Hello Vaughn,
Thank you for your response. Like I said before I am not denying that Canadian operations are important. I strongly believe that hypothetically, if what they have in RSA was in Canada, their stock prices would have been much higher than where it is right now. But that still does not change the fact that they need "cash flow". Let us assume that they find something major in NWT. It will take money to start and finish the project. Look at Diavik. Cost is $1 Billion. Also it will take 4 to 6 years to start mining(that is if they are lucky and don't come across any obstacles) after the project starts. Number one, SUF does not have the cash to finance a project of that magnitude {they will need partner(s), i.e. too many cooks in the kitchen}, Number two, if they tie up all their resources to a project like that they can not wait for 4-6 years to have a cash flow again because M1 will be exhausted well before that. We have to remember something. SUF is not a small company, they employ around 250 people. They need the cash flow.
Also my understanding is that SUF recognizes the importance of a Canadian find and therefore as you know, they are active in NWT.
I agree with you that market perception is important. But I believe the reality is important as well. Actually that is where SUF is now. In their own words they have become a "show me" company. If you look at the P/E ratios, while ABZ and DMM are flying well over 500's, SUF is barely around 7. The only real cash generator is SUF. (DMM will not see a profit for the next four years until they payoff what they owe th BHP).
Even though it is a factor, I don't think that SUF's problems are originating solely from where their mining operations are(RSA, Angola etc.). First of all they are not the only company operating in RSA. As far as I know, not all of those companies are hit in the same way. I agree with Confluence, What happens in RSA can and will happen at other places in different forms or shapes. That is the risk factor. When a company is into exploration and mining, there is no way of predicting what will happen next until the production starts. That is true anywhere in the world.
I think that last year's M1 incident with the "heirs" did not only hurt SUF financially but hurt SUF's management's image as well. Both CJ and LB claimed on National TV that SUF would get the mining rights and CJ even predicted a starting date for the mining operations. That was a big and costly mistake. But as far as I am concerned that does not show incompetence, on the contrary I think that the SUF's management is a good team and they are doing a good job. The only criticism I have is their lack of effort when it comes to PR. They have a lot of good things going for them. But not too many people or groups know about them. What we need is some outside players coming into the picture. The 3 Musketeers (First Marathon, RBC and TD) are playing with this stock like a yo-yo and manipulating it in any way they want. Just out of curiosity, couple of weeks ago, I called Solomon Smith Barney and Merryl Lynch in NewYork to talk to their Mining/Precious Metals analysts. (H. Herschaft and J. Corkrane respectively). They both asked the same thing. (Who is SouthernEra? Where are they?) Basically they had no idea that SUF existed. A week before that I was talking to a Portfolio Manager in Boston, and when I mentioned SUF, I received the same response. No clue what so ever. My point is SUF needs more, much more exposure. I believe in shaking the tree to get the apple, SUF is waiting for the apple to fall by itself. Like I said before, SUF has a lot of good things to offer and not too many people know about those things.
We both know that SUF is a good investment. I hope that what we post here don't fall on to deaf ears. Something positive and constructive comes out of these.
Regards
Bozkurt
P.S. I was told that the reason behind today's big drop is an article in the National Post. Can anybody post (at least a summary or contents of) it. Thanks in advance. |
