Here is the latest from SW. Note the following:
WSP value per share = basic outstanding shares 39,074,483 $12.639
WSP value per share = fully diluted outstanding shares 48,459,938 $10.191
WSP earnings per share fully diluted (2nd 25 years) $2.68
Have a good day!
Author: WillP
-- Date:1999-09-08 16:19:17 Subject: Rumours Wrong Again
The MRDI report is out, and should exceed most everyones expectations.
Personally...I love it.
Going back to read it again.
We got our 3,000 TPD!
Regards,
WillP
Author: WillP -- Date:1999-09-08 16:28:58
Subject: What I Especially Like...
Is the implied threat of 6,000 TPD. [grin]
Regards,
WillP
Author: DiamondWillie -- Date:1999-09-08 16:34:17
Subject: Wunderbar
Great news. One thing that has me confused (not an infrequent occurence ;-) ) is the following:
"A DMS pilot plant would be constructed on the property during the first half of 2000. This would be available to process the three underground bulk samples at a rate of 100 tonnes per day as required under the Class B water license"
Is 100 tpd a typo (doubtful,eh?)? I thought everyone was talking about a 1000 tpd plant? At 100 tpd we're talking 200 days to get 20,000 tonnes. Any light to be shed on that?
Author: WillP -- Date:1999-09-08 16:44:27
Subject: DiamondWillie
The NWT regulations that I am aware of say that the maximum bulk sample that can be taken is 40,000 tonnes. That's where the original figure came from. Winspear had originally planned to take the biggest possible...supposedly.
The second constraint, is that they can only process at 100 TPD regardless of the plant's capability. That's a condition of the water license. I think because of the volume of water used, but I'm not entirely sure.
Yes...that would be 200 days to process the bulk samples...but it will most likely be released in 2,000 tonne chunks. Looks like a fun filled news releasing start to the millenium.
Regards,
WillP
Author: FundamentalThinker. -- Date:1999-09-08 16:56:28
Subject: 2 WORDS & 100 TPD?
2 words .... WOOOOOOOOOO HOOOOOOOOO!
2 bad . I was real close to nailing down the mining cost per tonne. Oh Well.
100 TPD? I assume that the appropriate licenceing will increase this figure to match production? GROSS PROFIT @ $180 per tonne! I'll Redo my NPV analysis shortly.
Sorry, I just couldn't stay away.
I KINDA SUSPECTED WE WOULD PUSH 'EM IN THE RIGHT DIRECTION!
BRGDS!
Author: The RESOURCE INDICATOR -- Date:1999-09-08 16:58:27
Subject: Bulking up for the winter
This is good news. Winspear now must follow this up with adding to existing senior management and financing the aggressive program. Will, I agree with you. This 3,000 tpd will grow.
Sudhir
From the August 25, 1999 issue:
"... However, there are certain to be many who are uncertain about this mathematical/statistical approach when it comes time for the bankable feasibility study. How can Winspear, using micro-diamond counts from a two to three meter intersection, accurately estimate the production grade of something kilometers away from the bulk sample site? This is a perception that Winspear can only address by taking underground bulk samples from more than one location.
Underground samples will also allow the consultants to conduct extensive structural studies, understand the hydrogeology, and fine tune their mining methods and cost estimates. Eventually, the underground samples will help Winspear attract debt financing.
GETTING COMFORTABLE
Winspear needs to take several steps in order to continue attracting institutional players. These steps are summarized below.
* Establish project potential for an attractive discounted cash flow rate of return.
* Strengthen senior management.
* Raise considerable funds.
* Outline an aggressive plan to quickly move towards cash flow.
RATE OF RETURN
The initial scoping study indicated that a combined 1,000 tpd open pit & underground mine has a very attractive rate of return. I speculate that WSP is probably looking at a scenario that aggressively starts open pit surface production with a plan to use cash flow to ramp up production rates through underground mining. Open pit for 1,000 tpd followed by expansion to 3,000 tpd through underground mining (over a couple of years) should yield a ROR close to 40%. This should be attractive to financiers. The above is my speculation only
but the type of scenario I believe the market needs to be able to analyse in order to sustain current prices. It should also be noted that the MRDI estimate should be fairly accurate as we are not dealing with multiple sources or water problems. I do not expect future surprises such as Aber is now facing.
In addition to the above, Winspear may be able to find another underground access point on the north shore over the next year. I have suggested that they may take an aggressive approach and do underground sampling in more than one location. This is what I would attempt to do due to the large area covered by the dyke. This access point can than be utilized to expand production. It is the potential of this type of production expansion that will take the price higher.
