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Gold/Mining/Energy : SOUTHERNERA (t.SUF)
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To: VAUGHN who wrote (3851)7/1/1999 10:13:00 AM
From: gemsearcher  Read Replies (1) of 7235
 
Hello Vaughn.

Highlights from HA's BOE report of June 15 :

1. "[SUF] shares continue to languish at low levels due , we believe , to investors' loss of confidence in management following last year's Marsfontein debacle" ; "We conservatively value SUF's share in Messina at C$1.21 per share" ; "The Messina acquisition looks good and stands up to the highly conservative factors we applied to account for risk. This adds value to [SUF] and the share rates a BUY at C$4.60 per share."

2. "[M1] grade has fallen...and is projected to remain at 160 cpht for the duration of mining on [M1]. Price.. per carat has fallen .. partly due to the smaller stone size recovered and partly due to a downward revision in prices paid for the diamonds by De Beers."

3. HA's Klipspringer resource estimate - 208K tonnes/160 cpht for M1; 400K tonnes /150 cpht for "Other Marsfontein"; 2700 tonnes/70 cpht for Leopard; 1000 tonnes/50 cpht for "Other non- Marsfontein".

4. DCF valuation:

a) Klipspringer is $8.11/share using a 10% discount rate;

b) Messina is $1.16/share using a 10% discount rate; and

c) Angola is $0.50/share using a 15% discount rate.

All in all , pretty conservative. I didn't know that the M1 grade had dropped that significantly - not clear whether HA means avg. grade down to 150 metres? Regards.
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