BARRINGTON FINANCIAL SECURITIES ANALYSTS
1st Quarter 1999 . 14 RUE RHONE, 1204 GENEVA SWITZERLAND . 41.22.819.1890
This report is published on an exclusive basis for subscribers to the analyst services of the publisher. The information contained herein is proprietary and is not to be reproduced or dissem9nated without prior written consent from Barrington Financial Securities Analysts.
Barrington Financial is a subsidiary of Union Trading Financial Ltd. – a full-service discount brokerage firm with headquarters in Amsterdam, Netherlands. Barrington Financial publishes 20 special situation reports per year one merging growth companies trading on major securities markets in the United States and Europe.
Each report focuses on a company that is selected from hundreds of candidates, based on future trading market potential and the feasibility of the selected company to achieve optimal business goals. All Barrington publications are based on in-depth research and due-diligent investigation to ensure accuracy and accountability of all information.
SPECIAL SITUATION REPORT
STOCK DATA
OTC Trading Symbol.............................AFRI
Current Price...........................................$0.35
12-Month Range.......................$0.01 - $0.62 Common Stock Outstanding
Public Float....................................1,520,000
Total Shares..................................11,400,000
Fiscal Year End...................................Dec 31
African Resources, Inc. (formerly known as Alpha Diamonds Corporations - ALDM) is a U.S. natural resource development and mining company with diamond concessions in Africa and operating gold mines in the United States. The company's current mineral resource deposits are among the richest finds in western Africa for the preceding decade and have the potential of generating substantial revenues over the next five years. The U.S. gold and platinum concessions represent billions of dollars in proven reserves.
The Company's primary African concession is on the Konkoure River in Guinea which has proven, in a recent Black Sand Assay conducted by American Assay Laboratories, to consist of 1.2 oz. of gold per ton, a mineral consistency of 45.6% titanium and significant gem quality diamond volume. The Guinea government equivalent of the Department of Minerals and Mines has independently estimated the concession's value at $1.6 Billion. Subsequent to the government's evaluation of the concession, the Guinea government ceased the issuance of any further mining permits perimetering the concession. Full-scale alluvial mining of the 20 mile concession is scheduled during the first quarter of 1999. The concession is projected to yield approximately $600 Million to the company by the end of 2003.
The Company has an option on a secondary African concession on the Dinguaye river-also in Guinea with Gold reserves, estimated at $1 Billion. Barrington has learned that the Company intends to exercise it's option during the fourth quarter of 1998 and to commence mining operations during the second quarter of 1999 together with it's joint venture partner, Gold Rivers of Africa. In addition to the Dinguaye River Concession, management is negotiating to acquire two additional gold and diamond concessions in western Africa. Barrington analysts forecast that the secondary concession will be achieving substantial operating profits in the nine-digit range by the end of 2003.
On December 16, 1998, the Company acquired a 100% interest in Golden Green Mining, Inc.-currently mining approximately 1,000 acres of gold claims located on the Papago Indian Reservation in southeastern Arizona. Golden Green is a full-scale operational gold mining company with proven reserves of over $120 Million and an estimated $6 Billion in total reserves. The Golden Green-one of only two operating gold mining operations in the State of Arizona-owns one of seven gold-platinum smelter licenses issued by the state. Golden Green is expected to yield over 100 ounces of gold per day by the second quarter of 1999 and potentially represents one of the richest gold reserves in the State of Arizona.
The Konkoure River concession, represents one of the richest natural resource finds in western Africa. The combined Konkoure and Dinguaye concessions represent potential reserves of $2.6 Billion. African Resources Inc's 50% participation represents potential reserves of approximately $1.3 Billion - $12.50 per share. The book value of the Company, based on the Konkoure concession alone-not including the U.S. natural resource assets - is currently carried at $3.57 per share.
The Company's securities trade as Units - each Unit consists of One Class B Common Share and One Class A Preferred Share. The Class A Preferred Shares provide the holders with a pro-rata distribution of 3% of the gross revenues derived from the Company's mining interests.
Trading in AFRI's small float of 1,520,000 common shares has been unusually active. On April 28, 1998 - volume of 3,150,000 shares traded, on June 2, 1998 – 1,250,000 shares traded and during the last eight weeks of 1998 approximately 500,000 per week exchanged hands. During September 1997, the trading value of the Company's shares was over $13 per share. Barrington analysts have audited the trading records of the company and are of the view that there are substantial short positions with many of the current market makers.
Current trading market price of approximately $0.40 per share represents a 4.6 Million market capitalization. This market cap is less than one sixth of AFRI's book value – which is $3.57 per share- And less than 7% of the Company's share of the estimated reserves in its primary concession.
Natural resource companies historically trade at two times book value-prior to commencement of mining operations – and four times book value – upon commencement of full – scale mining operations. AFRI is currently trading at approximately one fourteenth the price level that market analyst project as the standard for similar stocks.
