Johnny, as you have been been complaining about Sudhir ever since you made a bad trade contrary to his recommendations. And since you have been Quoting what you think he said, I thought it would be appropriate to post up a recent copy of the Resource Indicator.
"The RESOURCE INDICATOR
___________________________________________________
Vol. 3, No. 9 staking VALUE early
March 9, 1999 (before market open)
___ Summary _______________________________________
Winspear Resources Inc. - WSP.v - Accumulate on Dips
Market Watch - Lac Rocher Play
Resource Indicator Index - $113,980 +14%
Q&A - MMU.c, IUC.t
Open Positions
____________________________________________________
___ Performance Watch ________________________________
August 1, 1998 (initiation date) to March 8, 1999
Resource Indicator Index +14%
TSE 300 -6%
VSE Index -13%
VSE Mining Index -10%
DJIA (Dow) +11%
NASDAQ +30%
____________________________________________________
WINSPEAR RESOURCES LTD.
DECLARATION: I isolated profits (+200%) near $2 in mid 1998 as
recommended and protected another portion with a 20% trailing stop
loss, also as recommended. A small position was then established by
accumulating on dips below the $1.16 level as outlined in the
September 14, 1998 write-up and near $1 level as outlined in the
September 1, 1998 summary. This position was sold for
approximately 200% profits near $3.50. I have once again established
a small position under $3. My original capital was not re-invested.
ACCUMULATE ON DIPS (WSP.v/$3.44)
Last Full Write-up: Feb. 4/99 ($2.72) - Accumulate Again
Recent High/Low: $4.85/$1.00
Trailing Mental Stop Loss on no more than 50% of Position: 20%
THE FOOTSTEPS OF FORTUNE ARE SLIPPERY
Winspear released an update on their winter drilling program after
market close yesterday, March 8, 1999. The drilling has extended the
north-south strike length to 2.0 kilometers. Three holes drilled into
the north shore in search of a near-surface third bulk sample site
encountered only thin intersections of kimberlite. All three drills are
currently conducting delineation drilling down dip, moving from west
to east, over the lake.
The up-dip limits of the dyke at the north shore appear to be too
narrow for the extraction of a bulk sample. The news release does not
give the depth of these holes. Winspear drilled three holes into the
north shore during the last drilling campaign. It should have been able
to use this information to extrapolate and identify an area where the
dyke may potentially come close to the surface. It appears they only
drilled three holes in this extrapolated area. Either the dyke does not
come to surface in the north shore or the up-dip extension of the dyke,
in the north shore, is not yet well understood.
Companies have approximately a 14 week window in which to
conduct their winter hauling program in the NWT. WSP lost two
weeks up front due to poor weather conditions which delayed the
construction of the winter road. With the goal of pre-feasibility on 3.5
to 5 million tonnes by year end, WSP could not afford to spend too
much time looking for an appropriate bulk sample site in the north
shore. This search can be continued in the summer. At this time, no
bulk sample will be taken from the north shore. The winter should be
used to drill on the frozen lake in order to delineate the down dip
extension of the NW dyke.
Approximately 6,000 tonnes, representing the winter bulk sample,
have been extracted from two sites on the NW Peninsula. The sites
are the south extension of the two mini-bulk sample pits. The bulk
sample is currently being bagged and shipped for processing. The
shipping should take approximately 15-20 days as approximately 20
trucks, each of which can carry 40 tonnes, are being utilized for the 18
hr trip to the processing site.
The delineation drilling, utilizing all three drills, is moving from west
to east on 200 m centres. This drilling pattern will allow WSP to
collect enough material to model a yearly processing rate to within
15%. This, in turn, is good enough to move the project to the pre-
feasibility stage. The drilling should reach the area which may host
the feeder zone by late March.
THE nICE ROAD
The news release does not reveal much. However, there continues to
be many reasons to be optimistic about this project. I have
summarized my thoughts below.
* Recently, Malcolm Thurston (MRDI Canada) gave a presentation,
on behalf on Winspear, regarding micro/macro analysis to
institutions in Toronto. I attended the presentation and was
pleased to see many of the major institutions represented. It
appears that institutions are monitoring the project and are now
only beginning to understand the use of the size distribution model
and the potential of the project. I suspect most will be interested
in modelling a cash flow analysis prior to an investment decision.
This, however, cannot be done with any level of accuracy until the
bulk sample valuations are released. Big money is watching WSP
and will move in, at higher levels, on positive results.
