Hello Vaughn,
Like you, I was one of the early investors in SUF. I have been through each of the ups and downs, from the diamond in the drill bit, to Tli Kwi Cho to Marsfontein and into the present.
I believe that there are two ways of looking at SUF: the sum-of-the-parts method, where you take the company apart, value each asset, add these numbers together and divide by shares outstanding to come up with a value. I would prefer this method. The other is the net present value of future cash flow methodology employed by analysts, IRR guys, etc. This is less preferable to me.
Unfortunately, the analysts and many recent purchasers of SUF were led to believe that the cash flow and earnings numbers were the reason to own SUF, with excellent blue sky potential in several areas. One director of SUF told me in a phone conversation last spring that SUF expected to have cash flows greater than $2 per share for the next many years. I would assume that others, and analysts had this same optimistic viewpoint.
Since the "visiblity of cash flow and earnings" has become clouded by a lack of certainty about SUF various future projects (Messina, Klipspringer, Camafuca all unkowns today, but with great upside), it is easy to suggest that SUF pull in its exploration horns to meet its production needs. Or else they have to go to the market hat in hand.
Perhaps this explains some parts of the conference call.
My criticism, after years of support, is that the delaying of virtually every SUF development has cost shareholders immense amounts. For example, if SUF had delivered data on Camafuca over two months ago, as promised, then it would be known if this was a saleable asset, or had market value, or could be monetized, etc. This would have benefited all shareholders by demonstrating that Angola wasn't a bottomless money pit, and by giving a sense of confidence to the market. This is important because a market price of 4, 5 or 6 dollars would leave SUF on substantially better terms to negotiate financing for Messina. Don't take my word, call the company.
So, as the share price continues to get beaten down, it is not good enough to sit by and let the market have its way. Would Bill Gates let someone screw with Microsoft (see the US Government)? It doesn't matter who the villain is. What matters is that another villain is screwing SUF shareholders right now. Just like the villains who stole Marsfontein. In the final analysis, it doesn't matter that SUF holds the moral high ground, or "has done its best". We as shareholders simply lose. We, as shareholders, have once again been caught out by SUF management.
Far from name calling or whatever, or the glorification/villification of any persons, we shareholders should only be concerned with restoring our share value.
That means restoring confidence to the markets, which means chasing away the nasty dragons, playing nice with analysts, kissing the butt of the institutions, or whatever it takes. Anything less is not good enough.
Unfortunately, no analyst worth his salt will say anything positive about SUF until the delivery of positive developments and the accompanying slow restoration of credibility and goodwill.
Its that simple: SHOW ME
Best Luck,
Confluence
PS. For anyone with balls enough to criticize the Canadian markets as home to thieves, unjust, lacking in credibility, etc. I have a couple questions: Did you raise money in this environment? How much? When did you know that this was an unsafe country to host your business? What did you do to protect yourself and your fellow owners of your business? I think the phrases "Don't **** where you eat" and " You made your bed, now lie in it" come to mind. |
