To all: I just discovered a very interesting evaluation published June 6/98 by Hilton Ashton, in the Diamond Industry Review, 9 days prior to SUF/DB negotiated settlement. The article seems to have been missed by all diamond experts/analysts, and is worth repeating IMHO:
"SOUTHERNERA
"The battle for Marsfontein should be resolved soon. But the scars borne by the share price have been substantial. The price has fallen from C$16 per share in December last year, before the heirs came into the picture and grabbed the rights to Marsfotein, to C$5.10 per share. As a result the stock's market capitalisation has fallen from being the third largest in Canada, having been overtaken by Namco. The recent events bear testimony to the fact that investors shy away from any company involved in court action. It does not matter whether the company is right or wrong.
"The facts of the argument have been misrepresented in the press on a number of occasions, and this has not helped SouthernEra's cause. Recent press reports in Canada gave readers the impression that the company's Klipspringer Project was under threat of being taken out by De Beers. The company's Klipspringer Project is under no threat and our previous valuation of the project excluding Marsfontein of C$9.48 per share, remains unchanged. Our total valuation of the company including all assets is C$10.59 per share. This is the minimum value for the company even if it receives no interest in Marsfotein.
"The facts are that the company and De Beers are negotiating to try and settle so that the Minister of Mines does not have to make a decision on whether to expropriate. Should a negotiated deal not be made then the Minister will be forced to make a decision on whether to grant SouthernEra the rights in terms of its expropriation application.
"We believe that Marsfontein will be shared between De Beers, SouthernEra and an unnamed Black interest group, which will be offered an interest in terms of a request by the Minister.
CONCLUSION
The recent fall in the share price has been due to investor panic caused by inaccurate reports. The share rates a STRONG BUY on the basis of our 1- and 3- year price targets of C$12.71 and C$22.47 per share."
signed: Hilton Ashton (telephone - 27 11 302 1208) June 6, 1998
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