a couple of posts from SW....
Author: halcrow -- Date:2001-02-25 17:37:46
Subject: from Europe
www.minesite.com
Features SOUTHERNERA RESENTS ITS LOW RATING IN CANADA AND CONSIDERS LONDON LISTING.
Squabbles on the Board of Canadian listed "SouthernEra Resources" in the early part of last year turned a lot of investors off the company At one time Chris Jennings appeared to be removed completely as a director, but he fought back with the help of a number of shareholders and by August 2000 was in place as chairman again with Patrick Evans. Patrick is an ex "Placer Dome South Africa" executive, who had been responsible for its acquisition of a 50 per cent interest in the big South Deep gold mine as chief executive and Mike Eksteen, a career man with Gold Fields who had ended up in charge of Kloof gold mine as chief operating officer.
This looks like a pretty good team for a company operating in two of the sexiest areas of mining at the moment - platinum group metals and diamonds. Essentially, of course, Southern Era is a diamond company with production from the Marsfontein mine, exploration in Africa, Australia and North America and high hopes for its Klipspringer mine near Potgeitersrust in South Africa. Here the feasibility study for mining the first portion of the fissure has been accepted and 3.6 million tonnes will be mined at an average recovered grade of 47 carats/100 tonnes to give the project a 13 year . The capital cost will be US$6.6 million and it will take two years to develop.
Fissure mines are notoriously difficult to mine efficiently and it is said that De Beers has been so impressed by the way in which SouthernEra has approached the project, that it is thinking of joint venturing some similar diamond operations close by with SouthernEra. . The efficiency of the operation is confirmed by the fact that it is expected to achieve the highest value per tonne of ore at US$292 of any diamond mine in the world.
Klipspringer, however, is dwarfed by the huge Camafuca diamond project in Angola in which Endiama, the Angolan State mining company has a 35 per cent interest, Welox which has 33 per cent and SouthernEra is free carried and has a 32 per cent interest. Welox is owned by Lev Leviev who, it may be remembered, fell out in a big way with De Beers when the giant took legal action to block cargoes of his diamonds on the way from Angola to Antwerp. Previously a sightholder with De Beers he is now a power in his own right and has cutting facilities in Russia.
Angola is no walkover as a country in which to operate, but SouthernEra has the right partners. The Phase1 feasibility study was very robust and the pipe, which is 160 hectares in area at surface, is reckoned to have total resources of 209.5 million cubic metres containing 23.24 million carats of gemstones worth US$109/carat. Overall production costs using a marine type cutting head dredge are expected to be around US$55/carat so the capital cost of US$16 million can be repaid in a year. Last, but by no means least, SouthernEra is involved in platinum group metals through its 70.4 per cent holding in South African listed Messina. A short time ago the company announced that , following an independent audit, its Bushveld Complex resource had grown 60 per cent to 15.9 million ozs compared with previous estimates. Sources close to the company expect the figure to increase further if it gets the block next to the four it already owns.
Metallurgical test work on an 80 tonne underground bulk sample has confirmed the mined head grades and metal recovery rates contained in the Messina project feasibility study of February 2000. Based on the test results, the grinding circuit design will now be simplified which will result in a reduction in capital costs and operating expenses at the mine which is currently under construction and will be operational in 2003.
This is the good news, but the even better news is that SouthernEra has felt for a long time that it has been underrated in Canada. An AIM listing was considered, but it is now thought that the company could qualify for a full London listing. No decision has yet been made but SouthernEra looks to have qualities which are appreciated here.
26 February 2001
--------------------------------------------------------------------------------
Top Reply
Author: teevee -- Date:2001-02-25 19:39:09
Subject: halcrow
Thanks. That is a great article. I expect that with a full London listing, SUF will easily achieve a 10 times multiple once its estimated cash flow of better than $2.00/share is achieved in 1993. $20.00/share seems within reach again. A multiple of 15 is possible in a good resource market. There are also the "Blue Sky" exploration projects, scattered over 4 continents, any one of which will add significantly to the share value, if and when yet another high value discovery is made.
In light of DeBeer's privatization, and their happy experience with small scale mining at the M-1, I find it most intriguing that DeBeers has approached SUF on partnership in certain DeBeers undeveloped holdings. I suspect that might have something to do with the government's new "use it or lose it" policy with respect to resource tenements in South Africa. This could bring attractive and immediate, financable development opportunities to SUF. A prospectus issue(with the usual underwriting fees) is just the sort of thing that could fast track a listing on the London Stock Exchange, especially if DeBeers subscribed for a significant portion of the underwriting. A London listing might be also be convenient, considering that DeBeers and Nicky O have now made London their home base of operations:-) SUF's largest shareholder, RTP is based their as well.
Sadly, now that DeBeers is being privatized, SUF is the only diamond miner I have left:-(
regards, teevee |
