Howdy Folks!
Lots of unsaid stuff in the NR. I'm surprised not to see any posts from our two friends, but at least one of them is now bound by a confidentiality agreement. Lets see if we can guess whom?
Any way you split it, SUF does not get what most of us wanted to receive. Am I pleased with the deal? From last year: no. From February: no. From March, disappointed. From April: Hmmm. From last month: maybe. From last week: Yes. Get it done and get on with things.
This is the power of De Beers. This was against SUF, but for the next while is behind SUF. This was a matter of business, politics and future positioning. SUF could have forced the minister's hand and been in court for years. Now all are happy. Could SUF have cut a better deal months ago? It seems that way, but it also seems likely that "friends" of De Beers caused this whole scenario to happen (GULL or is it Jacobus or "Manda" will object to this, but, well, they're done now.)
The point is, what is done is done. Where are we now?
We still own 100% of SUF!!!
We have a company with great prospects and earnings potential, that has a serious communication problem (witness today's posts), but has mammoth earnings ability into the future.
For those who are disappointed: deal with it. Remember that it could have gone completely against SUF -- De Beers still has massive influence in RSA (this is now a good thing for SUF).
But to the deal. In the words of someone close to the scene:
1. this ends the uncertainty for SUF
2. SUF will now be able to get on with finding and mining diamonds (anyone notice that they've found very few in the past few months?)
3. Klipspringer can be developed to it's full potential.
4. Angolan production can be stepped up, with exploration at Camafuca more focused, and the balloon payment next April taken care of by cash flow. Angola was not a part of this deal.
5. M1 can be in production within 4 weeks.
6. The production at the facility at Klipspinger can run at max for the next 18 months, with the feed from M1, until fissures are completely developed, when M1 ore should run out.
7. SUF will NOT require potential debt financing. Ask Gull who is paying for M1 development.
8. SUF will NOT require equity financing for the foreseeable future. No dilution until Camafuca development, or something "New".
(these last two points are unlikely to engender support from Canacorn or FirstBorn Marachurn)
9. Randgold and SUF will quietly work out a net profits deal to remove Randgold from the picture in short order. SUF will be left with 40% of this part of Marsfontein.
10. SUF has no obligation to NGS or "heirs". This is De Beers problem.
11. The agreement with De Beers stipulates that certain things are confidential.
12. SUF puts up NO CONSIDERATION, other that marketing deal for Klipspringer.
Other thoughts:
SUF did not agree to a marketing deal with De Beers at 25% below MV. This figure is "way, way too high". Will SUF lose 25% revenue at Klipspringer? "Much, much less". How long is the Klipspringer deal?
10 years
Will there be a FP piece tomorrow talking about CJ's cold, his tired voice and oncoming laryngitis? Not if one guy has any class, so my guess is page 3 or better.
Are the Angolan holdings safe? Production will be stepped up quickly. The deal is consistent with the planned development of all Angolan assets, invcluding and especially Camafuca. (this is the real value)
De Beers is Manager. Will SUF be involved? SUF will process all ore at Klipspringer facility. SUF staff will participate on technical and management committees. (SUF folks know the deposit, many are from De Beers, they will play nice, and efficiently) What will mining rate be? "Full capacity until resource is exhausted"
De Beers can impose a 20% reduction quota. Is this a factor? Can be a possiblity, but could only slow production. Presently, De Beers quotas only being used to reduce low values stones and yellow fancies. But still could happen. Can De Beers restrict Klipspringer production? NO , only M1! Klipspringer is 100% SUF.
Will Klipspringer run at full capacity? Mining plan for M1 is as proposed; resource is 570,000 tons plus. There will be availablity of plant to process 100% SUF diamonds from fissures. Plant is expected to run 7 days per week. SUF figures plant can "run above rated capacity"
Will M1 pay fees to Klipspringer for processing? Yes. Similar to contract mining, the costs of Klipspringer plant (this is key for NPV guys) will be reflected in the revenue recieved for mining ore. This is small to De Beers, but large to SUF.
When is CJ returning? Next few days.
Will analysts have new projections? Call them!
And thats about what I've heard.
For Peter, ValuePro, and Vaughn, et al. get the calculators out again.
All supporters of SUF should be proud that they helped to correct an
injustice, even if it wasn't 100%.
Confluence
PS Will the two opposing people be gone now? Lets hope for less "guidance" in the future.
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