Red
Don't know if anyone has seen this or not as I have been away for a few days & am still 250 posts behind. But here it is any way.
Subject:
Stockwatch: Winspear Resources Ltd - Heard on the Net
Date:
Mon, 28 Jun 1999 02:28:26 -0700
From:
newsout@canada-stockwatch.com
Winspear most active conference
Winspear Resources Ltd WSP
Shares issued 39,238,388 Jun 25 close $4.30
Mon 28 Jun 99
Week ended June 25th
by Stockwatch business reporter
Winspear was reviewed in Forum Watch last week and continues to hold its
first place ranking among Canada Stockwatch's most active conferences. In a
June 20 Bottom-Fish Tracker, newsletter writer John Kaiser advised his
subscribers to sell Winspear at prices above $3. Mr. Kaiser suggested that
the recently released results from a 3,000-tonne bulk sample would spark a
sharp sell off of the stock. The stock closed at $3.57 on Monday, down 48
cents, but staged a strong recovery in subsequent sessions. On June 22, the
National Post reported that Yorkton Securities continued to rate Winspear a
"speculative buy," with a 12-month target of $7. A June 22 Canada
Stockwatch article examined the recent results, addressing several issues
of concern to shareholders in an interview with Winspear spokesman Steve
Swatton. The full text of the article will be appended to this issue of
Forum Watch. On June 25, a Globe and Mail article remarked on the seemingly
unexplainable market reaction to Winspear as the stock price rebounded
strongly late in the week, noting that Yorkton Securities has indicated
that there could be another spectacular increase in buying ahead of the
results from the remaining 3,000-tonne sample.
The Winspear conference was even more active than usual and, as might be
expected, much of the early discussion given over to consideration of the
results of the 3,000-tonne bulk sample. Soon after the release, Gee10
pointed out that the results did not meet the expectations of conference
participants because those expectations were too high. Many of the posters
expressed disappointment with the results and, particularly, the disparity
between the previously stated expectations and the actuality. Nonetheless,
most seemed to adjust quickly, confident that the results indicated the
deposit would host a mine. WillP offered a quick calculation, suggesting
that Winspear could generate earnings of 70 cents per share, given a rock
value of $180 (U.S.) per tonne. He added: "And...I've grossly inflated the
expenses over stated amounts." RealityCheck countered that, while the
expenses had been inflated, the potential dilution did not appear to be
factored into WillP's calculations. "Your EPS may be at least as grossly
inflated as your expenses." Inflated or not, some posters wasted little
time using the figures to calculate a share value and discussion turned to
early speculation regarding the stock price when trading opened for the
week. Interspersed with those speculations are some posts from WillP,
including a table based on data from pit one, multiplied to represent a
3,000-tonne sample, and comments on other data that are well worth a read.
WillP led off a new thread bearing the Gone With The Wind-ish heading
"Tomorrow Is Another Day" with an analysis based on a recalculation of the
diamond distribution curve from which he concludes: "The lack of large
stones reduced the overall value significantly. The drop in value appears
not due to a significant change in quality from that shown in the minibulk
sample...We know that pit one exhibited a lower proportion of large stones.
We know that pit two had a larger proportion of these stones...What we
don't know...and each individual must decide...is which pit is more
representative of the dykes as a whole." Douglas pursued the topic: "If a
distribution curve tells you a certain number of stones in a size range
should be there and they are not, what conclusion is to be drawn?" Among
the possible explanations, WillP discounted the notion of a bad curve and
placed little significance on the possibility of problems with the sample
caused by the processing plant, giving more weight to the idea that
"Winspear may have been simply unlucky" and the possibility of a variation
in population. DiamondWillie posed a series of questions, leading off with:
"What exactly do we know at this point as to whether Pits 1/4 or 2/3 are
more representative of the entire dyke?" In different fashion, Mr Slate and
WillP both indicated that there was no way to determine which samples were
more representative. Rod_of_Rock offered his assessment that the results
were respectable, although not impressive. "The question remains whether
the results are good enough for a mine. Well, the grade and value of the
rock is indeed ore grade. Now we need drilled tonnage into the reserves
category and this should cost Winspear about $10-million at least, and then
there is the issue of milling this rock and actually being able to
profitably mine it in an UG operation." Those issues were temporarily set
aside as trading opened and the market action took centre stage in the
discussion on a new thread.
In fact, the greater part of two threads were taken up with comments,
trading summaries, and speculation regarding the market activity. However,
some space was taken up to revisit Rod_of_Rock's post regarding tonnage and
the exchanges are worth a read. Briefly, Rod_of_Rock challenges the tonnage
figures that have emerged over several months in the conference. WillP,
whose own estimates have been among the most conservative, points out that,
as an investor, he is comfortable with an estimate of 15 million tonnes,
noting that the official figures will probably be considerably lower. A
poster who can hardly be characterized as conservative, Teevee, joined the
discussion, prefacing his message with the claim that it was not a rumour:
"My broker was on a conference call this morning with none other than a Mr.
Randy Turner...the area of known kimberlite sheet indicated by drilling,
has been extended from two kilometres x 2.5 kilometres (5 square
kilometres) to 20 square kilometres...Assuming an average thickness of 2.5
metres, would you or anyone else care to comment on the possible
tonnage..." Perhaps Teeve was attempting to be humorous but, given his
previous claims regarding tonnage, that is not at all clear. In any event,
it is difficult to determine which is more astonishing: the suggestion of a
20-square-kilometre kimberlite sheet; or the notion that unattributed
hearsay served up on an Internet discussion site by an anonymous poster is
not a rumour.
In the past, nearly unbridled optimism has been the hallmark of the
Winspear Internet discussions but the recent bulk sample results seem to
have reined in many of the wilder expectations. Along with the more subdued
approach of many of the long-time Canada Stockwatch participants, posters
like Pendragon, GeoffB, and Justthefacts have brought refreshing new
perspectives to the discussion. Of course, a few new recruits like
Positively Charged, offering up suggestions of long kimberlite
intersections, unsolicited takeover bids, dramatic price increases, and
heaping scorn on posters with a different point of view have bolstered the
ranks of Winspear boosters like Diamonds and Teevee. Interestingly,
Pendragon's early read of the short-term market action turned out to be on
the mark: "I think we are starting to get some support at 3.60 and we
should see it break 4.00 by week's end." Winspear finished a week of active
trading at $4.30.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
Luck & Regards. . . . . . . Rick |
