Just got this on SW
Winspear appears on track with tonnage objectives at Snap Lake
Winspear Resources Ltd WSP
Shares issued 33,721,333 Mar 30 close $3.40
Wed 31 Mar 99 Street Wire
by Will Purcell
Last Friday evening, Winspear Resources Ltd. released an interim report
outlining the results to date of the exploration program at Snap Lake, NWT.
A total of 51 holes have been drilled to a depth of just over 6,000 metres
in a program that plans to complete in excess of 17,000 metres. The primary
thrust of this program is to expand the proven tonnage to the range
required by the MRDI scoping study released last fall. This study proposed
a 1,000 tonne per day open pit and underground mining operation with a
10-year lifespan. To achieve this, a total of 3.5 million tonnes of ore
would be required.
In announcing the planned program in January, Winspear stated their goal
was "to identify between 3.5 and 5 million tonnes of kimberlite for a
feasibility study and to outline an additional 3-5 million tonnes."
It would appear that this is well on the way to being realized. A very
rough estimate based on released results suggests that over six million
tonnes appear reasonably well established, with a similar amount or more
possible. Furthermore, the dyke remains open to the north, and east. The
dyke is open to the south as well, but drilling in this area has confirmed
a noticeable thinning of the kimberlite in this region. It is not known at
this time if this is a temporary phenomenon, or might possibly represent a
southern limit. Drilling in this area now appears to be limited for the
time being. Perhaps to compensate for this thinner region, the dyke appears
to swell toward the northeastern limit of the grid area drilled to date.
This thickening apparently lies just offshore roughly parallel with the
shoreline. Conjecture aside, Winspear's president, Randy Turner offered a
careful response that they "were well on the way to meeting the stated
objective". He said, "At this point we have a 690,000 tonne resource
identified as suitable for open pit mining, with a total 1.3 million tonnes
outlined on the peninsula." He reiterated they were working toward
"identifying, to feasibility standards, some 3.5 to 5 million tonnes once
all infill drilling was complete." He acknowledged that the secondary
objective of outlining an additional similar amount would likely be met as
well by the end of the program.
An objective of delineating tonnage in excess of that required by the MRDI
plan could be to eventually mine the ore at rates in excess of the original
1,000 tonne per day. Most analysts, such as Canaccord's David James base
their estimates on this production rate, however some, such as Deutche
Bank's George Albino have recently modeled the results for a hypothetical
mine with possible production rates two to three times higher.
A 3,000 tonne per day operation would require roughly 13 million tonnes
over a 12-year mine life, for instance. Winspear confirmed that mining
rates in excess of 1,000 tonnes per day are under consideration should
circumstances warrant it. Suitable conditions would most likely require the
delineation of at least seven to 10 million tonnes of kimberlite, and bulk
sample results indicating an economic value per tonne.
In spite of the regions of thinning and thickening, Winspear continues to
describe the dyke's thickness as "remarkably constant". Winspear reports
the average downhole intersection as 2.57 metres, and a quick calculation
of the average intersection over nine contiguous 400-metre grid squares
yields an even better 2.88 metres. With the dyke sloping downward to the
east at 12 to 15 degrees, the true thickness would be less. Winspear
suggests a value of 90 per cent of the intersection, but for the most part
a value of 97 per cent may be more appropriate. This would suggest the
average true thickness of the dyke could be of the order of 2.8 metres. Mr.
Turner stated that dilution should be minimal for the most part. He said
mining the orebody would not require a height in excess of this, and the
need to remove excess amounts of waste rock would be minimized.
The presence of four drill rigs on the Snap Lake property was confirmed by
Mr. Turner. All of these rigs are drilling HQ, or 3.5-inch cores for the
most part. The objective of the larger core size is to obtain a sample of
25 to 35 kilograms of kimberlite per intersection. Presently, three are
working on the 200-metre grid east of the northwest peninsula. As of March
23rd, an area roughly 1,000 metres by 900 metres had been completed on the
grid. In addition, the northwest dyke area has undergone much more
extensive drilling. The remaining rig is performing infill drilling within
the grid on the lake ice.
In addition to time spent mobilizing and de-mobilizing the drill rigs, from
one to two full shifts are spent ensuring each drill hole is sufficiently
sealed to keep lake water from finding a quick route into a future mine.
"Failing to properly seal the holes has damaged many a mine," said Mr.
Turner.
Current plans call for one rig to eventually drill some longer, possibly
much smaller NQ holes this spring in the ongoing quest for the pipe, or
source of the dyke kimberlite. The original budget called for up to 2,500
metres of drilling for this target. Mr. Turner stated the source would be
"nice to have", but not a high priority at this point. He acknowledged "The
market wants a huge pipe, but we would be doing an injustice if we went
charging around" The company remains strongly committed to its stated 1999
exploration program, to develop the northwest dyke as an economic orebody.
The drill program will remain focused on the lake ice until breakup, at
which time the focus will switch to the north shore, and possibly the
southeast dyke region. In particular, the north shore holds intriguing
potential to host a sizable amount of kimberlite.
Caustic fusion results from the spring drill program will not be released
on a hole-by-hole basis, but they will not be held until all results are
available. One batch of cores has already been shipped to the lab, and
typical turnaround times vary between four to eight weeks, normally. No
time frame was offered for the first report, but two to three months might
be realistic. The caustic fusion results will be issued in the same format
used in the Jan. 26 release.
The market reacted typically to Winspear's release, closing down 14 cents
to $3.40. The stock rose from less than 50 cents to over $2 with the
release of the valuation of a 200-tonne mini bulk sample in June, before
subsiding to less than $1 in late summer. A rise in value from October to a
high of $4.85 in early January was fueled by the release of the MRDI
scoping study, and the results of the summer drill program which extended
both the strike and downdip dimensions of the dyke. In addition, reports of
a "cone sheet theory" began to circulate, which implied available tonnage
could be well in excess of amounts previously believed possible. This
theory has invoked skepticism in many circles. It is worthy of note that
the latest release contains no data that would prove or disprove this
theory.
The next several months should see a fair number of news releases from
Winspear, including a few drilling updates and reports of caustic fusion
results, and of course, the much awaited 6,000-tonne bulk sample results.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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