SouthernEra loses $2.2-million in Q2 2002
SouthernEra Resources Ltd SUF
Shares issued 51,580,800 Aug 28 close $6.35
Thu 29 Aug 2002 News Release
Mr. Patrick Evans reports
SOUTHERNERA RELEASES SECOND QUARTER RESULTS
SouthernEra Resources Limited has released the following highlights from the second quarter of 2002: immediate deepening of Messina phase 1 shaft, to increase production by 50 per cent; common shares to list on the London Stock Exchange's Alternative Investment Market; completed $32-million equity financing; and appointed new senior management members. Subsequent to June 30: Camafuca diamond operating joint venture approved; Yamba Lake diamond project yields encouraging diamond results; SouthernEra joint venture awarded new platinum properties in South Africa; drill program defines 1.44-million-ounce mineral resource at Millennium Platinum; SouthernEra underwrites Messina Platinum rights issue; Messina phase 2 feasibility study completed by SRK, upgrading mineral resource to 6.3 million ounces; and SouthernEra joint venture announces 7.8-million-ounce mineral resource on newly acquired platinum properties. Operations update The company's 70.40-per-cent subsidiary, Messina Platinum Mines, continued to make good progress in developing the phase 1 mine. Equipping of the main shaft to 430 metres progressed well, while development and production at the 150- and 200-metre levels continued through the API shaft.
As planned, the phase 1 main shaft was commissioned on Aug. 19.
Preparations for the deepening of the main shaft to 730 metres are well under way. The focus of mining activity has now shifted to development on the 275-, 350- and 400-metre levels to support the buildup of production. Construction of the phase 1 main 90,000 tpm plant continued during the quarter. Commissioning of the new plant is expected to take place ahead of schedule during early September. At the Klipspringer joint venture (KJV), sinking of the decline was completed. Fissure development and mining is now the focus of activity. In the current quarter, tonnage throughput was 52,472 tonnes compared with 162,200 tonnes in the second quarter of 2001. Average grade in the quarter was 41 cpht, compared with 15 cpht yielding 21,443 carats in the current quarter and 24,288 in the comparable quarter of 2001. SouthernEra's portion is 50 per cent of the KJV's production. The company incurred a net loss for the three months to June 30 of $2.2-million (five cents per share) on revenue of $700,000, compared with a loss of $2.3-million (eight cents per share) on revenue of $1.0-million in the second quarter of 2001. Cash flow provided by operations for the quarter was $400,000 (nil per share), compared with a use of $700,000 (two cents per share) in the second quarter of 2001. For the six months ended June 30, the net loss was $3.6-million (nine cents per share) versus $3.2-million (11 cents per share) for the comparable period in 2001. Cash used in operations totalled $1.1-million (three cents per share), compared with $800,000 (three cents per share) for the six months in 2001. Deepening of the main shaft In April, the company decided to proceed with an immediate deepening of the phase 1 main shaft at the Messina platinum project. The main shaft is being deepened from its current level of 432 metres to 730 metres. The deepening will increase phase 1 production by 50 per cent. A production rate of 80,000 tonnes per month will be achieved by the end of the third quarter of 2003 and will continue to a full production rate of 120,000 tonnes per month by the end of the first quarter of 2004. The shaft deepening will defer approximately $20-million in cash flow from 2003 to 2004, and thereafter is expected to generate an additional $20-million in cash flow each year thereafter, assuming no changes in metal prices. Capital costs for the expansion are estimated at $22-million, of which nearly half is future expenditure moved forward. The current banking syndicate is co-financing this initiative. Common shares admitted to trading on the London Stock Exchange's AIM In May, the company announced plans to proceed with a secondary listing of its common shares on the London Stock Exchange's AIM. The company retained Nabarro Wells & Co. Limited as its nominated advisor and Brewin Dolphin Securities Limited as its United Kingdom broker and financial adviser in listing SouthernEra on AIM. Subsequent to the second quarter, the company submitted an application for admission to AIM and trading in the company's common shares commenced in mid-August. The AIM listing will enable the company to broaden its shareholder base and to expand its international profile. Equity financing In June, the company closed a $32-million equity financing through a syndicate co-led by National Bank Financial and BMO Nesbitt Burns Inc. The financing consisted of five million common shares at $7.25 per share and a further 1.7 million common shares at the same price by way of a green-shoe option. The financing will contribute toward the financing of Messina's phase 1 mine expansion. It will also enable the company to take down its share of rights in a Messina rights offering and to take up additional unexercised rights in order to increase its percentage ownership in Messina Limited. A rights offering will enable Messina to restructure its balance sheet and reduce its debt, including money borrowed from SouthernEra, which totals approximately $13-million. Additions to management During the quarter and subsequent to June 30, two senior managers, Dr. Sally Eyre and John Barker, were appointed to the company. |
