Tahera and Winspear: something for both
Tahera Corp TAH
Shares issued 159,300,000 Nov 29 close $0.06
Tue 30 Nov 99 Street Wire
Also Winspear Resources Ltd (WSP)
TAHERA PASSES THE PLANT
by Will Purcell
Tahera Corp. recently sold its pilot diamond processing plant, located at
the Lupin mine site of Echo Bay Mines Ltd., to Winspear Resources Ltd. for
$2.3-million. The deal, announced two weeks ago, has closed and allows both
companies to further their respective programs over the next year. For
Tahera, the deal provides a significant amount of much needed cash and
makes way for the company to purchase a significantly larger production
plant. The deal gives Winspear the means to process a large bulk sample
planned for next year at the Snap Lake site.
The 10-tonne-per-hour processing plant was jointly acquired by Lytton
Minerals Ltd. and New Indigo Resources Inc. in 1996 to process a large bulk
sample taken from their JD/OD-1 Jericho pipe. The two companies
subsequently merged, and became Tahera Corp. early this year. Tahera
vice-president, Grant Ewing, said that the plant was originally sourced out
of South Africa, from Dowding, Reynard, and Associates Pty. Ltd. (DRA), a
mineral plant design engineering company that have built numerous diamond
processing plants worldwide. He added, "Those are the same guys working on
our prefeasibility study, and will supply our 40-tonne-per-hour plant that
we plan on purchasing as part of the mine development."
Mr. Ewing said that the plant was a conventional diamond processing
facility, and was very similar to plants used around the world, adding,
"Put the stuff in the front and out come the diamonds." While the internal
processing is far more complex than that, the complete plant does include
ore crushing, scrubbing, and screening devices, dense media separation and
X-ray recovery plants, and a sorting house where the diamonds are cleaned
and sorted. He said that the plant was currently located in one of Echo
Bay's spare buildings, and the mine had supplied power, water, and
accommodation under a preliminary agreement between Tahera and Echo Bay.
Mr. Ewing said that the Jericho sample was processed using their own
personnel, adding that there was a high level of security while the plant
was running. He stated that the company had its own mineral processing
engineer who was responsible for a small one-tonne-per-hour plant located
in Vancouver, as well as the larger plant. Mr. Ewing said that Winspear
personnel performed the processing of their own bulk sample, but added that
Tahera's mineral processing engineer was at the site to assist in running
the plant.
Tahera now appears ready to take the next steps required to advance their
Jericho project. The company continues to believe it can bring Jericho to
production as Canada's second diamond mine. Mr. Ewing said: "According to
our timeline, we complete the feasibility study in the second quarter of
2000, then we continue to seek permitting regulatory approval and project
financing which would lead to plant commissioning if everything fell into
line at the end of 2001. We assume that if everything fell into place once
again, we would be producing in 2002." Under the agreement with Echo Bay,
should Tahera deliver a feasibility study before the end of 2000, the
company could construct its full scale production facility at Lupin. Mr.
Ewing estimated that the new 40-tonne-per-hour secure diamond plant and
stockpile area would take 12 months to fully construct. He was pleased with
Echo Bay's decision to reopen the Lupin mine, and said, "It's a better
situation if they're operating. Their power is on, and their accommodations
are all open. We assume we will have a better operating case scenario."
Winspear's Randy Turner was equally enthused about the deal from his
company's point of view. He said that the plant "will be disassembled and
shipped down the winter road." He stated that it would take four to six
weeks to dismantle the plant, and added that the contract had already gone
to tender. Mr. Turner said that a number of prospective contractors had
already been to Lupin to inspect the plant, and added: "One of the groups
will be selected, and every part will be labeled and taken apart like a
Lego set, and then shipped down the winter road. Echo Bay going back into
production has worked great in our favour, because that section of the
winter road will be maintained and opened up right away." He stated that
the plant would be reassembled at Snap Lake once the underground bulk
sampling begins, adding that the bulk sample processing would probably
commence in August.
Mr. Turner said that Winspear would continue to utilize the plant after the
planned underground bulk sample was complete. He said that at one time,
pilot plants of this size were considered throwaway items, but that is no
longer the case. Mr. Turner stated that Winspear envisioned using the plant
for processing minibulk samples from any future discoveries the company
might make, and for processing samples for other companies in the area.
There are currently only three pilot diamond processing plants in the
Northwest Territories. The Diavik Diamond Mines Inc. plant is currently
mothballed in Yellowknife, but it may ultimately be moved to the Diavik
site. As well, the Ekati joint venture continues to maintain their plant at
Koala for processing additional minibulk samples. There is one additional
plant in North America, the Texas Star plant in Arkansas, but ore
transportation costs to this site from northern Canada are high.
Mr. Turner was pleased with the performance of the processing plant during
his company's bulk sample program earlier this year. He said that Winspear
had been planning to acquire one directly from South Africa, but he felt
that the Tahera deal was too good to pass up. "It's a good plant," he said,
adding, "You know it works extremely well, all the bugs are out of it, and
we know it produces diamonds."
The plant indeed does produce diamonds. It appeared to be very efficient in
recovering smaller diamonds, and it appears to treat large stones rather
kindly as well. In 1997, Lytton and New Indigo announced that the plant had
recovered 10,539 carats from 9,401 tonnes of JD/OD-1 kimberlite. In total,
67 diamonds larger than five carats were recovered, including 10 which
weighed more than 15 carats. The largest diamond recovered weighed just
over 40 carats, by far the largest diamond reportedly recovered from a bulk
sample program in the Northwest Territories. Two years later, the plant
recovered 10,708 carats from 5,986 tonnes of Snap Lake kimberlite,
including nine stones weighing more than 10.8 carats.
The plant appears to represent excellent dollar value for Winspear as well.
Lytton and New Indigo each carried their 50-per-cent interest in the plant
on their books at approximately $2-million, making the full 1996 value
nearly double the current purchase price. As a result, it appears the deal
represents a significant cost saving over the purchase of a new plant from
South Africa.
Cash is not currently a problem for Winspear. With a recent $14-million
financing deal completed, and the deadline for the exercise of up to
$12-million in share purchase warrants due next month, the company appears
to be in a strong financial position to pursue its program at Snap Lake.
Mr. Turner said that the company was holding planning and budgeting
meetings this week to develop the winter and spring program. "We're getting
everything ready for the underground bulk sample, so there is a lot of
preparation going on right now; a lot of planning and tendering going on.
Everything does go to tender, from the camp, to the airstrip, to the
underground," he said. Mr. Turner said that the permitting process was
proceeding as well. He stated that the company had its hearing before the
water board last Monday, as part of the process to obtain a Class-B water
licence. Mr. Turner said that the hearing went well, and now the matter
goes before an internal review panel. The terms of the licence will
apparently allow Winspear to process a bulk sample as large as 40,000
tonnes, at a rate of 100 tonnes per day.
The news of the transaction had little effect on Tahera's sagging market
fortunes. Tahera shares peaked at 50 cents early in March, but fell
steadily during the spring and summer. The company's shares have traded in
a narrow range between 5.5 and seven cents during November, and closed
Monday at six cents, unchanged on the day. The news was received in
lukewarm fashion by Winspear shareholders as well. Winspear stock reached
an all time high at the end of May, trading for $5.30, but had declined to
less than half that by mid-November. In the days following the news,
Winspear set a 52-week low, trading for $2.10, but the stock has since
recovered somewhat, closing Monday at $2.45, on the day.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com |
