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Gold/Mining/Energy : SOUTHERNERA (t.SUF) -- Ignore unavailable to you. Want to Upgrade?

To: crudestope who wrote (5026)	11/19/1999 11:23:00 AM
From: Donald McRobb	Read Replies (1) \| Respond to of 7235

Diamond Market Commentary David James, P.Eng. (204) 988-9602 This past week we have seen several, different, recent "publications" which lend credence to the belief that the diamond market has indeed been strong and with some suggestion that this may continue to be the case into the new year. A recent De Beers presentation implies that CSO sales may reach US$5B in 1999, up from $3.3B last year. The CSO's management of sales in 1998 and the restocking of the diamond pipeline this year is an integral part of the derivation of these figures. From 1998 into H1/99, retail sales rose 6% and imports into cutting centres rose 26%; CSO sales which were off 28% in 1998, rose 45% in the first-half of this year. The "Millennium Opportunity" fits nicely into this picture, though we do like the "less subtle" challenge: "What are you waiting for, THE YEAR 3000?". A reservedly corroborative comment comes in Trans Hex Group's Rough Diamond Market Report for the six months ended September 30. This Antwerp-sourced commentary notes the restricted CSO sales in 1998, as well as fewer goods than might have been expected from Angola, the Congo and Sierra Leone, along with a minimum of Russian leakage. These factors "ensured that increased competition amongst buyers led to increased prices for outside goods across the majority of sizes and qualities" (in the six months reviewed). Trans Hex notes that CSO allocations have increased since June and most estimates put its likely sales figure for 1999 at over $5B: the CSO's annual, rough, sales figures are expected to be released in early December. We quote the following verbatim from the Trans Hex note: ...The effect of higher sales from the CSO, with premiums for their sightholders, has meant that prices for outside goods have eased in the last few months as buyers could afford to become more price conscious. What should perhaps be remembered is that this easing of prices is not due to the effect of poor polished sales, as was the case towards the end of 1998, but is rather a readjustment in pricing from the high levels that the shortage of supply fuelled earlier in the year. Indeed, it is fair to say that from a sales perspective the market remains by and large optimistic going into the New Year. This is based on the strength of US retail sales, the potential of the Millennium to generate increased sales and the possibility for further improvement in the Far Eastern markets. Despite this optimism for retail sales figures, and the encouraging exports of polished from cutting centres, there remains some notes of caution; most notably debt levels and credit periods. As is customary, much of the sentiment in the early part of next year will be based upon the US holiday season sales... Trans Hex markets its South African production by tender. On Wednesday, The Argyle Diamonds Industry Review came on-line www.ashton.net.au). This is an extremely interesting market review and outlook for the industry, opening with the forecast that world mine supply of diamonds will likely only rise 2% per annum 1998-2007, with increased (carat) output from Canada and the Orapa expansion early 2000) being only partially offset by the reduced Argyle output and limited production in Africa, due to civil war. On a dollar-basis" diamond demand is forecast to grow at 2% in real terms. This study and the implications of the new resources to be exploited at Argyle suggest that, with the growth in imports into the Indian cutting centres, a shortage of lower-end stones may occur: development work to extend the open cut at Argyle to at least 2006 may restrict access to the higher grade southern portions in the next two years, cutting overall output by 10-20% from the targeted 30M carats. This may bode well for certain of the Canadian diamond projects where average carat values range from $(60) to $140-plus: the De Beers presentation estimated the 1999 world diamond production value at 6.8B and the Argyle review at $7B. If the weight of world production was 120M carats, the average carat value would be in the plus-or-minus 57.50/carat region. The Argyle review states its position succinctly: The world's major diamond consumer markets are increasingly purchasing the Argyle product - affordable diamonds offering "value for money". Since the last Argyle Industry Review was published market sentiment has improved with indications of recovery in Japan, a buoyant USA market and strong growth in demand for rough in all cutting centres. New production has been successfully introduced to the market. However, there is a continued need for caution. The pipeline is refilling as De Beers' strategy shifts towards regaining market share and improving its return on assets. The challenges now faced by the industry are: * Building on the recovery from a low base in the Japanese and other Asian markets. * Developing a wider base of demand with a particular emphasis on the more expensive product. * Developing market strategies to deliver value to customers in an increasingly competitive environment. Over 90% of Argyle's production is processed in India and for the financial year 1998-99, Indian cut and polished diamond exports increased 12% to just over $5B: this is the fastest growing area of the sector. One other endorsement of the health of the luxury goods/diamond jewelry market was the report of record quarterly earnings and new trading highs of Tiffany & Co. (TIF : NYSE) this week. We have taken to monitoring TIF not with aspirations of becoming a merchandising analyst but because it owns 14.8% of Aber Resources and has entered into a long-term diamond sales pact with Aber. Tiffany only breaks out operating income by product group once a year, but last year 21% of operating income was derived from diamond jewelry sales and this week's conference call with analysts highlighted this area as one of the company's strongest sales groups. A new line of engagement jewelry, "Lucida", has just been launched and will be introduced in Japan this spring. (Tiffany's first "line" campaign was a six-prong diamond setting introduced in 1886.) For the record, Tiffany's Q3/99 sales were up 28% and net earnings were up 81%. International sales rose 31% with Japan up 10% (largely reflecting a strong yen), but of particular note is a 49% sales increase in the Asia-Pacific region, which is the fourth consecutive quarter of growth. TIF's holiday sales will be reported January 6, 2000 and Q4 sales are expected to be up 15-20% year-over-year. TIF's new website comes on-line November 26: www.tiffany.com. The diamond mining sector does not have a daily benchmark tone-setter" (as in London/COMEX gold for the gold mining group) but underlying market sentiment does indeed exist, and for now it's quite positive. Our principle recommendations in the diamond sector remain: De Beers (DBRSY : NASDAQ) $25.93 BUY Dia Met Minerals (DMM.B : TSE) $21.50 BUY Aber Resources (ABZ : TSE) $8.00 BUY Winspear Resources (WSP : VSE) $2.25 BUY Mountain Province Mining (MPV : TSE) $1.60 BUY

To: crudestope who wrote (5026)	11/20/1999 12:17:00 PM
From: Gee10	Read Replies (2) \| Respond to of 7235

Greetings to Crudestope from Gee10, New diamond plays in Quebec: take a look at Twin Gold (TWG), Marum Resources(MMU). Pity about SUF, seems to be hitting an all time low, the real question is just how low will it go ? Talked to the guys at Kennecott and they are a bit concerned about the whole thing. Take a look at my post on the Twin Gold and Ashton strings regarding Quebec. Rumour on the street is that De Beers have a big hit on their Attawapiskat property. They have sampled the pipe and it seems that it is running at 2-3 carats per tonne. They are now putting out tenders for a much larger bulk sample. This is extremely significant, since it is the first REAL discovery on the Superior craton.