these diamonds are the highest reported values known to us from in situ kimberlite anywhere in the world.
· The three largest diamonds recovered from the sample, weighing approximately 10.8, 8.42, and 6.04 carats, are all of gem-quality. These results are the best recorded to date from the NWT in samples of comparable size. This provides strong support for a decision to proceed to a significantly larger bulk sample from this kimberlite.
· Information obtained from the two 100-tonne samples indicates that diamonds are relatively uniformly distributed in the NW kimberlite dyke. Of the three largest diamonds recovered, two of the large gem diamonds are from one sample, one from the other.
Diamond Drilling:
Although the sources of the diamond-bearing kimberlite boulders was not located in this drill program of approximately 5,000 metres, three additional kimberlite dykes, each dipping gently to the north-west, were discovered in the south-east arm of Snap Lake. It now appears that these three dykes together with the NW dyke have originated from a common source somewhere on the northeast side of Snap Lake.
The summer program, which covers the period July 1 to December 31, is focused on collecting approximately 400 till samples from the property. While particular attention will be paid to the Snap Lake area, others areas on the property also require follow-up. Dr. N. P. Pokhilenko and four of his associates from Novosibirsk joined our field crew for the sampling program on this and other Winspear properties that are being actively explored this season.
Supplementary Budget:
In light of the favourable results received from valuation of diamonds recovered in the bulk sample, a Supplementary Budget of $1.3 million was adopted which is jointly funded by the Joint Venture partners at their new respective interests. This budget will support the following main work components:
WINSPEAR RESOURCES LTD.
QUARTERLY REPORT - FORM 61
SEPTEMBER 30, 1998
SCHEDULE C: MANAGEMENT DISCUSSION (cont'd…..)
· A scoping engineering study by H.A. Simons, a leading engineering consulting group with significant experience in northern mining conditions. Simons is the lead engineering group for construction of BHP – Diamet's Ekati mine scheduled to begin diamond production in October.
· A detailed study by an internationally recognized diamond expert of the diamonds recovered from the 200 tonne sample
· A drill program of about 2,800 m which is designed to test the structural continuity and thickness variations on an area of the NW dyke that measures about 800 m long by 200 - 400 m wide. If this program is successful, additional targets on the dyke may also be drilled.
· Two structural studies of the area are being completed. One study will establish the regional geology of the Snap Lake area while the second is focused on locating the centre of kimberlite emplacement in the area. Should accessible drill targets emerge from this work. they may also be drill tested.
· The environmental base line study initiated in January has been increased in scope.
· A planning program has been established that will identify various issues to be addressed in taking a larger bulk sample this coming winter, and will formulate guidelines for testing the potential resource available on the NW dyke during the same period.
In total, work undertaken on the Camsell property in 1998 is projected at approximately $3.8 million of which Winspear's share will be about $3.4 million.
Third Quarter Advances:
Winspear made considerable progress during the third quarter, particularly in advancing the Camsell Lake property. Highlights of this work are summarized below.
Drill Program – Camsell Lake property:
With the high valuation placed on diamonds recovered from the test of 200 tonnes of kimberlite from the NW dyke at Snap Lake, the Joint Venture decided to embark on a diamond drill program on the NW dyke. As this was done during the summer, drilling was restrained to the limited area where the dyke is overlain by land. The area tested measures about 800 metres by between 200 – 400 metres. The drill program was planned in conjunction with MRDI Canada, a Division of H.A. Simons Ltd. (MRDI). This consulting engineering group is one of the largest in North America, has had considerable experience in northern mining operations, and was the lead engineering firm for the recently commissioned Ekati diamond mine in NWT.
A diagram of the Snap Lake area is attached to this report that shows all drill holes considered to have tested for the presence of kimberlite dyke material as this is presently understood.
· The drill program on the NW dyke comprised 66 holes (~5400 metres). The purpose was to determine the structural continuity of the dyke and its variability in thickness over this area.
· From the results of this drilling, MRDI determined that no insurmountable problems were encountered that could detrimentally affect either open pit or underground mining of the NW dyke significantly.
· The average thickness of the dyke over this area is approximately 2.6 metres.
· MRDI established from the drill results that approximately 1,348,000 tonnes of kimberlite underlie the NW peninsula of which ~670,000 tonnes could be mined by open-pit methods within the constraints of the NWT mining regulations.
WINSPEAR RESOURCES LTD.
QUARTERLY REPORT - FORM 61
SEPTEMBER 30, 1998
SCHEDULE C: MANAGEMENT DISCUSSION (cont'd…..)