* In the diamond exploration business, there is a trend in the industry
to do more with less. Diamonds occur in parts per million,
therefore, you need large samples to collect representative macro
stones. Micro/Macro size distribution analysis attempts to use
micro stones, which can be yielded by smaller samples, to predict
the occurrence of larger stones. In this type of modelling, usually
only micro diamond data is available. Micro size class distribution
can be used to extrapolate/estimate macro size class distributions
and thus grade of a pipe. In the case of Winspear, macro diamonds
from the mini bulk sample results are also available for the
modelling exercise in addition to the micro stones from the caustic
fusion. When plotted, the micro stones from the caustic fusion
analysis would actually have predicted the macro stones found in
the mini bulk sample results. Malcom Thurston has also modelled
the CF results on a local basis. He has indicated that the size
distribution curves yielded by this exercise appear to be very
similar to each other. These "local" size class distribution curves
can be used by Winspear to fine tune their cash flow estimate. As
a speculator, the above indicates that WSP already has a very good
idea of the commercial grade of the pipe and the size of the stones
the dyke may hold. It is now a matter of proving this to the
investment community and the banks through delineation drilling
and bulk samples.
* Previously, I have discussed that the grade difference between Pit
1 and Pit 2 (mini-bulk sample sites) is due to contamination of Pit
1 by the footwall. WSP learned from the extraction process of
kimberlite from Pit 1 and was able to reduce the level of
contamination in Pit 2. The 1998 Caustic Fusion results were also
closer to Pit 2 than Pit 1. Adjusting for the contamination, the
grade would probably have been in the 1.3 to 1.5 cts per tonne
range as opposed to the 1.14 cts per tonne reported. Assuming
little contamination in the current 6,000 tonne bulk sample, as a
speculator, we can reasonably expect to see a higher grade.
* Drilling has extended the dyke along strike to 2,000 meters. To
date, the widely spaced drilled area has the potential to host over
25 million tonnes of kimberlite.
* The environmental study is progressing well. Consultations with
native groups and elders have been started and will continue. The
actions of the principals clearly point to their underlying
confidence in the project.
* In the resource industry, there has been very little deal or merger
work over the last two years. Many firms may attempt to position
themselves for future work from Winspear by initiating coverage
of the stock. So far, Deutsche Bank has stepped up to the plate. I
speculate we will see more.
* Winspear is at a point when it must start thinking about raising
money for the next stage of development towards a mine and
eventually mine financing. The bulk sample results will give the
first good indication of the quality of diamonds nurtured by the
NW dyke. Given good quality (US$200/ct or more), WSP should
be able to raise adequate funds from existing warrants and options
to continue exploration.
* In order to secure future mine financing, WSP may decide to take
a bulk sample down dip starting November. This will require
consultations with native groups, possible construction of a gravel
air strip and purchase of a small (10 tonnes per hour?), on site,
bulk sample processing facility. A decision of this nature cannot
be made in June. It will most likely be made over the next two to
three weeks. The announcement of an additional down dip bulk
sample may give speculators sitting on the fence additional reasons
to participate.
* Six indicator mineral trains, with good geochemistry, have been
identified on the Hilltop property. Ground geophysics should be
close to completion with drilling expected to begin in March. This
property holds much potential and I expect to see a progress report
in the very near future.
The bulk sample will most likely be processed at Diavik. As with the
previous mini-bulk sample, WSP will periodically remove some
material from the belt for caustic fusion analysis. This will help to
continue the process of building the size class distribution model.
Shipping should take approximately 20 days. Processing will likely
take another one month. Picking of diamonds, with over 7,000 cts
expected, should take another month. Diamond results should be out
by May with valuations by June. Winspear has been building a
healthy base at these levels with little volatility. Analysis of data to
date continues to indicate that WSP has the grade and tonnage. The
bulk sample results will give an indication of quality. I continue to
suggest accumulation on any dips leading up to the bulk sample
results.
MARKET WATCH
Market Watch should be considered a commentary on stocks in the
news based on my general knowledge. These are stocks of interest
that I am currently watching but should not be considered
recommendations. Open positions are summarized, as always, at the
end of each issue.
LAC ROCHER AREA PLAY
The Nuinsco (NWI.t/$3.09) nickel discovery continues to attract
speculative interest as drilling begins. This round of drilling will
indicate whether the high grade massive sulphide mineralization is just
a local accident or a major discovery. Market expectations continue to
be high with standards set at a very high level by the discovery hole
which included the high grade interval of 3.2 metres of 10.8% nickel.
