Hello Goalie
I wish I were quite so eloquent(sp?).
Just to carry on a bit on my paranoia/international plot theme. Its interesting that G&I are trying so hard to sell the concept that this was not a random act by unthinking and desperate thugs, but rather they have repeatedly suggested that this was a planned attack with the clear goal and objective of assassinating the mine's senior manager.
Are they privy to something we do not know? How? Why so insistent?
In CJ's conference call yesterday, it came out loud and clear that there is a very strong, entrenched and committed racist hard core who have been undermining both Minister Maduna, the DME and I gather the legal system along with who knows what else. Certainly it would not be unreasonable to assume that these are the same people who ran or supported the White Supremacist government for so many years and who were prepared to torture and murder without compunction or conscience.
If the Minister's speech and the DME's policy is causing the consternation and anal constriction of so many old guard both individual and corporate, it is not too much of a stretch to assume that these White Supremacist individuals/groups/mercenaries are receiving clandestine funding from major SA corporations facing significant changes if the government enacts its proposed policy or who have other objectives which funding such organizations might help achieve.
If you recall from some of my older Angolan news posts, there were several references to the fact that the UN was concerned that there are still air freighted (smuggled) arms shipments from SA to UNITA rebels. You don't think those are coming from the SA government of Nelson Mandela do you?
So G&I repeatedly suggest that this was a deliberate assassination by UNITA. UNITA is funded or at least supplied by SA White Supremacists who are in turn probably funded by SA corporations facing losses at home "or" who want something of value, possibly in Angola (if UNITA can stage a counter revolution) or who want to disrupt a business competitors operations (SUF) in order to either send a message in negotiations or too gain control of the company. Far fetched? Maybe...
By the way, have you noticed how (I) "spins" each situation. You quote some fact with common sense conclusions and you shortly receive a reply with the facts twisted or "spun" to suggest an entirely contradictory perspective. This is a person (I) who has worked at some political level who is well trained in putting an alternate or opposite slant on facts. A SA Spin Doctor? You must admit, its an interesting handle, perhaps (I) should consider changing?
A fellow investor, David, very generously transcribed as best he could, CJ conference call for me. I tell you, you two guys are unreal. I never knew anyone living east of Regina even had a heart? Let alone gave so much of them selves for others. Hats off to the both of you. Anyway, I digress.
Here is his transcription for thos eon the thread who may not have been able to listen in:
Vaughn
If you heard the conference call, ignore what follows. If not, maybe it'll
be helpful. I hope you can make sense of it.
cheers
david
Notes made during conference call with Southernera
3 June 1998
CJ (along with KF) in RSA. CJ said
-legal proc. were dropped by both heirs and suf as reported
-meanwhile suf is talking with DB to resolve matters in an acceptable way;
very frustrating process; db changed position often; suf thought maybe they
didn't want resolution
-suf thought this should not be public but now suf believes it ought to be a
public debate
-intense battles in RSA between old guard and new for control in govt; suf
believes there is subversion of proper legal procedure by old guard
-suf believes if minister exercises discretion to expropriate under section
24 then heirs will not be penalized financially ( because suf will pay them
what DB promised) and hopes min. will go along with suf
-min made it clear that min wd prefer a negotiated settlement and has
appointed a broker to see if agreement can be reached. There have been some
discussions so far
min. Hopes for early resolution so db, suf and heirs will be happy.
-recent rumours (e.g. that db was awarded rights = not true;
-only thing in dispute is marsfontein; cj thinks suf will end up with an
interest in mars.;
if no agreement (ok with db and suf) then min will be forced to decide.
CJ hopes to reach agreement first.
-remember that min wd be expropriating not db but 29 heirs whose formation
of a company to hold rights is in direct violation of the law; it would be
ludicrous of min to fail to expropriate simply because of db's presence.
CJ believes that whatever the outcome there will be an interest for suf and
that suf's plant will be used.
-at Klip, remaining development and exploration is going well and
independent consultant believes it will be the best of all fissure
operations in RSA.
-intersected Leopard fissure at 450 m.and extended it, which dramatically
increases resource figure (by 20%) and continue to extend sugarbird fissure.
