SouthernEra's share prices head south
By: Gareth Tredway
Posted: '14-SEP-04 10:00' GMT © Mineweb 1997-2004
JOHANNESBURG (Mineweb.com) -- SouthernEra Resources, the Toronto-listed miner, has had a dismal two weeks as its decision to split its platinum and diamond interests appears to backfired. The idea was that the split would result in two quoted shares priced at more than their previously linked single incarnation.
According to Patrick Evans, the company’s chief executive, SouthernEra Diamonds and Southern Platinum, are currently trading at less than a third of their respective net asset values.
“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,” he said.
SouthernEra Diamonds closed yesterday at C$0.30 a share while Southern Platinum closed at $1.95 a share. Two weeks before the share split, the combined company’s shares traded at C$3.60 a share. Even then, that was only fractionally more than half of the C$7 total NAV.
Evans says the shares have slightly under performed their respective sectors since the split on September 1. “It was a soft market the week before last, but last week, when investors returned, the shares were lower,” He said, “I think it is as much a reflection of the mining bear market in Toronto.”
It is still early days since the change, and Evans says he “hopes and expects” the shares to perform more strongly in future. “There is always a fair amount of confusion when something like this happens.”
The major asset in Southern Platinum’s portfolio, is its 91.5 percent holding in Messina Platinum, a Johannesburg-listed platinum miner. Earlier this year the company purchased a large stake giving it the power to buy out minority shareholders and to de-list Messina.
Evans says he is not ready to do this just yet, as current negotiations with empowerment partners, may oblige Southern Platinum to sell an equity stake to comply with South Africa’s mining charter.
If this empowerment transaction only leads to a sale to black interests at the operating level – a direct interest in the mine itself rather than in the company -- , Evans says, then a cash offer to minorities would be considered.
Mvelaphanda Resources, an empowered investment house, has concluded an agreement with SouthernEra, which secures for Mvela a 50 percent interest in the exploitation of certain significant PGM properties adjacent to the Messina lease area.
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