Winspear most active conference
Winspear Resources Ltd WSP
Shares issued 33,721,333 Feb 12 close $3.30
Mon 15 Feb 99
WEEK ENDED FEB.12
by Stockwatch business reporter
Winspear was last reviewed in Forum Watch for the week ended Feb. 5, also
in first position. On Feb. 10, Deutsche Bank Securities initiated coverage
of Winspear, rating the company 'outperform (speculative)'. A Stockwatch
article reviewing that research report and related matters was published on
Feb. 12. The full article will be posted following this issue of Forum
Watch. Also on Feb. 12, the company announced that incentive stock options
had been granted to certain employees to purchase up to 75,000 shares. The
options are exercisable for a period of five years, commencing Feb. 11,
1999.
The Winspear conference was not only the most active for the past week, it
was also the most interesting; and that interest extended to other stock
discussion sites. A StockHouse post directed readers to the Stockwatch
Winspear conference and several posts on the Silicon Investor thread drew
attention to the quality of the Stockwatch discussion which was described
as 'a must read', 'level-headed', and 'a refreshing change' from the SI
thread. In both quality and quantity, the detailed posts by WillP clearly
stand out, with some credit due RealityCheck for instigating many of the
exchanges and long-time contributor jspec for picking up some of the more
general discussion. There were, of course, a number of other contributors.
The 'Winspear Revisited' thread has been most often cited as 'a must read'
but the series of posts, primarily by WillP, in the "Winspear's Rocks"
thread should not be disregarded. In an early post to the thread, WillP
writes, "This is not rocket science." That is true, but the posts are not
easily summarized. In the opening post, WillP provides a diamond
distribution curve for the 1,387 Winspear diamonds and follows this with a
'fun with numbers' post examining the probability of finding three large
stones in a 200 tonne sample at various grades. He then moves on to a
discussion of whether the Snap Lake deposit is "unique", providing a
comparison to some results from a Southernera release. "I feel the 6,000
tonne sample will return a diamond value of $160-$200 US per tonne," he
writes. In a timely anticipation of the Deutsche Bank Securities research
report, he addresses the question of the correlation between caustic fusion
results containing micro and macro counts and overall grade: "Of course
there is...or every company sending kimberlite for caustic fusion wouldn't
spend all that time plotting curves and checking them twice." He goes on to
offer a comparative analysis of caustic fusion results and grade which
seems to augur well for Winspear. WillP subsequently challenges some of the
assumptions and conclusions from John Kaiser's Bottom-Fish Tracker of Jan.
8 which raised concerns about a dangerous speculative bubble. Entering the
discussion, teevee approached the question of whether the three large
stones were a fluke from what he termed a 'classical' perspective rather
than a statistical one. He offers his 'best guess' for certain stone sizes
from the upcoming 6,000 t sample: "27 ten carat stones; 3 thirty carat
stones and one (two if they are really lucky) 100 carat stone." Noting that
teevee did not specify gems, WillP offered his guess: 34 stones greater
than 9.99 carats; 5 greater than 29.99 carats; and 0.5 greater than 99.99
carats. The entire thread is well worth reading.
The conference's 'Winspear Revisited' thread was the most active, with
discussion ranging over a number of issues. The thread was started by jspec
in a post addressing suggestions that 22 stones from the bulk sample must
have a value of less than $50 per carat. He provided an argument against
this suggestion that seems to have been ignored by mineman, who persisted
in stating his belief that the stones were worth less than $50 per carat.
Responding to mineman's repeated claims, WillP wrote: "You can repeat as
often as you want...but for what purpose? Your questions have been answered
and you appear to be mute to the questions posed to you." When mineman was
subsequently questioned regarding whether he was shorting Winspear and
trying to create fear, RealityCheck entered the discussion, noting, "There
are many unanswered questions of more relevance than whether mineman is
short or plans to go short." Addressing comments to jspec, he went on: "I
believe that on several occasions you have pointed out that, even
discounting the largest stones, the project is economically viable. That
appears true, if the data available to this point is representative of the
deposit." In a subsequent post to jspec, he commented, "Your own assessment
may be entirely right but I don't see a queue of analysts straining to
offer the same testimony and the market doesn't reflect the same amount of
confidence." That drew questions from jspec regarding who RealityCheck
defined as an analyst. He also suggested that market action was not a valid
point, writing, "So to suggest that price is a support indicator for your
position by non-support of mine is ludicrous." RealityCheck offered Art
Ettlinger and John Kilborn as examples of analysts who advised caution and
also suggested again that price was an indication of market confidence. The
latter point seemed to go unresolved and jspec did not provide any analysts
to support his own position until the Deutsche Bank Securities report was
issued. There were also a number of interesting exchanges between WillP and
RealityCheck on statistics, predictive models, and probability.
RealityCheck noted: "Your calculations and comparisons are impressive and
persuasive. I admit it would take considerably more time and effort than
I'm prepared to expend to offer some specific challenges...However, I think
they should be challenged before being accepted as compelling. Perhaps
someone else more familiar with the data might take that up." WillP seems
quite open to having his posts challenged but, to this point, it does not
appear that anyone is willing to take up the task of offering some
competing calculations and comparisons. There is a great deal more of
interest in the Winspear conference but many of the posts should be enjoyed
in their entirety. Winspear closed the week at $3.30.
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