FINANCIAL POST
Wednesday, April 29, 1998
SouthernEra hopes for speedy end to suit
By PETER KUITENBROUWER
The Financial Post
SouthernEra Resources Ltd. said yesterday it is hoping for a speedy resolution to a four-month diamond dispute in South Africa, with talks in Johannesburg set to continue today.
SouthernEra president Chris Jennings yesterday met the heirs, who say they own a key diamond find, and De Beers Consolidated Mines Ltd. SouthernEra believes it should be granted the rights.
"We're miners, not litigators," Frank van de Water, SouthernEra chief financial officer, said in Toronto. "We'd like to get on with it."
In January, a group of 29 heirs said they owned the mineral rights for the farm Marsfontein.
Two weeks ago, De Beers announced it had bought the rights from them.
But De Beers won't take possession until "mid-May at the latest," to give a court time to hear SouthernEra's application for an injunction that would prevent the sale.
All of which, says van de Water, spells "a standoff."
"We would prefer not to see something tied up in court for two years and the other party knows damn well they can't get a nickel out of De Beers until it's settled in court."
In addition, SouthernEra needs the cash from the gems.
"Within a week of cleaning up the legal battle, we'd be producing diamonds," van de Water said. "The thing is just sitting there waiting to be scooped. And it's very important to us from a cash flow point of view."
One mining analyst said settling with the heirs would not clear up SouthernEra's difficulties.
"A number of things have to fall into place," he said. The Canadian firm has to reach an agreement with Randgold & Exploration Co., its 50% joint partner at Marsfontein.
"They've put the cart before the horse. They have a big mill there [in South Africa]. They need a mineable ore body. They really are in a bind."
But van der Water said his firm has a feasibility study "ready to plop on Randgold's desk,"
which would increase SouthernEra's stake in Marsfontein to 65%.
Tom Beardmore-Gray, a De Beers spokesman in Vancouver, said he did not know the talks were going on and could not comment.
SouthernEra shares (SUF/TSE) closed at $9 yesterday, down 20›.
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