Winspear Resources Ltd -
Post says De Beers in $259-million Winspear offer
Winspear Resources Ltd WSP
Shares issued 51,634,088 2000-06-26 close $4.17
Tuesday Jun 27 2000
Also (U:DBRSY)
The National Post reports in its Tuesday edition that De Beers Consolidated Mines tried to break its run of bad luck in Canada on Monday with a $259-million takeover offer for Winspear Diamonds. The Post's Keith Damsell writes that the unsolicited bid was immediately rejected by the Vancouver junior. The Canadian arm of the South African diamond giant is offering $4.25 cash for each Winspear share, a 77-per-cent premium on the company's previous close of $2.40. Winspear's key asset is majority control of Snap Lake, a $269-million project in the Northwest Territories. The property, scheduled for diamond production in 2003, contains an estimated 22 million recoverable carats. The offer may end a long and frustrating search for a North American diamond supply. In spite of close to 30 years of exploration and partnerships with a handful of Canadian juniors, the company has yet to find an economically viable source of precious gems. Meanwhile, rivals BHP and Rio Tinto have added to De Beers's anxiety by securing controlling interests in the two-year-old Ekati mine and the proposed Diavik mine.
(c) Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com
Winspear Resources Ltd -
Post says De Beers in $259-million Winspear offer
Winspear Resources Ltd WSP
Shares issued 51,634,088 2000-06-26 close $4.17
Tuesday Jun 27 2000
Also (U:DBRSY)
The National Post reports in its Tuesday edition that De Beers Consolidated Mines tried to break its run of bad luck in Canada on Monday with a $259-million takeover offer for Winspear Diamonds. The Post's Keith Damsell writes that the unsolicited bid was immediately rejected by the Vancouver junior. The Canadian arm of the South African diamond giant is offering $4.25 cash for each Winspear share, a 77-per-cent premium on the company's previous close of $2.40. Winspear's key asset is majority control of Snap Lake, a $269-million project in the Northwest Territories. The property, scheduled for diamond production in 2003, contains an estimated 22 million recoverable carats. The offer may end a long and frustrating search for a North American diamond supply. In spite of close to 30 years of exploration and partnerships with a handful of Canadian juniors, the company has yet to find an economically viable source of precious gems. Meanwhile, rivals BHP and Rio Tinto have added to De Beers's anxiety by securing controlling interests in the two-year-old Ekati mine and the proposed Diavik mine.
(c) Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com
Winspear Resources Ltd -
Winspear has new matters to consider
Winspear Resources Ltd WSP
Shares issued 51,634,088 2000-06-23 close $2.4
Monday Jun 26 2000
Also Aber Resources Ltd (ABZ
)
by Will Purcell
Although Winspear Resources Ltd. is officially remaining mum on the matter, at least for the moment, Aber Resources Ltd. greeted news that it might have a new partner at Snap Lake in a positive fashion. This morning, De Beers Centenary AG announced that one of its 100-per-cent owned Canadian subsidiaries will make a cash offer of $4.25 per share for at least 50.1 per cent of the outstanding stock of Winspear Resources Ltd., subject to certain conditions.
The road to De Beers gaining control of Snap Lake may be long, winding, and perhaps impassable. The takeover offer was unsolicited, and may have caught Winspear's management by surprise. De Beers has placed a number of conditions on the bid, including the withdrawal of Winspear's shareholder rights plan, effectively a poison pill provision that seeks to prevent, or at least delay hostile takeovers. Other conditions set by De Beers include the withdrawal of the recently proposed public offering of shares and warrants, and a commitment by Winspear not to enter into any material contracts or commitments.
As a result, the conditions appear to leave the ball in the court of Winspear's current management. Winspear spokesperson, Sophie Taylor, said that the company would be addressing the issue formally, later today, in a press release that is likely to provide a much clearer picture of whether the main conditions will willingly be met by Winspear, and the company's response may provide the best indication for those who have questioned Winspear's resolve to develop the project itself.
Regardless how the takeover bid ultimately plays out, the attention should be favourable for Canadian diamond explorers, and the Snap Lake project in particular. The unsolicited offer was based entirely on information in the public domain, and although Canadian investors remained skeptical of the project's merits, the offer confirms that De Beers clearly holds a much different opinion.
