Southern Platinum Comments on Trading Activity and Progress at Subsidiary Messina Platinum
Shares Issued and Outstanding: 85,339,411
TSX: SPC
TORONTO, Sept. 13 /CNW/ - Southern Platinum today commented on recent
trading in the Company's shares and also on progress at 91.5 percent
subsidiary Messina Platinum. The Company expressed its surprise and
disappointment with the decline in the Company's share price since the
reorganisation of the Group, which was completed under a scheme of arrangement
(the "Plan") on September 1, 2004.
Under the Plan, the platinum and gold assets of SouthernEra Resources
Limited were reorganized under a newly listed public company, Southern
Platinum (TSX: SPC). Through the Plan, Southern Platinum now controls the
following platinum assets:
- 91.5 percent of Johannesburg-listed Messina Platinum;
- 50 percent of the Dwaalkop Joint Venture;
- 85 percent of the Millennium Platinum Project in South Africa;
- 100 percent of the Paradise Platinum Project in South Africa; and
- 95 percent of the Monts de Cristal Platinum Project in Gabon.
Southern Platinum has acquired control over these assets in the past four
years. Collectively, these assets place the Company amongst the strongest
platinum growth companies globally, with production growth projected to
increase by more than 300 percent by the end of 2006.
Within months of gaining control of Messina, Southern Platinum
recommenced development of the Phase 1 mine. This was financed out of treasury
until three years ago, on September 11, 2001, when Messina Platinum secured
the project finance required to complete construction of the Phase 1 mine. Two
years ago, construction of the Phase 1 mine's infrastructure was completed on
schedule and on budget and the Main Shaft and Main Plant were commissioned.
Over the past two years, Messina has been developing underground, to open up
mining faces, and recruiting and training its workforce, which now stands at
approximately 1,800.
Based on knowledge gained while mining on the two upper levels of the
mine during the construction period, the Board in 2002 approved the expansion
of the Phase 1 mine's capacity from the original 80,000 tonne per month to
120,000 tonnes per month. In addition, the implementation of new mining
methods - conventional and mechanised long-hole stoping - was also approved.
To support the increased mining rate, deepening of the mine was commenced
immediately rather than waiting until Year 5 as originally planned. In
addition, construction of a trackless workshop was completed at the 350-meter
level; development of a decline ramp from the 350-meter level commenced; a
fleet of trackless development and mining equipment was purchased and
operators were hired and trained.
These strategic decisions - to increase the mining rate and to implement
superior mining methods - were embarked on with the full understanding that
the mine's build-up to full production would be delayed. However, these
decisions ensure that once in full production the mine will be safer, more
productive and, hence, more profitable. Had Messina not taken these important
strategic decisions when it did the risk that the originally designed 80,000
tonne per month Voorspoed shaft would be able to achieve and sustain an
operating profit under the current strong Rand environment would be greater
than it currently is.
In addition to the above, Southern Platinum recruited and hired a new
mine general manager, Mr. Glenn Baldwin, eight months ago. Mr. Baldwin, an
Australian-trained mining engineer, has specific experience with mechanised
long-hole stoping, which is widely practiced on Australian and Canadian mines,
but seldom on South African mines. The geology of Messina Platinum, which is
unique on the platinum-rich Bushveld Igneous Complex, allows the
implementation of mechanised long-hole stoping, which is superior to the
conventional down-dip stoping practiced on most other platinum mines in South
Africa.
In addition to leading the successful implementation of mechanised long-
hole stoping, Mr. Baldwin has also implemented a number of significant
business practice improvement at the Phase 1 mine over the past eight months.
During this period he has:
- improved Messina's safety record by halving accident rates;
- doubled development rates since the start of the year;
- fundamentally restructured Messina's bonus compensation scheme to
reward employees for excellent performance; and
- implemented continuous operations to improve productivity. Messina is
the only underground platinum mine in South Africa that has adopted
this practice.
As with the strategic decisions described above, these actions - while in
the near term impacting the mines build-up to full production - ensure that
once full production is achieved it will be sustainable and profitable under
even under a harsh exchange rate environment. Collectively, these initiatives
taken early in the 20-year life of this mine ensure that the mine will be
amongst the safest, most productive and most profitable underground platinum
mines in South Africa.
In addition to the impact of these strategically important initiatives,
Messina's build-up to full production has been slower than anticipated due to
the inexperience of the majority of Messina's new work force. Approximately
1,000 of Messina's employees have been on site for just over 12 months. As
each month passes, the experience and productivity of the workforce improves.
Regrettably, some of the above business practice improvements have caused
tension with Messina's representative labour unions. This resulted in an
unfortunate illegal strike in late May and early June, which negatively
impacted on production. Communications with the three unions representing
Messina's 1,800 employees have improved over the past few months and
constructive consultations are underway to improve the productivity and
working conditions of the employees.
In the past month, Messina's Phase 1 mine has performed better than at
any time since production commenced. Based on the performance to date, the
mine is expected to report its first operating profit this month, a mere two
years following commissioning of the mine. This is less than half the time it
has taken for other underground platinum mines in South Africa to report
operating profits.
In addition to the high level of activity at the Phase 1 mine, Messina
has continued exploration at the Phase 2 (Doornvlei and Dwaalkop sections) and
Phase 3 (Zebediela Section) projects. A feasibility study has been completed
at the Phase 2 Project and the results are due to be released at the end of
the current quarter. Through the drilling program associated with this,
Messina's resource has been increased significantly.
Commenting, Southern Platinum President and CEO, Patrick Evans, said:
"From a position four years ago, when our Company had no platinum assets,
Southern Platinum has grown to become one of the strongest emerging mid-tier
platinum producers. We have built and brought our first underground mine into
production in less than half the time it normally takes to achieve this in
South Africa and also in less than the time it normally takes to just permit a
mine in North America. Through this period we have invested heavily in
innovation to ensure that this very long life asset performs optimally. In
addition, we have continued to grow our asset base through successful
exploration for platinum group metals; the successful acquisition of the 9
million ounce Dwaalkop Section of the Greater Messina; and the completion of
scoping and feasibility studies at our expansion phases of the Greater
Messina. This is a remarkable achievement for a junior Company."
Mr. Evans added: "It is regrettable that at the very time that we
position Southern Platinum as a 'pure platinum play', through the
restructuring of our Group, that our share price should come under the
pressure we have experienced this past week. Despite this disappointment, our
business strategy and business plans remain unchanged and keenly focused on
creating long term shareholder value by building what we expect will be one of
the world's great platinum companies."
Southern Platinum is an independent producer of platinum group metals.
The company also has an extensive PGM exploration program. The common shares
are traded on the Toronto Stock Exchange (TSX: SPC). Mr. Michael Cowell and
Dr. Anthony Martin, professional geologists, are the qualified persons in
respect of the Greater Messina Platinum Project.
NOTE: Certain statements contained herein are "forward-looking" and are
based on the opinions and estimates of management, or on the opinions and
estimates provided to and accepted by management. These opinions and estimates
include those that relate to all the geological, development, mining and
commodity price and market parameters used by management. Forward-looking
statements are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ, possibly
significantly. Readers are therefore cautioned not to place undue reliance on
any forward-looking statement.
For further information: Southern Platinum Corp.: Mr. Patrick Evans,
President and CEO, Telephone: (416) 359-9282, Fax: (416) 359-9141, E-mail:
inbox@southplats.com, www.southernera.com |