A STRONGER MANAGEMENT
Winspear is quickly moving from exploration to production. The skill sets of the existing management is no longer enough to advance the project to the next level. Winspear will need to build upon its existing management strengths with the addition of senior management in the areas of Project Management, Finance, and Environmental issues. This process will need to begin ASAP and will bring an additional comfort level with institutions. There are many good people available in the current resource environment.
A Project Manager will bring operational mining expertise to aggressively advance the project from pre-feasibility to a bankable feasibility. A Financial Officer should help WSP structure financing that minimizes dilution. This person can also make sure that proper systems are in place to continue to control costs and achieve goals on budget. An Environmental Officer will help to guide WSP through the assessment and approval process, both with the government and the native groups. I expect this hiring process to begin over the next few weeks and should be treated as a positive sign, both of technical progress and ability to finance.
FINANCING
WSP will need to raise funds, in the near term, in order to move forward with work demanded by the potential of the property. Should WSP raise money at these price levels? How much money will be needed in the short term? These are details that will become apparent following the release of the scoping study.
The stock price will be governed by how fast WSP can bring this property to some level of production. We only need to look at the performance of Aber over the last two days to see that the time lag to production is an important issue in attracting large investments. With this in mind, it is more important to raise adequate money now, in order to continue the existing pace of progress towards production, than to worry about the level of dilution. Dilution can be controlled by the method of financing. With insiders holding a majority of unexercised warrants and options, the incentives are in place to find money through means other than issuance of equity. I am confident that management will be able to achieve this over the next two months. If the size of the financing is large, the market should react positively and provide us with an opportunity to isolate some trading profits.
NEXT STAGE OF WORK
It is critical for Winspear to continue building upon the existing fast pace of progress that it has established for itself in order to hold investors interest. Following a positive scoping study, WSP should be able to quickly announce the extent of the winter program.
The news release suggests that the cores have been logged and studied in depth. Geotechnical logging must also have taken place. MRDI's scoping study will take this into account when estimating the open pit and underground costs. There are approximately 14 people from MRDI and approximately 25 people in total, working on the scoping study. The amount of data available to them is similar to a pre-feasibility stage. CF results are complete, value and grade have been established with statistical confidence, drilling (72 meter centres) has been conducted to feasibility standards, and the environmental studies have already been under way for over a year. It appears to me that the project is close to the pre-feasibility stage already. With this in mind, the work conducted in the next stage should be done in a manner able to move WSP to a bankable feasibility study by 2001. If this pace can be maintained, we may see production from Winspear prior to production by Aber.
..."
Author: DiamondWillie -- Date:1999-09-08 17:04:24
Subject: Dilution or a loan or Nevada twins or what?
Any ideas where the $$$ for the program will come from?
Author: Curious -- Date:1999-09-08 18:06:19
Subject: The RESOURCE
No matter what kind of financing is done, there will always be a dilution of the shares. Nobody in there right mind would consider lending or giving money without some kind of tangible security. Nice story so!!!!
Author: DiamondWillie -- Date:1999-09-08 18:28:46
Subject: All Quiet on the Western Front
Interesting how few posts there are after this important NR. Wonder why.
