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

To: nempela who wrote (1623)	6/16/1998 12:15:00 PM
From: VAUGHN	Read Replies (3) \| Respond to of 7235

Hello Nempela I think I speak for everyone but possibly two when I say how much we have all appreciated your contribution to this thread over the past month or so. I for one hope and trust you will continue to post now that this deal is done. On a more somber note, I am deeply concerned about the longer term effects of yesterday's announcement. Unfortunately for the RSA, its people, and Minister Maduna, I believe there is a reality here that will come home to roost. Many of us and the media, suggested this in the course of the last eight weeks, and while we are all breathing a sigh of relief that SUF's future is now a little more clear, the RSA reception in wait for any foreign investor, mining company and especially a junior, is not. The bottom line? Despite what the RSA might do in the future to resolve the loop hole the "heirs" used to irregularly register property "rights" and extort their pound of flesh, the system failed! Make no mistake about it. It failed SUF. It failed the people of the RSA! It failed the economy and very possibly, as a direct result, the political stability of the RSA! The RSA wanted foreign investment, specifically because the home grown business establishment had failed to move the economy forward. If there is a recipe for economic upheaval in a modern society, it is unemployment. As a result, there are any number of unanswerable questions overhanging any mining investment decision in the RSA. Will this happen to me? When will this loop hole be closed? Are there other loop holes? Can a foreign company or individual invest in the RSA and expect their investment to be protected by the law and the government? Can a successful foreign mining company take its own production to market and maximize its profits? Minister Maduna may possibly have sweetened the pot for SUF to make this deal happen, however, no such deal, has as yet been suggested. If there has not been one, such as reduced taxes or other prospective properties made available preferentially, then the market will penalize companies with a RSA story. Canadian juniors at least, can not afford this. Everyone of us knows, for a Canadian mining junior, its the story that gets a play off the ground. Obviously, any junior like SUF that plans on being around, (a rarity), needs to invest in people, and actually come up with results. However, the vast majority of juniors are really only interested in a story that the market will believe in. Of all the countries any junior can invest in, why would they pick one where the market will not believe their investment is safe? As I pointed out previously, how many juniors have you heard touting properties in Indonesia over the past 14 months? How many before that? The RSA and Minister Maduna had better demonstrate publicly and quickly that SUF has both been granted some special considerations, and that all possible legal title issues will be resolved in very short order. If not, juniors simply will not bother to even look at the RSA because the market simply will not listen. Investors do not like uncertainty. I don't expect the market to continue to punish SUF for their RSA investment. After all, they have paid for "protection"! But others? This could not have been a worse decision, both for the RSA and yes, even for DeBeers in the long run. If DeBeers had been handed the whole property, it would not have made any difference in the markets eyes. No Canadian junior with an existing or possible deal with DeBeers will be immune. For now, the market sees that they are partnered with a company who will do anything and everything to steal equity and title. If the RSA becomes economically unstable as a result of lack of foreign investment, DeBeers stands to lose there too. For a company that prides its self in taking the long view, they have either shot themselves in the foot, or are so incredibly arrogant that they think they will be immune forever. I am sure the Romans, Nazis, ITT , Savings & Loans and Nixon must have been stunned with the realization that they were not going to last forever. "People who do not learn from history are doomed to repeat it". In my view, the term "Anything But DeBeers" will become an industry hallmark that will haunt them. This may be especially damaging in Canada where so many deals are possible and so much potential remains untapped. The Canadian government may have to take a long hard look at Monopros just as they are doing with bank mergers. Minister Maduna and the RSA Embassy, had better make some announcements very very publicly and very very quickly. Perception is everything! Regards