Winspear speculation rampant
INTERNET RUMOURS GAIN LEGITIMACY
by Stockwatch Business Reporter
The March 15 news release by Winspear Resources announcing a proposed corporate restructuring that would see all the early stage exploration properties transferred to a new company, leaving Winspear holding its interest in the Camsell Lake property, took many shareholders by surprise. Many people, however, had advance notice; particularly Internet followers of Winspear on the Silicon Investor (SI) and Canada Stockwatch discussion sites. At 6 p.m. on March 14, a message was posted to the SI Winspear thread by 'James Flannigan' (aliases are the norm on discussion sites) claiming that Winspear would be issuing a news release the following day announcing the restructuring. According to the poster, that information was obtained from Winspear's president and chief executive officer Randy Turner during a private conversation at the Prospectors & Developers Association of Canada (PDAC) convention and trade show in Toronto. Mr. Flannigan prefaced his scoop of Winspear's news release by claiming that he "got lucky and spoke to Randy one on one for about an hour." In a subsequent post, cautioning that he had discussed a number of things with Mr. Turner, he indicated that his recollection was that shareholders would receive one share of the new company for every eight shares of Winspear that they held.
That information was soon brought to the attention of posters on Canada Stockwatch's discussion site by 'WillP', an anonymous poster with a wide Internet following. (In an effort to entice him to join their discussion, a number of Silicon Investor posters have offered to pay for his SI membership but he has declined. Indicative of the esteem accorded him, a thread titled "WillP Speaks on Winspear" was started on SI for the purpose of copying many of his Stockwatch posts.) At the outset, 'WillP' was sceptical about Mr. Flannigan's claims, noting: "Most SI rumours turn out to be false. I'm not sure how or why they're created...but they are. A very few end up being substantiated." Nonetheless, he was concerned at the possibility that Mr. Turner, who has been described as tight-lipped, taciturn, and circumspect, might have uncharacteristically divulged this sensitive material information. Several Stockwatch posters agreed that if Mr. Turner was the source, it indicated very poor judgement. The assessment was delivered even more forcefully the following day when the official release confirmed much of Mr. Flannigan's SI post regarding the restructuring.
Other snippets that Mr. Flannigan claimed to have gleaned from Mr. Turner have not been sanctioned with an official release as yet. For example, he claimed that he was advised that a fourth drill had been mobilized at Snap Lake. Perhaps more significantly and disconcertingly, he claimed that Winspear's president told him that 2,000 tonnes of the 6,000 tonne bulk sample had already been processed. That claim continues to cause some consternation among Internet followers of the company. In a press release issued on March 8, just six days prior to Mr. Flannigan's post, Winspear provided an update on the Camsell Lake exploration program which was widely interpreted as indicating that they were in the early stages of collecting the bulk sample: "With respect to the 6,000 tonne bulk sample, two pits have been delineated on the NW Dyke and blasting and mucking of the kimberlite has begun. Kimberlite is currently being stockpiled and shipping has commenced to the processing plant." When 'WillP' was asked to comment on Mr. Flannigan's claim, he provided some processing rate figures and suggested that the time frame did not hold together.
While the suggestion that a third of the bulk sample had already been processed was greeted with considerable doubt by Stockwatch posters, the possibility did draw some discussion. In particular, it was suggested that if the rumour was true it might lend support to a much earlier rumour posted on SI that Aber Resources was not going to participate in the 1999 exploration program. That would result in Aber's interest in the property being reduced to 16 per cent. The reasoning offered turned on the notion that results from the portion of the bulk sample rumoured to have been processed would have been available to both Aber and Winspear. It was suggested that the results may not have met expectations. There has been no official indication that any of the sample has been processed, let alone that early results are known. As it turned out, however, there is a possibility that Aber's interest will be reduced, though not voluntarily. In two more surprise releases on March 15, one issued by Aber and one by Winspear, a dispute between the partners was revealed. In its terse announcement, Winspear stated that a letter had been delivered to Aber notifying the company that Winspear took the position that Aber had elected not to contribute to the 1999 Program and Budget. According to the release from Aber Resources, Winspear was informed during the course of numerous discussions that Aber would be participating. The release went on to claim that the company is preparing to commence litigation to protect its 32.24 per cent interest in the project.
At this point, the source of the corporate restructuring leak is not known. Mr. Turner apparently could not be reached for comment while he was attending the PDAC convention and he has not returned calls to a Stockwatch reporter since arriving back in Vancouver. Another poster who attended the convention and spoke to Mr. Turner on March 14, suggested in a March 17 post to the Stockwatch Winspear conference that Winspear's president was very upset that the news had been leaked. According to the poster 'gee10', Mr. Turner claimed that no one at Winspear was responsible for the leak. By his account, Mr. Turner was bombarded with questions regarding the leak on Sunday. "I certainly appreciate his honesty on the matter, even though it got him in hot water," the anonymous poster wrote. "I don't think he would have said anything if it wasn't already all over the streets." Those comments seemed to divert attention away from Mr. Turner but they were not entirely reassuring to some posters. It was suggested that even if Mr. Turner was not the source of the leak, there was clearly a serious problem within the Winspear organization.
The fact that two significant material developments, the corporate restructuring and the possible reduction of Aber's interest in the Camsell Lake project, were posted and discussed on the Internet in advance of full public disclosure has brought a good deal of critical comment. 'WillP' noted that he did not care to get his news from the Internet chat sites, characterizing recent events as "bush-league". There is also a concern that because of the apparent confirmation of two Internet rumours, more legitimacy than is warranted will be given to rumours and, in particular, to posters responsible for posting the subsequently confirmed information. In spite of these cautions, speculation regarding Winspear is running rampant, especially on Silicon Investor, a site not known for restrained enthusiasm or critical debate.
A popular point of discussion is the possibility of a takeover bid for Winspear. In part, this has been sparked by the announcement of the corporate restructuring which would separate the company's interest in the Camsell Lake project from its other properties. The rationale for the restructuring offered in the news release was that it would enable each company to focus on its own business plan and further benefit shareholders by allowing them to hold a security reflecting the value of Winspear's portfolio of exploration properties. The rationale favoured on the Internet seems to be that the restructuring will make it easier for Winspear to sell its interest in Camsell Lake while maintaining its other properties. In effect, it is claimed, Winspear has hung out a "For Sale" sign. The speculative flames were fanned on March 16 when Mr. Flannigan followed up his restructuring scoop with the claim that he had withheld some of Mr. Turner's comments until he had purchased more shares of Winspear. He said that he had asked Mr. Turner if DeBeers had shown any interest in Snap Lake. According to Mr. Flannigan, the response from Mr. Turner was: "They are calling me all the time." He then asked whether there had been any discussion of DeBeers either becoming involved in a joint venture or taking over Winspear. He reported that Mr. Turner responded that he could not comment on that point at this time. Apparently many of Winspear's Internet followers have interpreted that as a strong nod and a wink that something is afoot. Others have chosen to set the matter aside, hoping that future breaking news regarding Winspear will be disclosed in a more suitable manner.
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