I thought that you might enjoy reading this tonight.
Tue Oct 20, 1998
Kaiser Bottom Fisher - Tracker 98-070
Publisher: Kaiser Bottom-Fishing Report
Author: John kaiser
North Shore dyke doubles tonnage potential
Winspear Resources Ltd (WSP-V: $1.76) broke out today on heavy volume of
2,167,800 shares that reflects growing recognition of the world-class potential
of the Snap Lake dyke system. Today's breakout was assisted by touts from
Dave Pescod, a prominent Edmonton broker, and Neil Maedel, a Swiss-based
newsletter writer who has done well on the Ultra Petroleum and Napier
promotions. The market surge may also be a delayed reaction to the drilling
update Winspear released last week. Investors were initially hung up on news
that drilling had shut down for freezeup, and on the absence of any indication
that the latest drilling had intersected a pipe. Buried within the news release's
technical detail was the significant news that the dyke exists on the land north
of Snap Lake, and extends at least 2,200 metres east of where it outcrops on
the Northwest Peninsula. These developments strengthen the case that the
Snap Lake dyke system will host at least 5-10 million tonnes of kimberlite, and
open the possibility that a substantially larger inventory of kimberlite is present.
If Winspear can demonstrate to us by the end of the year that it has
developed a reliable, micro diamond based grade prediction model for the Snap
Lake kimberlite, and delivers caustic fusion results for these stepout holes that
imply a grade consistent with the Northwest Peninsula mini-bulk sample results,
the $5-10 target I projected in Tracker 98-065 will turn into a stepping-stone
to much higher prices.
The 3 vertical holes Winspear drilled on the north shore of Snap Lake are on the
other side of a deep seated regional east-west fault. All three intersected
2.0-2.8 metre intervals of kimberlite characteristic of the NW Peninsula dyke.
Hole CL98-15, drilled 200 m north of the peninsula, hit 2.8 m at a depth of 98.7
metres, CL98-16 hit 2 intervals of 2.0 and 2.1 metres at 212 and 232 metres
depth, and CL98-19 hit 2.6 metres at an unspecified depth, but which I am told
is about the same as CL98-16. This is odd, because #19 is 300 m north and
100 m east of #15, while #16 is 450 m east and 150 m north of #15. Holes #16
and #15 are roughly in the same plane as the NW Peninsula dyke, which dips
eastward, but #19 suggests the dyke abruptly dips northward. Winspear
suspects the kimberlite in #19 may have been dropped down by a fault
between #16 and #15. If we assume a rectangular sheet, sections of which
may have been vertically displaced, and that this sheet is continuous with the
dyke on the NW Peninsula, these three holes imply a minimum 500 m by 450 m
addition to the dyke system. At an average thickness of 2.5 m and a specific
gravity of 2.5, this adds about 1.4 million tonnes. This tonnage would double if
the system is projected to the surface 550 m in a westerly direction. The North
Shore dyke remains open to the north and east. Winspear also drilled two deep
downdip holes to the east of the NW Peninsula which encountered the dyke at
478 metres, about 150 metres deeper than expected. Winspear does not yet
know if this reflects a steepening of the dip or a down drop fault. The dyke has
now been extended downdip 2,200 metres. If we assume one more or less
continuous sheet, we have a dyke system with a strike of 1,350 m and a dip of
2,200 m, which at a 2.5 m thickness translates into 18.5 million tonnes that
remains open to the north, south and east. If the grade and value hold up,
Snap Lake would be the biggest and richest diamond dyke in the world. Heaven
forbid if Winspear should ever find a pipe that fed the dyke!
As I have stated before, Winspear's dual task is to prove that the tonnage
exists, and that the US $343 rock value is reasonably consistent throughout
the mineable tonnage. A 500 kg sample from the mini-bulk sample trenches is
undergoing caustic fusion. By the end of November Winspear hopes to have
turned the micro diamond and bulk sample data into a statistical model which
will allow it to predict grade based on the micro diamonds recovered through
caustic fusion of drill samples. For this to work the dyke kimberlite must have a
uniform character reflecting a single emplacement event and source, which
Winspear management believes to be the case. The grade prediction model is
critical because bulk sampling is virtually the same as mining the dyke, which is
not feasible as a sampling strategy for a 2-3 metre thick orebody that
stretches over 300 hectares. Once Winspear is comfortable with a grade
prediction model it will apply it to the caustic fusion results from delineation and
stepout holes. Winspear will probably not publish the micro diamond results for
the delineation holes, but may publish conclusions about how its model predicts
grade will behave. With regard to the stepout holes, Winspear may publish
micro diamond results. What Winspear will probably not try to do is estimate
value from micro diamond data. A value model will require the results of a much
bigger sample such as the 5,000 tonne bulk sample proposed for this winter.
Between now and next spring the story will be about tonnage and grade.
[No statement or expression of opinion, or any other matter herein, directly or
indirectly, is an offer to buy or sell the securities mentioned. While we believe
the sources of information to be reliable, we in no way represent or guarantee
the accuracy thereof, nor the statements contained herein. Kaiser Trackers are
available through an annual subscription to the Kaiser Works by Email at
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at PO Box 6456, Moraga, CA, 94570-6456. Tel: (925) 631-9748. Fax: (925)
631-9753. Email: canspec@value.net. Archived copies available at
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