A magnetic anomaly, which is offset from the discovery hole, suggests
a potential mineralized zone of 900 metres by 100-200 metres. This
may simply represent disseminated sulphides. The first two holes are
expected to be drilled close to the discovery hole in an attempt to
extend the high nickel zone intersected at the gneissic footwall contact
of the mafic intrusive. It is the third or fourth hole which will tell us
whether NWI has a major discovery on its hand. At these levels, NWI
represents high risk and should be viewed as a trading opportunity
only. Excitement created by the first two holes and the PDAC should
take the price higher. Profits should be isolated during this liquidity
bubble.
Since the discovery in January, approximately 50 companies have
staked land in the region surrounding the discovery north of
Mattagami. On January 31, I indicated that Freewest (FWR.m/$0.48)
represents a conservative way to participate in the play as it was one of
the first in the play, holds strategically located ground and is trading
on the potential of other properties. With about $1 million in cash,
several prospective properties and an experienced management,
Freewest represents a sound way to participate in the excitement
created by the Nuinsco discovery. I own some stock prior to the recent
excitement and rise.
Queenston Mining (QMI.t/$0.55) also has some strategically located
land with downside protection provided by a large cash position. It
too represents a conservative approach to the Lac Rocher area play.
Donner Minerals (DML.v/$0.46) recently formed a strategic alliance
with Falconbridge and Noranda and now has an interest in a large land
package. Donner also raised some funds yesterday at $0.40. The
attraction to the stock is in its liquidity and promotional team. If NWI
hits, DML will make sure everyone knows about their land position.
DML is also a good stock to trade.
The RESOURCE INDICATOR INDEX - $113,980
In addition to the open positions, each issue now monitors a
hypothetical $100,000 trading portfolio with a start date of August 1,
1998. This will give all subscribers an avenue to judge the
performance of the publication, timing for individual companies and
the percentage of a portfolio any one company should occupy. The
portfolio will follow the disciplined approach outlined in the
publication and will be subject to stop losses and trailing stop losses as
outlined in the write-ups, without exception.
The portfolio performed very poorly over the last month. The cash
position will be utilized to accumulate undervalued stocks, prior to
movements. I expect the portfolio to return to its recent highs over the
next four months as our plays mature. I am going to use the cash in
the portfolio and the liquidity in VIN to add 50,000 shares at $0.15
(yesterday's trading amount). VIN holds a large and prospective land
position in Mexico. The stock will perform once it raises some money
to drill. I expect this to happen over the next two months. The cash
position now stands at $29,630, leaving room for new
recommendations. The updated portfolio is summarized below.
ESX.t 60,000 $0.24 $14,400 +19%
IUC.t 50,000 $0.48 $24,000 -8%
GHN.v 100,000 $0.05 $5,000 -29%
NCS.v 20,000 $0.34 $6,800 -46%
VIN.v 70,000 $0.15 $10,500 -4%
WSP.v 5,000 $3.44 $17,200 +23%
LTU.v 15,000 $0.43 $ 6,450 -4%
Cash $29,630
Profits above 60% will be subject to a 20% trailing mental stop loss in
each case above unless otherwise stated in writing. New stop loss and
trailing stop loss levels will be indicated for every change (buy) to the
portfolio. All transactions will be outlined by E-mail or in the issues.
SUBSCRIBER QUESTIONS & ANSWERS
I spend a lot of time answering questions via E-Mail from subscribers.
This section will summarize relevant questions and answers whenever
I feel it appropriate. In some cases, several similar questions are
posed and answered on an individual basis. In these cases, the
questions and answers are summarized as a combination of all the
similar inquiries. Let me know if you find this section beneficial.
Question: MMU.c - March 1, 1999
Sudhir, I bought some Marum following your comments in December
at $0.08. I know they are drilling. How should I play this? Any advice
will be appreciated. TAI
Answer: MMU.c - March 1, 1999
It is illegal for me give specific buy/sell advice on an individual basis.
I will say, however, that my interest in Marum is based on geology
and management. They have done everything they can to pick an area
of interest, identify targets, raise money and now finally drill. As I
suggested in the write-up, I view MMU as a trading opportunity until
diamondiferous kimberlite is actually found. You should have an
opportunity to isolate gains of over 100% over the coming days. As
you know, I always suggest that people isolate gains when they are
available.
