Attention Business Editors:
Messina Moves Forward In Arranging Debt Financing of PGM Project
TORONTO, Dec. 19 /CNW/ - Messina Limited. ("Messina"), a 70.4% owned
subsidiary of SouthernEra, announced today that, based upon the terms and
conditions outlined in their indicative term sheet, it has awarded a mandate
to Rand Merchant Bank to arrange and structure a non-recourse loan for the
construction and start-up of its 100% owned Messina Platinum Group Metals
("PGM") project in South Africa. Peak funding requirements for the project,
exclusive of the financing costs, are estimated to reach ZAR495 million, or
US$64 million at the current exchange rate.
Completion of the debt financing with Rand Merchant Bank, one of South
Africa's largest and oldest lenders to the resource industry, remains subject
to, amongst other requirements, Messina arranging (i) acceptable floor-price
protection for platinum and palladium production, (ii) an acceptable
completion guarantee, (iii) a commitment on the remaining capital required;
and (iv) completion of due diligence and final credit committee and board
approval by the Bank. The credit facility may be drawn down by Messina in
either US dollars or South African Rand at Messina's option.
SouthernEra Chairman Dr. Chris Jennings said "we are very pleased to have
the continuing support of the Rand Merchant Bank Group, who financed
SouthernEra's original 54% acquisition of Messina. They are one of the most
knowledgeable and experienced lenders to the resources industry in South
Africa. We are confident that we will be able to meet the terms and conditions
required by the Bank on a timely basis."
To supplement the debt financing, SouthernEra is in discussions with
several multi-national corporations who are end-users of platinum group metals
and are interested in securing a long-term supply of platinum, palladium and
other platinum group metals. These groups have indicated a willingness to
provide a floor price mechanism. "Obviously the recent increase in PGM prices
is proving helpful to us in our effort to make these arrangements. Our
objective remains to complete the project financing without a SouthernEra
equity issue," said Dr. Jennings.
The Messina project bankable feasibility study completed in February,
2000, projected a 36.3% IRR and a net present value at that time of US$121.7
million at a 10% discount rate, assuming a platinum price of US$448 per ounce
and a palladium price of US$498 per ounce. Platinum is currently trading at
US$600 per ounce while palladium is now around US$900 per ounce. The
feasibility study predicts an average annual production rate of 159,000 ounces
of 5PGM's + gold with an average operating cost of US$150 per ounce of payable
metal (net of nickel and copper by-product credits) and a mine life of 17
years.
"The Messina project repositions SouthernEra as a significant future
producer of PGM's and we are currently evaluating further PGM opportunities,"
Dr. Jennings noted.
SouthernEra Resources Limited is a diamond mining and exploration company
and an emerging platinum group metals producer. The common shares of
SouthernEra are traded under the symbol SUF on the Toronto Stock Exchange.
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