Author: FundamentalThinker. -- Date:1999-09-08 18:44:32
Subject: New NPV numbers per MRDI
Table of relevant data, re: WSP NR's (All amounts in Cdn funds) September 8, 1999 Estimated number of work days per year 335
Estimated discount rate to be applied 8.000%
Minable total reserve tonnes available (U/G & Pit) = ????????? 10,700,000
Costs of Property, plant & equipment estimated at $241,000,000.00
Revenue streams Net (Add 20% Oper. & Admin Exp's) 51.505%
Avg Value / tonne = Cdn $251. (US exchange calc's $1.50Cdn : $1.00US) 251
Extrapolated production capacity = avg. TPD (Pit) (ie: slow initial) 1,000
Extrapolated production capacity = avg. TPD (U/G) (full production) 3,000
WSP outstanding shares @ July 31, 1999 39,074,483
WSP fully-diluted outstanding shares @ July 31, 1999 48,459,938
Mineable total reserve tonnes available (Pit only) = 0.7M 0.67 million 670,000
Mineable total reserve tonnes available (U/G only) = 0.7M 19.93 million 10,030,000
Estimated life of pit reserves = 2.00 yrs
Estimated life of U/G reserves = 9.98 yrs
Years 1 & 2 (mining of pit reserves @ 1400 TPD
Gross revenue = 335,000 tonnes/yr X 251.00/t = 84,085,000
Net revenue = 335,000 tonnes/yr X 251.00/tonne X % Net 43,308,264
PV of net revenue stream (2.0 years) = $62.8177 million (disc@ 6.5% p.a.) 77,230,100.41
Years 3 - 25 (mining of U/G reserves @ 3500 TPD (see note below)
Gross revenue = 875,000 tonnes/yr X 281.66/t = 246.453M 252,255,000
Net revenue = 875,000 tonnes/yr X 281.66/t = 246.453M X 35% 129,924,792
PV of net revenue stream (23.0 years) = $895.125 million (discounted $746,444,549.88
NPV of Snap Lake mine = approx 582,674,650
Based on 67.7 % ownership: 67.76%
WSP value per share = basic outstanding shares 39,074,483 $10.104
WSP value per share = fully diluted outstanding shares 48,459,938 $8.147
WSP earnings per share fully diluted (1st 2 years) $0.894
WSP estimated Price/Earnings Ratio $9.12
Based on 83.7 % ownership: 84.76%
WSP value per share = basic outstanding shares 39,074,483 $12.639
WSP value per share = fully diluted outstanding shares 48,459,938 $10.191
WSP earnings per share fully diluted (2nd 25 years) $2.68
WSP estimated Price/Earnings Ratio $3.80
Product Costing Data
Blasting Costs per tonne, per day, per heading
55 lb Bag - Anfo Fertilizer @ $0.11/ lb = $6.05+tx/bg=$7 7
# of Bags req'd to build round 2.5 X 2.5 x2.5 meters 120
Cost per round = $840 … Cost per tonne of ore = $22.40
# tonnes of ore removable by 1 round @ 2.4s.g. 37.5
# of rounds per day ( based on 2 - 12 hr shifts ) 4
Total tonnes of ore per crew per day per heading 150
Actual cost per tonne freight in NWT as %age of calculated 200.00%
Cost of assumed waste & sand backfill as % of blast cost 10.00%
Total Estimated cost per tonne of ore pre-processed $49.28
Blast & Removal Crew Costs
Average per hour regular wages ($25.00+$16.50)/2 $20.75
Average Bonus Pay ($15.00+$12.00)/2 $13.50
Numer of hours in 6 weeks X 24 hrs/day X 2 man crew 2016
Reg hrs per 2 man crew X 2 shifts/day X 3 crews / 6 wks 1440
O/T hours @ 1.5 X reg X 2 man crew X 2 shifts/day / 6wks 576
Per Day Labour Cost of 2 shift - 2 man blasting team / day $1,323.43
Add Employers costs (additional 12% CPP,EI,VAC) $1,482.24
Note crew transport costs included later
Labour Cost per tonne of ore pre-processed $9.88
Total basic cost per blasted tonne of raw ore $59.16
Extraction & Processing Costs
Scoop tram mucker operator Guess
Back fill & prep. Men Guess
Mechanics Guess
Timberman Guess
Additional raise miners Guess
Transportation to processing plant Guess
Foods Service & housekeeping personnel Guess
Transporation; miners fly in fly out staff Guess
Rock Crushers operators Guess
ESTIMATED MISCELLANEOUS Cost per tonne of ore $12.36
Total Cost per tonne of ore (per MRDI report) $71.52
Go ahead Arnold tell me my discount rate is too low! I wouldn't worry about where WSP is going to get the cash. When numbers look this good, Everyone wants a piece. The trick is being able to get the cash without giving away too may pieces . I don't think my December 31st share price is gonna be too far off @ $5.50. Also, don't think WSP's gonna have any trouble selling ALL those cheap options. (I wonder where I could get some of those? lol) NOTICE THE SHRINKAGE IN RESERVES!
Brgds!
Author: Douglas -- Date:1999-09-08 18:48:21 Subject: Very nice Indeed!
Seems we all got what we wanted. WillP's wish for 2500tpd was exceeded; TeeVee has said for sometime that there is no reason why ultimately this could not be mined at 6,000tpd or better; my wild assed post on the previous thread suggesting they could go 1500m straight up the NE trend from the NW dyke looks close (wasn't expecting them to push along UNDER the kimberlite but it still looks like these bulks are coming from the vicinity of L14 and that's going to make for mighty interesting numbers). SO MUCH BLUE SKY REMAINING! Congratulations to Randy, John McD and Co.
Douglas
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