Question: IUC.t - March 7, 1999
Sudhir I am increasingly concerned about IUC. I bought at .45 and
more at .65. I was planning on selling some or all at .70 but missed
my opportunity. My concerns are around the recent sell off by
someone with a lot of shares. Why is this still going on? The effect is
to depress prices back to lows from before Christmas. I am
considering selling all my IUC shares and going more into WSP or
ESX. I would like to hear your thoughts.
Answer: IUC.t - March 8, 1999
I too am disappointed by the action of the institutions. They are
selling resource related stocks because, at the moment, they make it
hard to market the fund. Their commissions are based on total value
sold. The fundamentals have not changed. I view IUC as a hold with
strong support at $0.40 range.
It is illegal for me to give specific buy/sell advice on an individual
basis. However, I do believe in diversification. Essex should bring in
a new property over the next 1-3 months. WSP should have bulk
sample results by June with some news likely this week. IUC may not
have anything exciting to say till the end of their fiscal third quarter -
June 1999. I have to leave the decision up to you. Please don't
hesitate to e-mail me with further questions or comments.
Sincerely,
Sudhir Khanna, P.Eng.,
Editor, The RESOURCE INDICATOR
staking VALUE early
RESOURCE INDICATOR OPEN POSITIONS
=================================================
ACTIVE PLAYS - MYSTERY TO HISTORY
take profits on bursts of liquidity during program
-----------------------------------------------------------------
Winspear Resources Ltd. (WSP.v/$3.44)
* Original capital and some profits already isolated
* Hold remainder for winter program results
* Down-dip delineation drilling started
* Hilltop news expected soon
Marum Resources Inc. (MMU.c/$0.17)
* Hold for activity in the first quarter of 1999
* Indicator minerals indicate nearby kimberlite source
* Some initial results expected this week
* Traders should protect some of the 100% profits
International Uranium Corp. (IUC.t/$0.48)
* Earnings growth story based on producing Uranium deposits
* 20F filed and approved
* Institutional selling holding price down
* Good support at the $0.40 range - accumulate
New Claymore Resources Ltd. (NCS.v/$0.34)
* Hold for drilling activity in the first quarter of 1999
* A mutual fund approach to the Alberta Diamond Play
* Drill program is continuing
* Trading suggests no success to date
ACCUMULATION PHASE - FIRST COME FIRST SERVED
disciplined accumulation based on developing fundamentals
-------------------------------------------------------------------------------
Essex Resource Corp. (ESX.v/$0.24)
* Accumulate aggressively near current values
* Cash rich play ($0.26/share)
* Looking for new properties to vend-in
* Look for a strong performance in 1999 upon vend-in
Latitude Minerals Corp. (LTU.v/$0.43)
* Positioning itself for the next market cycle
* Strong technical management
* Scoping study to be released soon
* Financing expected in first quarter of 1999
Visionary Mining Corp. (VIN.v/$0.15)
* Accumulate aggressively below $0.15 for long term play
* Large and prospective land position in Mexico
* A joint venture with Northair (INM.v) completed - expect more
* INM has identified a new gold system trending onto VIN ground
International Northair Mines Ltd. (INM.v/$0.26)
* First phase drilling at Venturina target completed
* Mineralized anomaly trends onto Visionary ground
* Highly leveraged with a one million ounce potential
* Results were average but indicate that gold system exists
* Currently trenching several anomalies
Western Copper (WTC.t/$1.80)
* Profits taken over $10.00
* Hold for additional discoveries and full valuation
* Needs to resolve cash problems
* WTC is becoming an undervalued commodity play
Ghana Goldfields Ltd. (GHN.v/$0.05)
* High risk do-or-die play for experienced speculators only
* Property consolidation and re-negotiations expected shortly
* Package of properties being considered by majors
* Property visits by majors are on-going
HOLDING BIN - DON'T JEST WITH EDGED TOOLS
monitor for new developments before beginning accumulation
-------------------------------------------------------------------------------
Globex Mining Enterprises Inc. (GMX.m/$0.17)
* Sold off Nevada property for $800,000 + shares
* Grassroots massive sulfide discovery
* Excellent exploration properties
* Ready to accumulate
Bomax Resource Corp. (BXS.v/$0.05)
* Agreement in principal to vend in Oil properties terminated
* Looking at an Internet technology project for vend-in"
=================================================
<<<<>>>><<<<>>>><<<<>>>><<<<>>>><<<<>>>><<<<>>>>
As always, you can E-mail me at khannas@interlog.com with any
comments or questions.
<<<<>>>><<<<>>>><<<<>>>><<<<>>>><<<<>>>><<<<>>>> |
