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

To: Goalie who wrote (2400)	2/3/1999 3:05:00 PM
From: VAUGHN	Read Replies (3) \| Respond to of 7235

Hello Goalie Thanks to both you and Fix BozkurtD I appreciate your perspective and no one more than I would like to see the RSA assets continue to be developed, but there is a political wind blowing evidenced by the DB's NR and action. My three points were based on what I suspect the market will concern its self with. What I believe you have to understand is that reality means nothing to the market. Perception is everything. Markets do not like it when the playing field does not appear to be level and tenure can be revised. One need look no further than the market's reaction last year to the whole 11th hour "heirs" issue and subsequent government involvement in DeBeers assumption of 60% of an asset over which they had absolutely no legal right. If that example is insufficient, look at what happened to Inco when NVB became embroiled in Innu land claims concerns and Newfoundland's 11th hour smelter demands. There are endless examples. What the RSA appears not to get through their heads (or could care less about) is the effect that the "appearance" of questionable practices has on the market and investment decisions. There need not be actual corruption, but the very suggestion of it is enough. The simple facts are that senior citizens and mutual funds do not invest in unpredictable and risky situations. There may be no risk, but it is the appearance of risk that is sufficient. Only four things can mitigate that fear and they ALL require time: 1. Continued earnings growth consistency 2. Continued discoveries, and 3. Maintenance of the existing profit share structure 4. Continued and unfettered tenure Why do you think SUF's shares have languished so long at these levels in the face of an improving profit picture? Fear of the unknown! Of what might be the next shoe to fall? Will an amalgamation with Lytton dilute share values? Will they loose Camafuca too after investing millions? Will the RSA elections result in new ground rules? Will world diamond market troubles affect profit projections? SUF has been mired in this cycle and can not extricate itself until it finds some free market assets that are beyond the unpredictability of third world realities. I could not agree more that exploration in the RSA has some significant cost and physical advantages over the NWT, however, that is completely beside the point. The market does NOT care what you find or how spectacular it is if it has come to doubt that you might not be able to keep it... Yes, production capacity at Klipspringer should be completed and even expanded for the cash flow, but in my humble opinion, SUF should invest its profits in exploration where it, and more importantly, the market, can be assured of ownership rights and long term profit maintenance. The simple facts of life are that the market is always right. What does today's share price tell you about the markets opinion? What does the incredible volume of trades over the past several weeks tell you about the market when there has been no appreciation? Who could be selling such large numbers of shares and why at such depressed prices? Start drilling up here SUF and let's find the source of those trains! Regards