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

To: Factfinder who wrote (3021)	4/19/1999 8:10:00 PM
From: Confluence	Read Replies (2) \| Respond to of 7235

Hello Factfinder, When I saw the tax loss carryforward, I thought it was enough to make the deal look "free" to SUF. However, in RSA, each loss is only usable against gains from that property, so this loss in Messina can only be used against gains from that property, rather than against diamond sales. It will still be quite some time into production before SUF will face taxes as they'll have the development costs plus the 110 million rand to write off against. I wonder if the analysts can grasp the tax benefit forward a couple years? BTW, net of cash in Messina, the total cost to SUF is US$10 million. This is basically $1 per oz in the ground. With potential upside of around 3 times more tonnage. Seems pretty lucrative to me. Another point to note was the other partner in the deal, the homeland trust. They own much of the land between the platinum leases and Marsfontein, and would likely be favourable to some exploration, especially the type that might lead to quick production. This Lebowa (forgive the spelling) group apparently has never dealt with de Beers. Wonder why? For those who missed it, quite a while ago, the M1 pipe is thought to be a root zone. (Forgive all my terminology). The theory is that the top 1km, or 1,000 metres has eroded from ground level. That implies that many diamonds have been transported away, probably in a southeasterly direction. These diamonds would be most likely to be found in gravels, not unlike the M1 gravels directly to the south of the pipe. If this erosion occurred along an ancient river, with bends and curves, and if it can be found, the theory goes that "potholes" could be found. And no one has explored the property. Just another potential for SUF as it develops many local relationships in a chronically underdeveloped,undercapitalized, mineral rich area almost forgotten by South African miners. And now SUF will look forward to providing over 900 local jobs. I wonder who the locals will want to deal with? One of the aspects of RSA that we forget is that much exploration was done over the decades by foreign companies like Falconbridge (CJ's former employer), Noranda and the like. When divestment of South African assets was forced in the 80's, most of the mineral leases were offered at fire sale prices to the likes of de Beers, Impala and the such. They took little interest in the properties, leaving the present under-developed situation, and explaining the government's motivation in the recent White Paper, which basically includes a "use it or lose it" condition on all mineral rights. I think SUF will have many more deals to come, especially after the battle with de Beers. But 3 huge pipes in the NWT would be AWESOME! Regards, Confluence