Hello Confluence
Thanks for your other message. Look forward to your other thoughts.
In the mean time, I noted that CJ's presentation was posted on the web site so for those like me who are too poor to attend, here is an excerpt that I think is the highlight.
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Our mining team has steadily improved production this quarter. Since 31st May, we have recovered 61,679 carats from 13 days production. This means that we have put on the table an average of 4,700 carats worth $531,000 dollars per day. This comes from a 2,000 tpd plant that cost only $2 million. In other words, we repay the cost of the recovery plant every 4 days. Please note that I am not including the costs of tailings disposal or other infrastructure in this statement – only the cost of the plant. We have already substantially surpassed the first quarter's production with 12 more production days still to go.
We have recovered a number of large diamonds, the largest of which was 327 carats in weight. This 40 carat diamond, mined a week ago at M1, probably represents the highest value diamond mined to date and has been given a preliminary value of up to 7,000 dollars per carat.
With regard to our future growth potential, I'd like to put some facts before you that will speak for themselves:
First, our long life resources.
More significant than even the production numbers I have just given you, is the fact that long-term resources have been outlined at Klipspringer. Here we currently have a drill indicated resource, to a depth of 500m, of 3.2 million carats that, alone, could give us 13 years of production at 250,000 carats per annum. This resource is nearly 2.5 times the current reserves at Marsfontein. What is more, this is on only 3.45km of a possible 19km of strike, which is still open at both ends. Exploration continues on several other fissures and blows at earlier stages of development.
We have added considerably to the expected life of both the M1 deposit and the Marsfontein Joint Venture by planning to deepen the pit of M1. We have also found a new orebody in our M1 pit (M8); we have extensive gravel reserves and have recently announced the discovery of a number of very promising additional targets on the Marsfontein Joint Venture. We start drilling on these targets at month end. Current reserves at Marsfontein are 1.3million carats.
In Angola – Our 51% owned Camafuca deposit also has tremendous potential, because of the excellent quality of its diamonds and its huge tonnage potential. Reserves appear to have been understated and when production begins, this deposit could generate substantial revenues. If the greatly increased grades indicated by our initial small samples are indicative of commercial grades, then we have an asset at Camafuca that is far greater than we ever realised. Lee Barker will tell you of our innovative plans to mine at a high production rate yet keep our capital extremely low. This property currently has a drilled resource of 8.7 million carats.
Second, the high quality of our exploration properties:
In the NWT - we're pleased with our progress. We recently reported encouraging microdiamond results from the Munn Lake kimberlite sill. We have found a new pipe and a significant extension of an existing pipe at Yamba Lake; a new pipe at Lac de Gras with encouraging microdiamond results and; a 15m wide, highly diamondiferous dyke on one of our Lac de Gras properties. (DHK Block SUF 25%)
Third, our operating ability:
We are one of only five companies in the world who have the mining and processing, and metallurgical skills necessary to extract diamonds from kimberlite. I believe that our team is second to none.
Today, SouthernEra is a strong company, standing on the threshold of vigorous growth. With 4 quarters of healthy revenue behind us, we are in an excellent position to take advantage of the current very difficult resource market to expand our activities on carefully chosen projects e.g. our Canabrava deal in Brazil. Lee will tell you about a remarkable 80 carat rose red diamond mined by garimpeiros from alluvial workings down drainage from our property.
Now that we've looked at the potential of our diamond mining operations, I'd like to take a few minutes to talk about our entrée into platinum and how we believe that strategy will provide shareholders with enormous upside potential.
Our corporate strategy is to leverage our experience in diamond mining, as well as the specific experience in Platinum, of senior management at SouthernEra, to increase our long-term revenues and growth potential.
Platinum is the world's rarest white precious metal. Demand for both Platinum and Palladium is currently outstripping supply, making the fundamentals in the platinum group metals extremely good. Were it not for substantial amounts of platinum and palladium being sold from Russian stockpiles, I believe the price for these precious metals would be substantially higher than it is today. There is general consensus that these stockpiles will be depleted over the course of the next few years.
This graph shows how palladium has continued to increase in price while platinum has largely held its price in stark contrast to the marked decline in the price of gold and of other metals. Platinum, apart from its industrial uses, is showing spectacular growth in use for high-end jewellery where it is used on its own and in settings for diamonds. I believe that the fit between diamonds and platinum in SouthernEra's portfolio will lead to very long term, healthy revenues for this company.
Remember, we don't plan to smelt, refine or market the PGM's at the outset. We will mine and sell the concentrate thus staying within our present field of experience and competence and saving us huge amounts of initial capital outlay.
There are tremendous synergies for us in these two projects, because the Messina platinum site is so close to our Klipspringer site. Results from past drilling indicate a resource of 10.5 million ounces of platinum, with the potential for that to triple. This means that at 120,000oz. per annum, equivalent (at today's gold price) to 195,000 oz per annum of gold, the Messina mine could generate substantial annual revenues for 66 years. These reserves have several favourable attributes, unlike other South African producers: steep dip, very good Palladium to Platinum ratios, and much greater Nickel and Copper credits than other PGM mines in South Africa. We buy these reserves at less than $1 per proven ounce and would sell them, at the current price of Platinum and Palladium, at over $416 per ounce. ($315 net.) before costs.
We hope to be in production within three years at Messina. At that time, we would have another profitable revenue stream and would then be the world's only major producer of both diamonds and platinum. I reiterate: We in SouthernEra believe that not only do diamonds and platinum make great jewellery, but financially, they make a great fit as well.
In our feasibility, which is currently underway, we will, obviously, also look at the implications and capital costs of producing at the rate of 180,000 oz. p.a. instead of 120,000. The current reserve base could support an even greater production rate than this.
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I trust all noted a totally new reference to a 15m wide dike on the DHK claims and to discovery of a significant extension to an existing pipe at Yamba not to mention some outstanding data from Brazil, Camafuca and especially Klipspringer/Messina.
Check out the slide show and photos, (unfortunately not captioned).
Kim Freeman's and Lee Barker's presentations are not posted but if SUF is reading this, please post them as this is terrific stuff.
I hope we can continue to count on regular graphics and text on the web site and that this was not just an annual AGM effort.
Very upbeat and very very exciting presentation. Hats off to CJ and staff for their efforts and the new PR crew for improving things 100% in a few short weeks.
Now if I can just get the SUF fax machine to quit losing messages we'll all be happy campers.
Howard, my e-mail address is noted on my SI profile, except you should replace the second underline _ with a dash -. Let me know if you still can't find it?
DJ suggesting SUF is a Hold with a 12 month target of $6 has got to be the understatement of the century. The only thing keeping SUF at $6 is the party(s) constantly unloading his/their position, but eventually those shelves will run bare.
Fill your pockets while you can fellas.
Regards
P.S. Howard, my questions can be found in the sentences ahead of the question marks in this post.
Message 10048800
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