-NWT; several kimberlites found recently in kenn/aber claim and also under
lac d gras.(40% suf)
=angola; mgr was killed in an ambush (probably by ex-bandits looking for
food). Good understudy taking over; security beefed up. If this was
intimidation, suf will not bow to it. (Army and police increasing their
presence too)
at Loua, Angola, they're increasing production; in river too (4xx
carats/day??)
exciting news; camafouca reserves to 80 m are 8.7 m carats at $100 + per
carat therefor huge potential
-Klipspringer; sold US$2.8 million of diamonds and another 21,000 carats
on hand; by end of June will have sold $4.5
As for financing, if needed there is a firm offer for private placement
(with warrant) at 25% above price when signed. Also talking to financial
inst. about debt financing. So financial picture is not as bleak as some
people think.
Open to questions from particpants:
-is it correct that fair share value wd be about $12/share without
Marsfontein?
Can't comment but probably in range of $8-12. There are some excellent
properties, a fine company, a long-term company (Klip alone. = 50 year life
mine). Some analysts put it way above these figures. Klip = Perhaps the
most profitable fissure in the world.
- if perchance the marsfontein fails, how effective wd the company be?
We have cash flow from Klip but wd be delayed without Mars.; wd take a few
years to get to US$60 million/year but Klip is a very viable, very long term
operation. But people ignore the asset of Camafouca which is huge and will
be a great company maker. Even without Marsf. ,Suf has one of the finest
teams in the world, lots of assets and a determination to succeed.
- what kind of relation is suf getting into with db? Ownership? Marketing?
Perhaps a joint venture or even a separate company for marsfontein alone.
But only on that farm.
Db tried very hard to get other farms but suf refused to discuss it
- rumour of interview with FP and DBin tomorrow's FP; today's FP was
misleading,
Agreed
- re Angola: indicate size of increase in alluvial;
new pan plant will double capacity, e.g. 300 c/day; ready in July
- re Camafouca; depth confirmed to 80 m; how much more is likely?
Governing control of where diamonds are is a certain rock type and it's
likely to go to 1,000 m. If so it could be a 900 m open pit mine with huge
potential.
-- Thus 8.4 million carats is likely to be conservative.?
CJ = Non-committal but optimistic
- NWT: timing for further results?
Short drilling season; warm early spring cut time by 3 weeks; summer
programme at Lac de Gras and Mackay lake and Diavik. Must wait for winter
ice for drilling.
- re FP's ghastly article today, is there some way suf can get the message
to FP for accuracy?
We're prepared to take criticism but not when misquoted as was one critic
in today's FP article.
- John Hainey: re: the heirs, who now have their mineral rights
acknowledged, do they have the right to sell rights to anyone else?
DB claims they've exercised the rights already. This is unconfirmed
-13.5 m carats at Camafouca; 8.7 at a grade of 0.3 c/cubic meter;
likely price to be $150/carat
[my calculation is 13 m. x US$ 150 = nearly US$2 billion]
- any gut feeling on how minister might decide?
Think this is why min. appointed a broker! Suf followed the law and
procedure so more than even chance he'd rule for suf but he probably prefers
a negotiated agreement. Probably suf will end up with something, if not all
and definitely not nothing.
- is DB likely to market suf's diamonds?
difference between db and other marketing organizations is 25% so not
keen on agreeing to market thru db
- how can you expect people (e.g. min) to operate on good faith ?
If min. expropriates against db, they'll kick up a fuss but if it's
against suf, the world will be watching with suf. Hence the negotiations.
- why do company news releases not mention recent murder of manager?
Company sees it as tragic but not essential to report.
- why give up the court challenge?
Somehow a lawyer in the minister's dept recognized the heirs rights (an
irregularity). This weakened suf's case under section 17 and it could have
dragged on for years in courts. CJ optimistic that some resolution will
emerge in a few weeks.
- will suf's plant be used or will db build a new plant?
CJ hopes suf's plant will be used.
- given that M1 is smaller than db usually mines, why do they want it?
Must be complex issue; db may claim they found M1 but there wasn't a drill
hole there.
- thank you for your answers; you're well respected in the investment and
mining community.
- I was under the impression the ministry supported suf from day 1; was
there a shift in their mood?
This was an accumulation of very unfortunate events, linked to leaks from
the dept.; minister will have to look at international trade, finance, etc.
as well as the law.
- suf has finished its feasibility study for Randgold so any settlement
with suf is shared with RandGold
- even if min. were to rule against suf there are still legal options open
- stock price is very low; might the company buy back shares?
Good suggestion; stock more than discounted. Unfair.
- seems like a grand take-over plan by DB to get suf? Any indication?
I have no indication and can't comment. Market watchers should look at
trading pattern. Can't confirm or deny rumours to that effect.
