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

To: Rocky510 who wrote (2667)	3/31/1999 12:02:00 PM
From: Confluence	Read Replies (1) \| Respond to of 7235

Hello Gord, Jimmy et al, I thought the NR was great. Stock is behaving poorly due to lack of buyers, but the way I read the news, several questions have been answered. 1) What is Q1 production/cash flow/earnings? A - From 55 days 194,877 carats have been produced, implying 3500 per day, with 8 days left in March. Thus 220,000 carats for Q1. SUF gets 40% or 88,800. Valued at $130/carat, this is US$11.5 million in revenues, with a margin of 80% giving cash flow roughly of CAN$14 mil, or $0.50/share. With a tax rate of 35%, my simple calculation gives about $0.33/share in earnings for Q1, from M1 solely. Additional production, higher diamond prices, nugget effects, etc. are all additive. 2) How log will M1 production last? A - In the minds of the JV partners, at least until late 2001. This is well over 2.5 years for an asset that most analysts have pegged to run out next year. 3) Can Marsfontein lifespan be lengthened further? A - Probably. With the many possibilities, especially the M1 gravels (does everyone remember the overburden?), this seems more and more likely as time goes on. Ongoing work is likely to prove up more resources, but with M1 lifespan lengthened, its not imperative to short term revenues. 4) Does M1 fit into part of the same system as the Leopard fissure? A- Seems to be. The map accompanying the release shows the various anomalies trending westward towards the Marsfontein border, SUF 100% property and the Leopard fissure. This could be a huge, linked resource! Even though the market doesn't respect the value in SUF, just wait until analysts get a better look and understanding of this potential. In my opinion, Marsfontein and Klipspringer alone will merit a $20 share price this year, with Angola, NWT, other developments all being additive. SUF has the simple, but challenging, task of informing the world of just how wonderful this company's prospects are. Why is the market cap only $50 million greater than Winspear? Regards, Confluence