The news also caught Winspear's joint venture partner by surprise. Aber head, Bob Gannicott, said that his company was glad to hear the news of De Beer's offer, adding that a successful takeover would provide Aber with "another first-class partner, somebody that understands the diamond industry better than anybody else." Although other Canadian junior explorers may have had their problems with Monopros or De Beers as a senior partner recently, a possible change in control at Winspear is likely to be perceived as an unexpected bonus by Aber. Faced with the possibility of dealing with De Beers rather than Winspear's current management, Mr. Gannicott simply said it would be nice to see a new set of faces on the other side of the table.
Should De Beers be successful in its takeover attempt, it seems more likely that the litigation surrounding Aber's interest in the project will be settled amicably, and perhaps quickly. Mr. Gannicott said that Aber has always had a good relationship with De Beers, and he expected that would continue.
De Beers Canada spokesman, Tom Beardmore-Gray, said that his company would be "happy to work with Aber," adding that when the appropriate time came, "we will sit down and talk to them."
If the De Beers offer is successful, the first item up for discussion will undoubtedly be Aber's $50-million damages lawsuit against Winspear, and Winspear's appeal of a recent court decision that confirmed Aber's ownership of Snap Lake at 32.24 per cent. Mr. Beardmore-Gray said that it would clearly be in De Beer's interest to settle the litigation as quickly as possible, adding that his company hoped it would be in Aber's interest as well.
Despite the many rumours that have suggested Aber is shopping its interest in Snap Lake, Mr. Gannicott now says that Aber has "always been determined to hang onto it," adding that he believed that De Beers would actually welcome a Canadian partner, which would "attest to the fair play of it." Aber continues to believe that Snap Lake is a great project, but one that will require additional work to prove a minable reserve. As well, there is an impressive array of permitting and environmental hurdles that must be faced by the project over the coming year, and Winspear has proposed a very aggressive timeline to achieve production.
Mr. Beardmore-Gray said it was far too early to be discussing plans for a project the company did not yet own, although he did say that the feasibility study, currently in progress, would be completed in any case. Once that study is completed, he added, De Beers would be in a much better position to assess the project timelines, and chart a future course.
Mr. Gannicott has expressed concerns about the optimistic proposed timeline in the past, perhaps due to the additional financing burden that it would place on Aber at a time when the company will be required to raise an additional $350-million to finance its portion of the Diavik mine. Nevertheless, Mr. Gannicott said that he did not believe raising additional cash for Snap Lake would be a major problem. That belief may be due to an expectation that the road to production would be extended significantly by a successful De Beers takeover. Mr. Gannicott said that he would expect De Beers to "follow the best industry practice here," adding, perhaps hopefully, "I suppose that has implications for the timeline as well."
If slowing down the development of Snap Lake provides an advantage to Aber, such is not the case with De Beers. Timelines and optimism aside, there appears to be an increasing urgency for De Beers to find its first diamond mine in Canada. The company has been an active explorer in Canada for more than a decade, though Monopros Ltd., but has continually met with disappointment. The company has a large landholding in Canada, but its best hope so far centres on a Northern Ontario pipe that is currently being bulk sampled, more than a decade after it was first discovered.
As well, the company is currently participating in joint ventures with Mountain Province Mining Ltd. at Kennady Lake, with Kensington Resources Ltd. in the Fort a la Corne region of Saskatchewan, and earlier with Major General Resources on Victoria Island, but the sampling results have either not lived up to earlier, optimistic hopes, or have been completely disappointing. Mr. Beardmore-Gray emphasized that De Beers was committed to bringing a mine into production quickly," adding that, if the takeover proved successful, they would bring Snap Lake "on stream as soon as we can."
The news appears to have brought hordes of speculators and investors back to the Canadian diamond play. Winspear, which had been listlessly trading near the $2 mark of late, opened with a vengeance this morning, hitting an intraday high of $4.35, before settling back just above $4. Nearly four million shares were traded in the first two hours of the session. Meanwhile, Aber was also actively trading, hitting an intraday high of $10, before retreating to just above $9, still well above recent levels. Curiously, the enthusiasm has spilled over to at least one other junior diamond explorer as well, as Winspear's sister company, Diamondex Resources Ltd, posted an early 30-cent gain, a healthy increase over the 57-cent close on Friday, despite the offer having no direct impact on any of its holdings.
Mr. Beardmore-Gray said that the offer to Winspear shareholders would be mailed quickly, in a process that might take about 10 days, suggesting that the process would take about a month, including the 21-day period through which the offer will remain open. The market now anxiously awaits Winspear's official response to the offer, and any further response from De Beers that it might bring.
(c) Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com |