- (1st marathon securities); Re: Randgold, what is their role?
They've left it to suf but 100% on side. Might be willing to sell their
portion to suf, not sure.
- RE: FP article. Client said that what SA and db were doing to suf was
despicable; therefor totally misquoted. Challenge everyone to write to FP,
SA ambassador and Toronto rep.to rectify things
- we seem to have conference calls only at crisis points; why not keep
people informed instead of waiting till crises intervene.?
I take your point. But there are people in Toronto you can talk to. We
should always have a senior person in Toronto
- I think the company needs more press releases and clear info (e.g. about
relative importance of M1)
I think it was a strategic mistake to focus on M1 and get distracted from
the other good things in the company.
- confused on timing. Is there a deadline for brokered settlement?
We can go to Min. any time to request his decision.
-
- re Camafouca; any constraints on development there? Financial? Technical?
This last report was found in Belgium recently. That changed things.
Constraint is not political, no security problems. Money is needed for
small plant and we can start mining right away. Can move much earlier than
anticipated. Pre-feasibility study (bulk sampling etc) by end of year.
- M1 is big for suf but small stuff for DB; why would the chair of DB meet
with the Minister?
Speculation on my part but DB is affected by government's new policies and
must have discussed other things as well.
- what is time frame for developing fissure if M1 not obtrained?
Working on feasibility now; speeding up. Talking to financial
institutions about debt financing
We expect to mine 102,000 carats this year (1998) and 210,000 next year
(1999) and year 3 will be up to 368,000 then 490,000 from 2001 on in a pure
underground condition it'll be about US$470,000/day
[my calculation = US$160,000 per annum; if so, about $5/share]
- why did DB drop its 40% of klip?
Because suf said it would not negotiate anything outside marsfontein.
Klip is not up for grabs.
- role of SA govt? What can other foreign investors infer?
The eyes of the world are on RSA and the outcome will influence other's
decisions. The min. Is in a bind! Let him help the heirs.
- Marsfontein, to a big company like DB, must be small stuff. Is that
really their final goal or might they be casting their eyes on other assets
of suf?
It's inconceivable that marsfontein is their only target.
- what assistance is suf getting from Cdn govt?
Wish we had some from Ottawa but getting none. Good assistance in Cdn
embassy. If investors can conjure help at a high political level in Ottawa,
try it!
- do you expect a hostile bid for suf from DB?
I can't answer that?
- if you can't come to a settlement in a few weeks, what then?
They can ask us to negotiate but can't ask us to do a deal which is
detrimental to suf; so we can walk away, tell the minister what happened,
and leave it to him. Negotiator will return to SA Monday; CJ hopes to meet
minister within several days.
- can heirs/DB appeal if suf gets section 24? Can suf?
Yes, both ways. That's why a settlement is desirable.
*****
A few final thoughts. I noticed in the AR that SUF sold a 100+ carrat diamond from their Klipspringer operation I believe, for some $400,000. It must have been a flawed stone for that price, but two points here worth considering:
1. I wish SUF would show piles of their diamonds and stones like this one in their AR. Every year, it is the most subdued and understated document possible. A little drum beating and self congratulatory media would really be nice to see. Pictures of the new plant (no pans in sight) are fine, but jeez, how about a little flash CJ! I for one would like to see fancy pinks coming from the Camafuca core, I don't care how small they are, and I would like to see 100 carat diamonds and near perfect 10 carrat dodecahedrons from the Angolan workings. Some callers yesterday suggested that better communication with shareholders would be appreciated and CJ agreed that this was a good idea. I think this might start with the AR and carry on with pictures and copy of these stones and progress on the web site. There are so many things that could be done that need not be trite or overly self promotional. Investors love this company and its management and want to feel they are a part of its growth. Let them share in the day to day excitement I guess is what I am trying to say. Perhaps they might not be quite so nervous or quick to bale.
2. When SUF start pulling 100 carrat stones out of Klipspringer, I think we should all take notice. Not all diamond mines produce large stones and they generally contribute significantly to profitability. Investors should be excited by this news as to date, I can't recall hearing of any stones over 20+ carrats (which of course are not kibble).
3. It was obvious that CJ was exhausted by the time that call was over and has been going night and day to resolve this mess. I think he, LB and management deserve our support and he certainly heard that from all the shareholders who called. Despite all the paper losses of hundreds of thousands, shareholders and even analysts were unanimous in their praise and support. I think that speaks volumes in these days of Bahamian hide-a-ways and disaffected investors.
Regards |
