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

To: VAUGHN who wrote (1915)	8/11/1998 12:03:00 AM
From: Confluence	Read Replies (2) \| Respond to of 7235

Hello All, I've been watching the market over the past while and it seems that most other diamond companies are experiencing the pain SUF has already been through. It would be good for all companies if gold/metal prices rebounded, and especially good if Aber and Diamet were trading near highs rather than making new lows. But this rough period for miners could prove to be excellent for SUF. From all of the companies born of the staking rush in NWT, SUF is the first to have meaningful earnings. That the first quarterly earnings were posted in such a difficult, trying period is a demonstration of the determination and skill of the people at SUF. They acquired property, explored, found diamonds and produced meaningful earnings in under 3 years. Imagine what they might achieve into the future now that they can generate earnings to fuel exploration all over the world. Quite obviously, SUF has built a team at Klipspringer that can endure great stress and difficult times and still create shareholder value. It may be that the 40% of M1 is of much greater worth than anyone has expected. One fellow suggests earnings of over 2 bucks/share in 1999. The recent amazing recoveries in the overburden may be pointing to a change in the fortunes of SUF. With good amounts of cash on hand, and more generated from production, SUF can easily purchase a smaller plant to handle the announced tonnage from the Leopard and Sugarbird fissures, and whatever else they might find. This is all additive to earnings and not reflected in any analyst projections that I have seen. While M1 is not huge in size, the probability is that SUF, with stepped-up bucks for exploration, will find something else to augment the production from fissures. A year ago there was much talk of M2, M3, .... M?. Lots of potential, some 40% SUF, most of it on 100% ground. SUF has spent 8 months fighting for Marsfontein, but now they're back to concentrating on finding diamonds and mining diamonds. In Angola, political/military problems are difficult to understand. Some suggest this is a large issue for SUF. Others think it less of a problem. I understand that defending a riverbend operation (Luo, Cassanguidi) is much more difficult than building a big fence around Camafuca, and manning security with the help of other equity partners (like Endiama). Clearly, no value for Angolan assets is built into SUF's share price. So all good developments, like production at Luo or results from Camafuca should increase SUF's value, although a clear peace would be very beneficial. In the NWT, SUF has not hit the jackpot - yet. While they missed this past drilling season, SUF has allocated their best exploration person (who isn't named Jennings) to continue the elephant hunt. They are very excited about the mineral chemistry at Munn and Margaret Lakes and feel confident that it is merely a matter of time before they find the source(s). And while many pipes have been found to date in the Lac de Gras area, much of the staked ground has not been fully explored. Will struggling juniors look to the "strength" of De Beers, or opt for the technical abilities and quick action of SUF? (Hint: De Beers did walk away from Marsfontein in the 80s.) As SUF becomes a larger producer (anyone have figures for other diamond producers in RSA?), the multiple that is applied to earnings and cash flow should expand. It will be difficult for analysts and institutional investors to ignore the emergence of an important new Canadian miner that offers increasing earnings with a top-notch exploration portfolio, especially in the present global mining environment. As long as the problems at Marsfontein are over, SUF eventually will attract more attention, even from those formerly put off at the difficulties of working in RSA. Regards, Confluence PS Aren't dollop/gravy terms from grandma's cookbook?