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Gold/Mining/Energy : Winspear Resources
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To: Lilian Debray who wrote (16226)3/20/1999 6:45:00 PM
From: Gord Bolton  Read Replies (2) of 26850
 
I gotcha, Lilian. You are looking for an exact mathamatical formula for value. In some cases with speculative stock it does not apply.
It is best to think of it as market psychology. Lots of people (well at least several) are sitting down this weekend and trying to fugure out some formula to tell them how much WSP is worth at various % of ownership, X Millions of tonnes, $XXX value per carat and X.X carats per tonne.
Everyone might have their own formula and estimations. WSP will be in play before or after the bulk sample. However, no one has any handle on what the other interests and properties of WSP are worth.
THerefore the default market value of WSP is the Snap Lake deposit and what people think it is worth.
The other properties have potential as well. So by splitting them up WSP Sr will still have the value associated with Snap Lake and whatever happens there happens. However, after the split, and whatever happens, current WSP shareholders will still have a share in the remaining potential and value of WSP in WSP Jr.
WSP Jr will be listed and will be trading and issueing it's own reports and ultimately the market will assigne a value to that property as well. In this case 3 divided by two may equal 3 plus 1.
To use a similar example. Compaq computers acquired one of its competators recently Digital or DEC. The acquasition included Alta Vista.
Compaq continued to be valued by the market on the basis of how many computers were sold at what profit. No value was assigned to Alta Vista even though similar Web services were attaining ridiculous market evaluations on their own.
Compaq will separate Alta Vista into a separate stand alone company and by doing so shareholder value will be enhanced.
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