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Gold/Mining/Energy : SOUTHERNERA (t.SUF)
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To: PHILLIP FLOTOW who wrote (6781)1/22/2002 11:24:55 AM
From: VAUGHN  Read Replies (1) of 7235
 
Hello Phillip

I thought it was interesting that there was no suggestion in this NR of what would be done with this windfall, only how it affected capital and operating costs.

The three biggest anchors on SUF's stock price are RSA/Africa political uncertainty, long term claims tenure and the amount of time/profits that must be initially devoted to repayment of debt before profits can be accumulated/retained or distributed.

Nothing SUF can announce or say will address the market's mistrust/reticence about the first two, but I would have thought the latter would have been addressed in the same breath in this NR.

Once a third world miner is in production, stock valuations are of course no longer based on speculation of discovery value. Rather, they are based on what multiples the market will assign stock prices based on weighing profits against long term security.

The market will probably never assign significant multiples to SUF stock because of the latter (the M-1 fiasco saw to that), therefore short term profit margins, production rates, debt retirement and dividends are the only factors the market will weigh in assigning a low multiple stock price.

A statement about expedited debt retirement and intention to pay dividends upon achieving said milestone would draw the attention of value investors and to some degree value funds.

Regards

Vaughn
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