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Gold/Mining/Energy : Winspear Resources -- Ignore unavailable to you. Want to Upgrade?

To: Andrew who wrote (14243)	2/10/1999 6:06:00 PM
From: kidl	Respond to of 26850

Slightly off topic but interesting: To: RBMac (980 ) From: RBMac Wednesday, Feb 10 1999 5:01PM ET Reply # of 981 From New North/Yellowknifer: Investing North Guest comment with Todd Ferguson Further to my last article on Aber, you may recall me speculating as to why the price had increased significantly from the lows of last fall. I had commented that I had heard a rumour about a potential takeover -- we all now know that "rumour" was partly true. Franco Nevada purchased almost 10 per cent of the outstanding shares of Aber through open-market transactions. In purchasing the shares in the open market, Franco obviously was partly responsible for pushing prices up. It is worth noting now that despite Aber's pull back to the $10.30 area, Franco Nevada has been very successful with its investments historically, and I am sure that its recent purchase of Aber will not be an exception. Aber had also updated investors as to its progress with the mine construction and approval process. I suggested that the fact that engineering costs were coming down was certainly a positive. Here is a comment from our analyst, Terry Bell, on the update: "Aber Resources and project manager Rio Tinto have provided additional environmental and engineering data on the development of their joint venture diamond project in the Northwest Territories. The release involved specific changes to the engineering of the dam structures and a likely change in the scheduling of the kimberlite pipes to be mined. "While there was insufficient detail to make definitive changes to our model for the mine development, it does not appear that there would be a dramatic change in our valuation. The Diavik mine will not begin production until 2002, but when it commences, will be one of the most profitable major mines in the world. The mine will operate for at least 15 years and the prospect to expand reserves is significant. The cash flow and earnings from the mine in 2002 and beyond should generate a three-year target price of at least $32 Cdn or a one-year target in the $20 range." It is important to note that the greater market is not interested in diamonds or diamond stocks at this point in time. As both the established and emerging economies of Asia are constricting, so, too, are the numbers of prospective diamond purchasers. With one of the key markets for diamonds chugging along like a diesel in an Indy race, diamond stocks are suffering with other commodity-driven companies. Estimates of a $20 stock price may be ambitious this year, but when the fundamentals improve, so, too, will the prices of all the diamond producers. Aber still has upside potential from favourable developments on exploration work on its own property as well as others like the joint venture with Windspear Resources. I remain excited by the long-term prospects for capital growth offered by Aber to shareholders. I must admit, however, that the current conditions will likely make it a bit of a sloppy trader in the short term.