Winspear Resources Ltd -
Winspear most active conference
Winspear Resources Ltd WSP
Shares issued 33,721,333 1999-02-19 close $3.35
Monday Feb 22 1999
Week ended Feb. 19th
by Stockwatch business reporter
Winspear Resources was reviewed in Forum Watch last week as the most active conference, a position it has now held for three consecutive weeks. Apart from the text of the Deutsche Bank Securities research report which has been widely distributed, there have been no developments within the last week.
Conference discussion has once again been wide-ranging and interesting, with a number of perspectives represented. Responding to a question regarding the 'cone sheet' theory WillP wrote: "The geological theories are interesting reading for someone with an interest in geology, and I love both reading and geology...but what's interesting to a miner and an investor is tonnage." He went on to suggest that it might be worth considering the exploration results from Snap Lake using the game 'battleships' as an analogue. "You seem to have all your ducks all lined up in a row. The game goes on. I-11 hits a destroyer. So does I-12. I go fishing north and east L-12, L-13, I-14, L-16, J-13. More hits. No misses. No glancing blows either...they're all good solid hits from my thundering 15 inch guns...At just under a million tonnes per call...I've got a lot of tonnage. I've inferred this, rather reliably, because of the consistency in the results. And all without mentioning cone sheets...just by playing battleships." RealityCheck questioned whether the available data was sufficient to warrant the inference: "Does the data obtained from your thundering 15-inch guns warrant the conclusion that you have hit a mine-sweeper, destroyer, etc.? I'm not so certain. To be sure, evidence exists that something has been hit--and often. However, it could be that your barrage has been laid down on a closely spaced flotilla of pleasure craft. If they are very closely spaced--bow to stern and gunwale to gunwale--the probability of a hit with every shot is very high. However, even the small spaces entailed by the shape of the boats have implications once the analogy is turned back to a consideration of the real object, a kimberlite body." The two seemed to reach some broad agreement on the nature of data and its interpretation but WillP is satisfied that the data indicates that the tonnage is there.
Taking up another line of discussion, DiamondWillie wrote: "I'm operating under the assumption that WSP gives a speculator/investor more bang for the buck (hereinafter "MBFDB") at the moment than any of the other players with any sort of proven or semi-proven resource. Am I wrong?" WillP was ready with a balanced response: "Well, if you're looking for the best bang...be careful it doesn't blow in your face. The best bangs are usually the long shots. They of course carry the biggest risks...Winspear? Yeah. Probably a decent bang here. It's far enough along you can reasonably calculate the odds. It's a 50-cent stock if Snap goes real bad. What's the upside? Well...how about a median positive bulk sample that I calculated at $180 per tonne. DeutschBank calculated a share price for something in this range...it was around $8.00 or a bit more. So...maybe you could triple." A more optimistic assessment was offered by jspec in three 'out-on-the-limb predictions: "1. The 6000 bulk sample will come in at >$200/t. 2. Ultimate tonnage will exceed 20 million tons. 3. Snap Lake will be acknowledged as one of the world's great diamond mines, if not the best." In a related discussion, RealityCheck invited comments regarding some of the information in the widely-hailed Deutsche Bank Securities report, addressing jspec: "To return to your figures, I noticed that you begin with $200/t and move up in $50 increments. According to the DBS report, the big question now is value. What if the grade is maintained but the value is not? Is the project, as you have outlined it, viable at $175/t, $150/t?" Drawing attention to some of the concerns raised in the report, he went on: "I think the report raises some worthwhile points regarding financing, potential dilution, and 'the long dull period leading up to production'. Much of that may be of little interest to those with a shorter time horizon but I wonder if the current price level can be maintained during what some might consider the long dull period before the results of the 6,000 t sample are available. Of course, there will be some excitement building before the results but is there going to be much of interest over the next month or two?" To this point, that discussion has not been picked up, though teevee proposed a scenario addressing the suggestion in the research report about the necessity of costly underground bulk sampling: "Here is a hypothetical scenario for you to consider.....Imagine if Winspear bought a 100 t per day portable diamond plant (they are available for about $1-million bucks)? This could be set up on site (probably a couple of flat bed trailer loads) under an inflatable structure in a very short period of time. A decline could then be driven right down the cone sheet, to cross cuts heading off to individual blocks for test mining and grade evaluation (as an aside, subject to finding the feeder zone, they could ramp down the cone sheet through payable rock all the way to the pipe). The rock could be run through the portable diamond plant and likely provide substantial offsetting cash flows (maybe even positive ones), assuming the grades stand up."
On yet another thread, discussion turned to the possibility of a takeover, with RBC suggesting, "Aber is well financed and is in a good position to make a cash and stock bid for Winspear." That did not seem to generate much enthusiasm but WillP offered some further comments: "I'm betting that far more likely a scenario is some deal between Aber, Winspear, possibly DDML (RTZ) and DeBeers...concerning marketing of diamonds from Diavik and Snap, and possible participation in the latter in exchange for footing some costs." The Doctor, well-connected by his own account, brought some heated responses with his contribution: "My friends, I have an associate 'close' to DeBeers and we shared a belly shake over this rumour this very afternoon. Not only is WSP not even a casual target, our super diamond friends are interested almost exclusively in targets outside of North America, perhaps more specifically in Brazil?" He went on: "Diamonds fit for emery board or drill bits at best, and that assumes they came from the site...Why is WSP's price where it is still? How has it held even this level? Promotion, promotion, and more promotion." Fortunately, some cooler heads discredited some of The Doctor's claims with facts rather than abuse and the discussion quickly returned to more interesting considerations, not all of which could be accommodated here. Winspear closed the week at $3.35.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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