This might help. borrowed it from SW...
Author: halcrow -- Date:2000-05-02 07:28:43
Subject: First fruit from analyst visit
From Canaccord Morning letter. Brgds
Winspear Resources Ltd. (WSP : TSE : $2.35)
Graeme Currie (604) 643-7405
Recommendation: STRONG SPECULATIVE BUY
52-week price range: $5.30-1.82 Shares O/S: basic
51.4M fully diluted 60.9M Major shareholder:
Management 20% Weekly trading volume: 485,000
Working capital: $15.0M (CCC est.) Long-term
debt: nil Market capitalization: $120.8M
Snap Lake Site Visit Comments
We have just returned from a one-day site visit to the Snap Lake diamond project in the NWT held67.76% by Winspear and 32.24% by Aber ABZ :TSE- : 8.60). Winspear is the project operator. This year's major program is designed to drive the project through to a completed feasibility study, forecast for delivery by Winspear in Q1/01. The program for 2000 was initiated a little later than hoped for as construction of the winter access road was delayed by roughly two weeks due to warmer than expected weather. In mid-February the flow of supplies to the site began. Since then, the project has undergone a rapid shift from that of an exploration camp to one designed to support underground development and the processing of some 6,000 tonnes of a planned bulk sample. An 85-man camp and related facilities are complete, as is a large 3.0 million litre fuel farm. The Tahera DMS plant is at site and a site for the concrete pad is cleared and being prepared. The decline, which is a full production size 5 by 5 metre decline, is advanced some 200 metres of the planned 1.2 km. length. A 600 metre drift will then be constructed to allow for three draw points to extract 2,000 tonnes from three separate areas of the NW dyke for processing. The company indicated that it remains some two weeks behind schedule. Construction costs are in-line with budgetary expectations.
Concurrent with site development a 10,000 metre drill program is now 68% complete. As well as in-fill drilling to upgrade the confidence level of the outer areas of the resource model, step-out drilling has, and is budgeted, to test the north shore extension of the dyke and the south-east area where recent drilling returned a very wide intercept of 8.82 metres. It was reported to us that drilling to date has continued to confirm the general homogeneous nature of the dyke as to thickness and mineralogy.
In regards to on-site management, the company has begun to place personnel in key areas and it was indicated to us that senior engineering and plant personnel would be added. Construction is currently under the management of AGRA Simons, all earth work is contracted to Nuna Logistics, and the underground development program is contracted to ProCon.
Timing for the underground bulk sampling is, in our estimation, likely to begin by mid-August. Initial processing is to follow in September/October. The company's management also indicated that, in regards to carat grade and valuation, each 2,000 tonne sample would be treated on its own, thus we might see separate grade and valuation numbers for each of the three samples extracted. We would roughly estimate that this information could become availablebeginning early Q4/00. This is later than originally estimated.
Moving forward over the next several quarters, we view the following as the key risks:
* The ability of the partners to act as a seamless team in the development of the project after the recent judgement in the BC Supreme Court regarding the project interest of Aber. The judgement was ruled in favour of Aber:
* The success of the proposed mining method which is mining by room and pillar, inclusive of backfill into the open stopes with concrete and waste material. We consider this method should prove successful.
* The average grade and valuation yielded from the bulk sample. Most important of all the risks, we consider it to be imperative that carat grade and valuation reported to date be confirmed.
* In light of the recent permitting difficulties at Diavik, and the general, North American market-wide perception that permitting a new project is extremely costly in both time and money, the permitting issue will always remain a key project risk. For 2000, as previously indicated, Winspear reports that all permits to allow completion of the budgeted program are received.
We Maintain Our past Assessment of Winspear
Winspear remains a Strong Speculative Buy as our recently revised valuation models indicate that at a 5% discount the net NPV equates to 6.13/share fully diluted or, if one assumes a higher risk parameter should be employed, at 7.5%, it equates to $4.68/share. We consider the shares of Winspear as providing excellent speculative leverage at current price levels. Many of the program risks outstanding for Snap Lake are to be addressed with this years program. We remain most focused on the partners ability to replicated carat grade and valuation from the bulk sample results. This, given all data released to date, is an objective that we view as being achievable or one that could be materially improved upon.
The information contained in this report is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it does Canaccord Capital Corporation ("Canaccord Capital") assume any liability. This information is current as of the date appearing on a report within this Site and Canaccord Capital assumes no obligation to update the information or advise on further developments relating to these securities. The information contained in the report is directed _only_ at, and any securities being offered are available _only_ to, persons resident and located in British Columbia, Alberta, the Yukon, Ontario and Quebec. Canaccord Capital, its affiliated companies and their respective directors, officers and employees and companies with which they are associated may, from time to time, hold the securities mentioned at this report.
Author: teevee -- Date:2000-05-02 08:12:42
Subject: market is all knowing:-))
Halcrow,
The markets appear to be all knowing. The current share price appears to be in line with the increase in share capiatization as proposed in the information circular.
Winspear Resources Ltd. (WSP : TSE :$2.35)
Winspear remains a Strong Speculative Buy as our recently revised valuation models indicate that at a 5% discount the net NPV equates to 6.13/share fully diluted or, if one assumes a higher risk parameter should be employed, at 7.5%, it equates to $4.68/share.
Share capitalization as of April 07, 2000 Information circular: shares outstanding: 51,684,088 special warrants: 5,746,150 options 4,579,600 Fully diluted there are: 62,009,838 shares. Approvals are being sought to authorize up to an additional 45 million shares and an additional 3 million options. That will bring the fully diluted share capitalization to just over110,000,000 shares:-)) It appears to me that up to half the company could eventually be sold for between $100 to $150 million (one or more private placements between $2 and $3 per share) for WSP's share of development costs before any debt financing. This assumes that the existing options and warrants get exercised. |
