Hello Goalie et al:
Firstly, I've owned this stock for several years because I think that it is worth much more than its present value (especially today!).
Secondly, after many conversations, some heated, it seems as this article in the FP, in my opinion, is wrong on many fronts, from the facts to the implied, but not stated, tone let on by the mistaken title.
Clearly, the author, or his source does not have a grasp on the facts.
Here is my understanding (in order of the mis-information given in the article):
1) SUF has a large stockpile of ore at Camafuca from its program of large core, reverse-circulation drilling, as previously outlined. About 15,000 tonnes awaits treatment on site, using the same pan plant that was originally used at Klipspringer to process ore before last March. The ore will be processed soon, with diamonds picked and courriered out in a briefcase, not a convoy. The purpose of this sampling is to develop confidence in the data from over 200 drill holes done in the 80s (by De Beers), which SUF possesses. Other cores from smaller diameter drills will be shipped back to RSA for fine diamond testing.
2) SUF directors and senior management are greatly encouraged by the increased security in the Camafuca region, especially in the areas around Saurimbo and Dundo (forgive my spelling and poor knowledge of Angolan geography). SUF's partner at Camafuca, the state-owned diamond company Endiama, apparently has other, well defensed operations in the nearby area, and the nearest fighting is several hundred kms distant. SUF feels confident enough maintain operations and some senior management will be on site over the next while.
3) SUF has not spent $20 million excavating ore at Camafuca; rather, its total expenses in Angola since work began several years ago is around $20 million. This includes expenses at Luo and Cassanguidi, and payments to obtain the 51% stake in Camafuca. While this info is easily located in the online annual report (Southernera.com), the revenue stream has not been factored in. Some expenses will be written down to reflect conditions at Luo and Cassanguidi, but Camafuca is, and has always been, the real prize: the worlds largest known diamondiferous kimberlite pipe, extensively explored by SUF's new friends at De Beers.
4) Many roads in the immediate area around Camafuca are safe. Many nearer to the fighting are not. I'd suggest locals would be much better informed than anyone reading newspaper reports in Canada.
5) The equipment and personnel are on site to process the stockpiled samples. Of course, perishables like food and fuel must be regularly obtained, again thru locals who live in and understand this environment.
6) A plane crashed in Angola, and unfortunately many died. As previous posters have pointed out, this is irrelevant to SUF.
7) The Angolan director of mines' statement seems consistent with SUF's understanding of the situation.
8) Obviously, the situation generally, in Angola, has worsened of late. The specific area surrounding Camafuca has thankfully been spared. The rainy season is coming to an end and at least some observers feel that the UNITA forces will soon shrink back as their natural defenses limit their ability to hit and run and hide. While I'm no military expert, this seems reasonable.
9) Banditry that caused the tragic death of one SUF employee months ago was an horrible occurence that has led to significantly greater security measures and no doubt contributed to the decision to write off marginal assets at Luo and Cassanguidi.
10) SUF has enough information from De Beers previous drilling at Camafuca to take a descion on its $US6.5 million final payment for the rights at Camafuca. This will happen, and SUF has plenty of cash. The ongoing program is merely advancing and confirming previous data.
I'd encourage all long term shareholders to call SUF's office in Toronto, or send them an email.
However, until the end of next week, almost all senior people, except the folks readying the quarterly and year-end figures, are at Klipspringer with several Canadian, South African and British mining analysts, some other interested parties and hopefully, some journalists eager to know the facts about SUF. Viewing of diamonds, the Klipspringer and Marsfontein operations and other events are on the agenda after the big mining conference in Cape Town (like the PDA in TO).
A diamond sale is to take place on Feb 5th, so perhaps some production numbers and values for December will be forthcoming, although all SUF folks seem tough to pin down as to this timing.
The recent trading has been dominated by First Marathon, with a style and flair that I would say is artful. Remember that these guys are trying to get cheap stock for their clients (and maybe themselves), so, in a market with few large buyers, it shouldn't be too surprising to seem them jerk prices lower to sucker stock from institutions who couldn't trade their way out of a wet paper bag. A tip of the hat to First Mary.
While I'm disappointed with the share price, and nervous about trading in the very short term, I am a long term believer that this company will be worth many billions of dollars one day.
Better understanding of communications (and lack thereof) would likely close the gap between the present market price and the massive potential that SUF possesses. And a nice result from Back Lake, a good deal with Newco and De Beers, some nice numbers from Camafuca, good earnings from 1998, excellent cash flow projections for 1999 and other new stuff will all be positive.
Regards,
Confluence |
