*News Release*Aug 18: SouthernEra president states company fundamentals solid
SouthernEra Resources Limited SUF
Shares issued 26,881,395 Aug 17 close $2.95
Wed 18 Aug 99 News Release
Dr. Christopher Jennings reports
In response to a recent decline in its share price, SouthernEra Resources
Limited stated that the company's fundamentals are solid and that it is
unaware of any reasons for the drop in value.
SouthernEra president, Dr. Christopher Jennings, said: "We wish to reassure
shareholders of the strength of the company's assets, and we are confident
that the market will begin to recognize that we are a long-term, value
investment. We began producing diamonds in March, 1998, and SouthernEra's
share of production has consistently averaged over 25,000 carats of
diamonds per month since that time."
The company recently announced six-month revenues of $25.5-million and net
income of $6.9-million, or 26 cents per share. Cash flow from operations
was $18.8-million or 72 cents per share. Lower second quarter earnings
resulted from the company taking a $3-million write-off, which was related
to exploration in the Northwest Territories. The company finances its
continuing exploration and development programs from cash flow and has no
debt.
According to Dr. Jennings, the market has not yet recognized or understood
the company's potential. "There are a lot of misperceptions in the
marketplace about diamonds in general, and our company specifically; the
main one being that our joint venture mining project at Marsfontein has a
short life span," Dr. Jennings said. "What investors may not be taking into
consideration is that we have a major, ongoing exploration program to
increase the mineble deposits on the Marsfontein farm. More importantly, we
have just started mining on our very large Klipspringer property holdings
which we own 100 per cent. Current reserves and resources outlined on a
small portion of these holdings represent a minimum 12-year life with
profitable operating margins."
In addition to these mines, the company has a valuable asset in Angola, the
huge Camafuca kimberlite pipe. The current bulk sampling program is
progressing well, and core testing results reported earlier indicated a
potential for higher grades than previously documented. Responding to
questions about security in that country, Dr. Jennings stated: "We are
confident that the Angolan government, as a partner in Camafuca, will
continue to ensure it will be a safe area in which to operate. There are
several other successfully operating mines in the area and a number of new
ones being developed."
Dr. Jennings also believes the company's strategy to diversify into
platinum is not well understood. "We have always regarded platinum group
metals potentially as valuable sources of additional revenue for
SouthernEra," Dr. Jennings added. "With Russian stockpiles expected to be
depleted in a few years time, combined with the growing demand for
platinum/palladium for jewelry and industrial uses, we believe we have an
exciting new facet to our long-term growth potential.
"Essentially, we're getting into the platinum business because of the good
economic fundamentals, and the project proximity and similar mining methods
to our Klipspringer underground mine," said Dr. Jennings. "The platinum
deposits are within a few kilometres of our current diamond operations, and
there are significant technical and administrative synergies."
The Messina bankable feasibility study is currently under way and
significant progress has been made on a number of fronts, including the
environmental, metallurgical, and mining sections of the evaluation.
Messina has a drill-indicated resource of 10.5 million ounces of contained
platinum group metals, which could generate substantial annual revenues for
well over 50 years at planned production rates.
SouthernEra's strategic goal is to become one of the world's leading
diamond and platinum production companies. Since 1992, the company has
already become the second largest diamond producer in South Africa and the
fifth largest in the world. SouthernEra holds an excellent portfolio of
properties and projects in South Africa, Angola, Zimbabwe, Brazil, Uruguay
and in Canada's Northwest Territories. The company is based in Toronto,
Canada, and listed on the Toronto Stock Exchange.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com |
