Marsfontein: more facts
Hello to all
It's gratifying to see that the information that was published in Business Day in South Africa last week, under the telling headline "Setting [the] record straight" sums up and reiterates *exactly* what they had told people like me that were phoning, and which I verified and posted.
The figure of R980,000, which was set aside by Southernera in trust has been confirmed as a more-than-generous valuation for the mineral rights to Marsfontein, particularly because at the time nothing substantial had been found on the property that would put a higher value on Marsfontein than on the other nearby farms. "Infoman's" post, and his/her language, depicting Southernera as "fighting De Beers in their own backyard," and supporting posts likening the mineral rights to a "winning lottery ticket" (Gull) can be evaluated by readers for what they are. The law is the law, and to have "an heir" suggest that the law will be interpreted differently because the dispute is in De Beers "own backyard" (Infoman) is something I won't touch.
With respect to the comparison between acquiring mineral rights and buying a lottery ticket: Mexico has a system whereby certain properties can be picked up in a kind of "lottery". In South Africa, as I understand it, a company with a valid prospecting permit either negotiates with the registered mineral rights holders, or, if they're dead, the company may apply for them from the State. That's what Southernera did. Statements made by "an heir," (ie. in "Infoman's" post) such as "Southernera has failed to comply with even the most basic provisions of the Minerals Act" have been refuted and revealed for what they are. Again, I choose not to characterize or place value judgements on those statements made by the "heir": the rational reader can decide.
The fact that Southernera found diamonds and that the mineral rights to those diamonds ended up, at least for now, in the hands of a group that has arranged to sell them to De Beers, is well known to the mining and investment communities around the world. In fact, if you ask around, it's gone beyond those arenas, and is now starting to elicit public and media interest beyond the strict confines of mining and investment -- local and foreign mining companies, investors, shareholders and mutual fund companies, as well as foreign and world trade and diplomatic offices are following this dispute: a small company, Southernera, prospects for minerals in South Africa under the terms of an agreement with Randgold. On ground that has been abandoned years earlier by De Beers, Southernera traces a mineral train over a period of several years. They apply for the mineral rights and a mining permit for the property. There are no mineral rights holders for the property, so Southernera/Randgold make application for those mineral rights. Southernera is expected to receive them but they are granted in haste to a group of "heirs," that "came to know about them" ("Infoman"). Those "heirs" then come to an agreement with De Beers to sell the mineral rights for tens of millions of rands, after telling Southernera that they did not have a mandate to sign a deal with them. De Beers, who has no prospecting permit and no mining permit for Marsfontein, issues a press release stating that they will engage in "small-scale" mining, despite the fact that De Beers didn't discover the diamond deposit. This is not about a parochial dispute: in the global economy, the investment aspects of this situation have been noticed and are being followed closely. To assume otherwise is to deny the presence of a global economy and foreign investment.
The questions that local and foreign investors are now openly asking are these: will this be allowed to happen to companies and their investors/shareholders who pour millions of dollars of investment into ventures such as this? If a company prospects for and finds a mineral deposit in South Africa, what are the guarantees that a group of "heirs" won't step forward and demand $50 or $60 or $100 Million Rand for those mineral rights? I place no value judgement on an action like that: it's immaterial whether anyone else views it as "greedy" or not. Mineral rights have a value, and are bought and sold as mineral rights, not as diamond mine profits. The effect on the mining industry of having a group of "heirs" come forward to demand tens or hundreds of millions for mineral rights is clear. Remember that those mineral rights had already been valued in accordance with the Government, and the value of those rights, at the time at which they were applied for, was no more or less than the other mineral rights in the area.
Diamond mines are not discovered without years of exploration, highly-paid expertise, and millions of dollars/rand/pounds. The benefits are local employment, taxes for the Government, healthy competition, corporate income, more-than-adequate compensation for the holders of the mineral rights, and an influx of foreign capital into local and Government coffers. Southernera prospected for and found the diamonds, and they spent millions doing so. They did so in good faith, and followed the law. They are apparently in a position to be able to mine Marsfontein immediately: they have an operating plant, which is and will continue to be used to process Klipspringer ore in any case. Is it the case that the members of the old guard in South Africa still think that the system belongs to them, a kind of "lottery" for land and rights that they feel they have automatically won, as if it were the old days before the new Government came in? I cannot imagine, and sincerely hope, that that is not the case in the new South Africa, and that a small group of "heirs" and De Beers will not hold sway over local and foreign investment.
Needless to say, no-one is going to second guess the law. The courts will decide the issue, and that is that.
I have never communicated with Southernera's legal counsel: I consider that to be inappropriate. Legal arguments, whether they're Southernera's or Randgold's or NGS's, belong in court. My points are: (a) You don't need to be a lawyer to obtain any of the information I have posted -- it's public information registered with the South African authorities, reported in newspapers (some on the Net, but not all) or available for the asking from Government offices. (Although the information I posted was described as "nothing new," by "Infoman," judging by the posts of many others that information had not been pieced together by shareholders, and I posted it for our benefit.) In fact, in a curious way, I'm glad the "heir" posted the information he/she did. It simply allowed me and others to check up on the information, and view the entire "Infoman" post for what it is.
As far as another poster's quote from section 17 goes, and claiming that Southernera "bet" on part of it: with all due respect, legal arguments and discussions relating to interpretation of the law belong in court. I'll leave it for others to decide about provisions of the law that are quoted with no context. That sort of posting is reminiscent of "Infoman's" first post which quoted "conditions reserving the mineral rights" which actually had no bearing on who actually owned the mineral rights. In fact, as I pointed out, the logical conclusion of the argument concerning those clauses was that the South African Development Trust, (now the State) owned the mineral rights, and that is of course not the case.
Legal arguments have a proper place: in court, where legal issues are decided.
Thanks for the encouragement of fellow shareholders and posters: I am indeed still on the trail of information that helps us figure out what repercussions this will all have. Apologies if the following is obvious, but analysts quoted in the media value Marsfontein as approx. $3 or $4 (C$) of SUF's share price (if someone could dig that up with the exact numbers/quote, I would appreciate it, although I think everyone's seen/heard it.). That means the share price is fully discounted already in terms of M1! SUF is in production in Angola and at Klipspringer and has an outstanding reputation in the mining industry. A group of "heirs" who believe they have what a supporting poster described as a "winning [lottery] ticket" has unfortunately been allowed to delay the development of a mine, to delay employment for locals, and to delay the influx of foreign capital and tax revenue for the Government. I shouldn't think that would be a matter for something as precarious or capricious as a lottery ticket, or that development and foreign investment could be denied to South Africa and its Government by those who view this matter as "fighting in your own backyard". Or do De Beers and the "heirs" assume they can simply do whatever they please because this is their own "backyard"? Predicting the outcome of a court case is not my business and I'll have nothing to do with it. I don't need to because the share price has already discounted M1's value. Realizing that the "heirs" and De Beers are acting as if the old guard still holds sway over the Government and due process is another matter.
A very interesting point has emerged with respect to the agreement which NGS signed to sell the mineral rights to De Beers. The "heirs' " lawyer made the deal with De Beers on the same day that Southernera agreed with the heirs to postpone proceedings preventing those heirs from selling the mineral rights, so that Southernera could enter into a discussion/negotiation of some sort with the heirs!!!
By the way, does anyone have latest production figures/valuations for Klipspringer ?? ... apologies if they've appeared somewhere recently, but I couldn't find any post to that effect here.
Nempela
P.S. Happy Victoria Day to everyone in Canada. And thanks again to all those, wherever you may be, that welcomed me to this thread. |
