Here it is.
Dow Jones Newswires -- February 15, 2001
Dow Jones Newswires
Institutions Buying SouthernEra Again:
Analyst
By ANDY GEORGIADES
Of DOW JONES NEWSWIRES
TORONTO -- A "revived institutional interest" in SouthernEra
Resources
Ltd. (T.SUF) has pushed the stock above the C$3 threshold
Thursday, an
analyst said.
Ed Flood, analyst at Haywood Securities, said the company was
mainly a
diamond producer and explorer until it shifted its focus toward the
"white-hot" platinum-group metals (PGM).
"The Messina platinum property project in South Africa is certainly one
of
the better PGM plays around, so that's what's driving the share
price,"
Flood told Dow Jones. "Now you're starting to see block trades, and
institutions are coming back into the story."
One of those block trades, a cross of 735,000 shares, was
performed by
Haywood Securities Thursday. "We just have a lot of institutional
interest
all of a sudden, so we've been successful in trading blocks in here," he
said.
Flood said the company's Marsfontein joint venture in South Africa
was
responsible for making SouthernEra a "strong" diamond producer
in the
first place. But as the company "mined out" its primary asset, the
market
became "disenchanted" with the stock.
That sentiment appears to be changing. In Toronto Thursday,
SouthernEra is
up 20 Canadian cents, or 6.7%, to C$3.20 on about 832,000
shares. The
stock is nearing its 52-week high of C$3.55.
Company Web Site: southernera.com
Mike Curran, analyst at Merrill Lynch, said any interest in the stock
could
be speculation that SouthernEra Resources Ltd. (T.SUF) is about to
secure
financing for its platinum group metals mine in Messina.
"It's a rare commodity, there's not too many development projects in
platinum and paladium, and that's one of the main reasons both
those metal
prices have gone ballistic in the last six months," Curran said.
Platinum trades at about US$591 an ounce, while palladium trades
at about
US$975 an ounce. "That's double or quadruple the gold price," he
noted.
Curran said the company's new management presented at a
conference in
Cape Town, South Africa, a couple of weeks ago, and investors
could be
anxious for SouthernEra to move quickly in light of these record
prices.
He sees the company raising the US$70 million it requires to build
the mine
through a combination of bank debt and a share issue.
Rudi Fronk, a SouthernEra director, said the company's objective is to
raise the funding without an equity issue. "We're looking to
complete the
financing package with a strategic partner coming in," he said,
adding the
company is in "advanced discussions" with possible parties. He
declined
to elaborate.
Fronk said Rand Merchant Bank Ltd. (O.RBK) has committed to
funding
two-thirds of the project, which leaves about US$20-US$25 million
to go.
He expects the company will make an announcement regarding a
partner by
the end of March.
Though it will take about two years to build the mine, a feasibility
study
showed Messina will be economic at 50% of current platinum group
metals
prices, Curran said, adding that no one expects prices to stay at
current
levels.
Ed Flood, analyst at Haywood Securities, pointed out that on Feb. 8 the
company announced that an independent audit of Messina showed
a 60%
increase of the PGM resource above previous estimates. "Their
fundamentals are looking stronger," he said. "Management has
tightened up
on their exploration spending, they have focused on a commodity
that is
white-hot in the market today."
Flood rates the stock a "buy" with a C$6 target.
SoutherEra's Fronk said news of the resource's "large increase" to
16
million ounces continues to move the stock. Though palladium is the main
driver of the share price, diamonds are still on the company's
agenda, he
said, citing new projects in Angola and South Africa that are in the
works.
-Andy Georgiades, Dow Jones Newswires; 416-306-2031 |
