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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: James Clarke who wrote (754)	12/24/1998 12:54:00 AM
From: Tomato	Respond to of 4691

Jim, NOT QUITE ON TOPIC, BUT SOMETIMES CLOSE.. You happened to touch on my obsession- diamond stocks. Besides DeBeers, there are a few that I think are cheap, although I'm not much of a wizard when it comes to doing discounted cash flow analysis and the like, so you need to take a close look (which you'd do anyway). Here are some that I like: SouthernEra SUF.TO They have a producing mine in S. Africa and a lot of blue sky. Based on what they've got right now they're trading at less than 5 times '98 cash flow with a p/e of less than 7, I believe. This year's earnings are est. at $1.20 and '99's at $1.45. They are partners with DeBeers (actually, DeBeers screwed them out of about 60% of their top priority property through political and legal shenanigans, which is the reason they are now partners on that property). The blue sky is in S. Africa, Angola, and NWT. I think their website is southernera.com The CEO is one of the most respected people in the diamond industry, and I believe was with DeBeers for years. The company has about 65 ex-DeBeers employees working for them. Aber Resources (ABERF and ABZ.TO) This company has the hurdle of environmental approval by the Canadian govt., but Diamet, the first Canadian diamond producer which now is producing diamonds not far from Aber, has shown the way for Aber. Aber is probably 2 or 3 years off from production. The stock traded at 20 before the Bre-X fiasco that precipitated a meltdown in the mining sector, and is now trading at 5 with stronger fundamentals than before and a new jv property that may be richer than the one that will go into production. I think their web site would be aber.com Diamet (DMM.A and DMM.B - both Amex and Toronto) is the first Canadian producer, but I'm not up on the cash flow and P/E. Winspear (WSP.V) is speculative and my favorite stock. They're jv partners with Aber on the Snap Lake pty in NWT (68% WSP, 32% Aber). They do have an engineering study showing they could economically do a mine based on what they've proven by drill holes so far, which could be just a fraction of the total kimberlite they might actually prove up over the next couple years. Their website is winspear.com Rex (RXD.TO) is producing in S. African and I think is very cheap, although I haven't looked at it for a while. rexmining.com Excellent articles on the diamond industry at their site.