Hello Peter
Thanks for the offer, I could use one right about now.
Haven't been to Halifax in 35 years but you never know.
Keep in mind, this will probably only be a $500+ if there is a takeover try over the next three years, if not, we're probably talking $500 in six to eight years. Camafuca could be in production in four years but SUF would need at least one other terrific pipe to spread their risk, before they could jump to the big leagues. Chris sounded like that Zairian pipe and the other up river Angolan pipe(s) might do the trick, but without the stability of Canadian pipes and/or significant and sustained African production, I think the TSE will trade this stock at a discount due to the perceived political risk.
You might also enjoy this. Chris had the silhouette of most of the worlds prominent pipes on one coloured glossy 8 1/2 x 11 showing the size of the Camafuca in comparison to all the other major pipes/mines in the world. You could gather all of them together and the Camafuca could still swallow them.
Chris then pointed to a graphic of the drill log on the Camafuca on another 8 1/2 x 11 and pointed to four of the pipe stem collars that were relativly close to one another. He then stated that all of the economic NWT pipes of Aber, Diamet, Lytton, and MPV could fit inbetween those collars and would collectively take up less than one sixtieth of the Camafuca pipe. Thats how big it is.
Can you imagine the value of high volume large scale production from a pipe like that? Other mining companies (DEBEERS) would pay Southernera NOT to put it into production or to keep its production limited. Talk about a hammer over the market.
Tomato, if your lurking, this may help explain my share price projection.
I don't have the numbers in front of me but Camafuca is known to be a relatively low grade pipe so, @ say $50/tonne of ore and @ .4 carats/tonne, with annual production of 100,000,000 tonnes, thats $5 billion in gross revenue every year! Lets say $4.5 billion net. Southernera's share is 51%, so asumming 27,000,000 shares fully diluted, thats $85.00 EPS. So if the shares trade at (conservatively) 9 times earnings, thats $750 / share to you and me. This would mean production of .4 x 100,000,000 = 40 million carats per year.
Am I blowing smoke up your pants here?
Well, the biggest producer in the world is probably either Udachnaya or Jwaneng in Botswana. Lets take Jwaneng which has a total reserve of 170 million tonnes as opposed to 49 million for the Russian.
Jwaneng can maintain high production levels and produces 10.5 million carats per year from 14,175,000 tonnes of ore. At $100/carat, and 13.3 carats/tonne, it produces annual revenues of $1.05 billion.
So if Jwaneng can produce at 38,836 tonnes per day could Southernera (Camafuca) produce at 273,973 tonnes per day? Why not?
Where would Southernera get the $$? As a major bank or consortium, would you lend $1 billion against first year net revenues of $4.5 billion?
If you had any brains you would, and quickly! As a bank, thats a friend you want to keep.
Chris projected mine/plant development costs at between $300 - $700 million depending on the size, so you can see I have chosen a larger number. The beauty is that even if they started out modestly, at say a 40,000 tonnes/day, they could still use one to two years revenues to expand production. Keep in mind that the more they expand production, the lower their costs per tonne are likely to be and the greater their profit per tonne out the other end.
This is only Camafuca, there's Klipspringer, other Angolan pipes/aluvial concessions, Zaire, Tanzania, Swaziland, Uruguay, Canada, Ukrain.
You think this might be a takeover prospect?
Does $500/share sound conservative to you?
Regards |