On June 11, 1998, the Company's shareholders restructured the capital stock of Africa Resources, INC. The shareholders authorized Class A and Class B Common and Class B Preferred Stock. The company determined that the Class A Preferred shares-yielding 3% of the gross net revenues from all mining concessions – is attached to Class B Common shares and made into a non-detachable Unit Certificate. This Combination equity and revenue Unit Certificate represents the trading instrument for AFRI. Barrington is of the view that the Class A Preferred dividend yield potential represents a significant long term revenue security for shareholders that will have the effect of dampening short term profit selling and stimulate shareholders to place AFRI Unit Certificates into long term holding portfolios. THIS STRATEGY MAY SIGNIFICANTLY EFFECT THE TRADING VALUE OF AFRI.
On January 4, 1999, the company announced litigation for unauthorized trading of the company's securities. On April 28, 1999 the third largest bank in the United States allegedly without authorization from the account holder – sold one million shares within a thirty minute interval and forced the company's Stock to an all time low of $0.01 per share. The unauthorized trading activity is to be brought before the NASD for arbitration during the first half of January 1999 – Concurrent with a lawsuit against the bank for damages. This means that – pending successful litigation – Chase Manhattan bank will be ordered to return the one million shares to the company and pay damage awards as determined by the courts.
Natural Resource Mining Revenues. The Company intends to develop its concessions for optimal revenue flow via full-scale alluvial and placer mining operations. Management intends to reinvest its net revenues into development of other concessions that the Company currently has under option or acquires at a future date.
Acquisitions. The Company intends to acquire additional natural resource concessions and companies involved within the natural resource mining industry. Management intends to consummate the purchase of targeted concessions and companies with generous royalty commitments, modest cash consideration, Preferred Stock and minimal if any, equity distribution.
Joint – Venture Programs. The Company anticipates the consummation of a number of joint – venture agreements with several natural resource concession developers and mining companies during the next five years. The terms of the joint – venture agreements will vary – however, in most cases will be based on an investment by the company in exchange for concession revenue participation rights.
A highly qualified management and advisory team with breadth and depth of experience is committed to the company's long-term objective of developing its U.S. and African concessions. AFRI's executives serve in active roles toward mining development and strategic acquisitions. These executives have, in their Business history, manifested the skills and abilities that are incumbent for a business plan with the scope and dimension of African Resources, Inc. to succeed.
The Company is quietly negotiating joint – venture relationships with other natural resource development companies. Management has scheduled the full – scale alluvial mining operation for the Konkoure river concession to begin during the first quarter of 1999. Management anticipates that the Dinguaye concession will be on – line with a full – scale mining operation during the first quarter of 1999. In addition, management is working with the mining operations team of Golden Green Mining, Inc., to expand the gold mining operations of the southeastern Arizona concession to an output of 100 oz. of gold per day by the end of the third quarter 1999. Aggressive acquisitions campaigns and various innovative financing programs for natural resource concession developers will continue for the foreseeable future. The Company commits 45% of its future operating profits toward natural resource concession acquisition efforts.
The Company's management is highly experienced and entrepreneurial in spirit.
The Company is bent on rapid growth with plans that call for expansion into other lucrative concessions. This growth is intended to be accelerated by management's innovative joint – venture programs.
Operational goals for the end of 2003 forecast five full – scale mining operations to be in place.
The Company has a small number of shares issued and outstanding – 11,400,000 common shares. The trading float (shares eligible to be traded on the securities markets) is only 1,520,000 common shares. The management does not intend to finance future expansion via dept. The value of the shares, in the securities markets, will rise in tandem with the net revenues – which are forecast to be substantial.
African Resources, Inc., is an exceptional mining stock opportunity. The Company has minimal debt and does not intend to finance itself via the use of future debt financing. This is a major factor in Barrington's selection. The Company intends to derive its growth via its proprietary ownership position of two highly regarded and valuable natural resource concessions in Africa and the significant gold reserves on the Golden Green operational mine in the State of Arizona. The Konkoure concession, in the view of Barrington's is one of the most valuable natural resource concessions in western Africa. The Company's book value, accounting the Konkoure river concession alone, is $3.57 per share. The units – as seen by Barrington analysts – should be trading at the $7 per share level today and are forecast to trade at the $14 per Unit level – upon commencement of full – scale mining operations in Africa. These prices may pale in comparison with the potential trading value of the units if the Chase Manhattan Bank litigation is successful via NASD arbitration and court action of the unauthorized trading of the company's securities.
Barrington Analysts have learned that the significant short position of the Company's market makers is of major concern for a number of NASD broker – dealers. In the view of the mandatory exchange demand by The Company for the new unit certificate – Barrington forecasts that severe pressure will be brought to bear upon the market makers to cover their trading positions, which will enhance the trading value of the Company's units significantly. Look for the common share trading of African Resources, Inc.,
to achieve substantial volume during the first quarter of 1999 and a trading price within the $3 to $5 per unit range!
The trading symbol "AFRI" promises to be one of the fastest moving stocks of the next 36 months! This is one of the highest recommended BUYS that Barrington has published during the preceding year!
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