To Vaughn, Valuepro, Peter et al: I'm finding the news relieving, but it's hard to like seeing SUF lose such a big chunk to more powerful entities in a way that makes South Africa's mining laws look quite inadequate. Maduna has his work cut out for him to convince foreign mining companies they can operate safely in South Africa.
Nonetheless, we can now all move on, and the markets should react favorably simply to having the legal clouds removed. And it does appear that DeBeers has effectively recognized that Klipspringer will indeed be an active diamond mine for the foreseeable future.
I have several questions and would appreciate any information any of you have that would help answer them.
1) DeBeers is said to have "management" of Marsfontein. Does this mean that DB will be directly responsible for mining the M1 pipe or will SUF always be the operator doing the mining?
2) Does DB have the right to refuse to buy any Marsfontein or Klipspringer diamonds put to it by SUF, or are they required to buy all the diamonds SUF chooses to mine? Is there a maximum number of carats DB will accept in any particular year?
3) How much will SUF be paying Randgold (in cash or stock) for Randgold's share of Marsfontein?
4) What does "close cooperation" actually mean? Does SUF really want anything of a technical nature from DB, and, if so, is it important/valuable or of minor significance?
5) What does "collaborative exploitation" mean for possible expansion of the Klipspringer property? Are diamonds known to exist in these new areas? What might such an expansion of the property mean for SUF?
6) What kind of cash flow is SUF now going to receive from the M1 pipe and from Klipspringer as a whole? What is the new plan for the number of carats to be produced in each of the next several years? What is the ultimate production capacity (tons/cts) possible and/or desirable now from the current Klipspringer property and from a possibly expanded Klipspringer?
As I said above, I am relieved by this settlement. Unfortunately, initial trading is not very favorable. I guess it is going to take some time for the market to put figures to the settlement. I suspect there will be a sizable contingent of folks who bail out in the near-term because they don't like these terms. Those people will not include me, and I hope all of us here will soon see some substantial reward for our patience.
Cheers!
Steve Baker |