· Drilling on the north shore of Snap Lake (3 holes) also established that kimberlite dyke material similar to that encountered on the NW peninsula underlies part of the area north of Snap Lake where there was no previous indication that kimberlite existed in this part of the property.
· Deep drilling has confirmed that the NW dyke extends down-dip at least 2200 metres east of the subcrop on the NW peninsula. Significant alteration in the hanging wall of the dyke in the most easterly hole is consistent with a nearby source of kimberlitic fluids.
· The NW dyke, through its apparent continuation to the north side of Snap Lake, now has an indicated strike length of 1350 metres. Together with the inferred down-dip extent of the dyke, the potential for increased tonnage of kimberlite material in this structure is considerably enhanced.
· Microdiamond analyses of all kimberlite intersections encountered during the spring and summer drill programs are in progress. Results will be compared to those obtained from analyses of representative samples obtained from the two 100 tonne bulk samples tested in the spring. This data will help establish a grade-predictive capability on down-dip portions of the dyke using microdiamonds as a guide.
· MRDI has completed preliminary scoping studies to examine potential mineability of the NW dyke assuming those parameters established by the bulk sampling and drill programs. Assuming in situ values of kimberlite of C$400 / tonne (C$543 / tonne was obtained from the valuation of diamonds recovered from the bulk sample), both the open-pit resource and a combined open-pit / underground operation based on a hypothetical reserve of 3.5 million tonnes were found to have very strong cash flows and payback period of less than 1 year. This information together with the drill results and analytical data obtained to date suggest that the NW dyke is potentially capable of supporting a very significant mining operation.
PLANS:
As a result of these extremely optimistic results, the following work is being planned for 1999 in order to more fully test and advance the Snap Lake area of the Camsell property:
· Obtain valuation results from a planned 5000 to 6000 tonne bulk sample. This should establish a high degree of confidence in the value / tonne of the NW dyke.
· Outline by drilling on Snap Lake sufficient kimberlite reserves to support a significant mining operation. In addition, the size of the kimberlite resource will be outlined to permit optimization of plant facilities should an economic operation be indicated.
· Increase the scope of environmental baseline studies so that an Environmental Impact Assessment report could be initiated in the fall of 1999 should results warrant.
· To collect all data consistent with feasibility study requirements and initiate this work should bulk sample and drill results justify it.
Carat Property
This property of 92,000 acres is strategically located adjoining the northeast side of the main BHP-Diamet claim block. The main trend defined by several of the BHP pipes being readied for production later this year lies directly through this property. Prior to Winspear taking an interest in this property, it had only received minor work since the beginning of diamond exploration in the area.
WINSPEAR RESOURCES LTD.
QUARTERLY REPORT - FORM 61
SEPTEMBER 30, 1998
SCHEDULE C: MANAGEMENT DISCUSSION (cont'd…..)
Winspear has the option to earn up to a 70% interest from Tyler Resources Inc. by issuing to Tyler 200,000 shares of Winspear in four tranches of 50,000 shares each over an 18 month period and by incurring $2 million of exploration expenditures on the property by December 31, 2002.
To date, 396 till samples have been taken on the property to provide a regional data base from which additional work can be planned for next year. In addition, a leading Consultant has mapped glacial deposits over the property in this field. During the first quarter of the year, a detailed airborne geophysical survey of about 3900 line-km was completed over the property. A preliminary evaluation of the survey results has revealed several targets that will require additional work.
1998 expenditures on this property are anticipated to be $450,000.
Hilltop Property
This 196,000-acre property was acquired by staking early in 1998. A detailed airborne geophysical survey of about 8900 line-km was completed this spring. A review of this data reveals several targets worthy of follow-up work.
During the summer, a regional net of about 500 till samples will be established on the property. Prior to this work being undertaken, a leading consultant in this field completed a survey of glacial deposits found on the property.
1998 expenditures on this property are expected to be approximately $500,000.
Financing:
To support this significant work program, a $10.6 million financing has been announced. Upon the exercise of attached warrants, an additional $12 million would be made available to the Company.
Board of Directors:
The Board of Directors has been strengthened by the addition of Dr. H. C. Morris. Dr. Morris, who is trained in Mining Geology, has served with Cominco in a variety of senior operating positions. In addition, Dr. Morris has had extensive experience at the executive and Board level with several junior and intermediate-sized companies. His presence on Winspear's Board will further strengthen the Company as it continues to advance the Camsell Lake property.
|
