Hello Gord et al,
I've been observing your thread for quite some time. Quite a bunch!
I've been involved with diamond stocks since early '92, owning many,
watching the rest, and have observed the growth of a new mining
regimen in Canada. As you'll see from checking my posts, this is
the first post I've made to any other than SUF. I've been a
shareholder and supporter for well over 6 years.
The reason for my post here is that I don't understand the valuation
differential between WSP and SUF. As several posters have "crossed
over" recently, I thought that maybe someone can help me to figure
this out:
WSP SUF
Price 3.72 5.90
Shares o/s 33 mil 26 mil
Mkt cap 123 mil 153 mil
**************************************************************
Production n/a 40% Marsfontein
FY98 .54 EPS, cash flow 1.63
Q199 .35 EPS, cash flow .50 (EST)
Proven lifespan 2.5 yrs, likely
5-8 yrs +++
**************************************************************
Advanced
Exploration Snap Lake Klipspringer
Time to
Production 2+ years 2 months
Cost to
Production 100mil +? 0
Lifespan 20+ years 20+ years
Grade pending 70 cpht
Valuation pending US$100/c
Cost per ton $30-40? US10-20
*********************************************************
Other
Exploration Hilltop, Cache 35,000 acres at
Camsell Klipspringer
Camafuca, Angola
Munn, Margaret, Yamba Lakes
Lac de Gras
Cash 12/98 ? $6.5mil
*********************************************************
Liquidity Excellent Poor
Mgmt Aggressive Technical
History Rollercoaster Rollercoaster
Other ? ?
*********************************************************
I don't mean for a second to imply that WSP is not worth $100mil.
After all, ABZ is pegged at around $460mil and might be several
years away from an expensive mining set-up that will produce
high-grade ore, but with lower value diamonds. I sincerely hope that
Snap becomes a mine, once the grade and value are proven up in
June/July.
But to my eye, WSP seems to be aspiring over the next few years, to
what SUF already has: a producing pipe with exploration upside, and
a highly developed fissure system producing in two months. With
both in a much easier mining environment (tho the taxes are killer).
Once you consider the rest of Klipspringer (100% SUF with anomalies
similar to M1), Camafuca, the rest of the NWT (Munn, Margaret,
Yamba, Lac de Gras), and management with technical abilities second
to none, how can SUF only be worth slightly more than WSP?
I guess if SUF wasn't actively drilling the four NWT properties, bulk
sampling Marsfontein, bulk sampling Camafuca, and poking drills all
around Klipspringer, I could see the market penalizing them for
complacency, but this valuation seems out of line.
I've got to split for the long weekend, but I look forward to any and
all (well, almost all ;) ) thoughts, and will anticipate much
insight.
Good Luck,
Confluence
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