SouthernEra Resources Limited - Highlights of annual report to shareholders for the year-ended December 31, 1998
- Mining income of $39.6 million on revenue of $52.4 million
- Cash flow from operations of $35.1 million or $1.35 per share
- Net income of $14.0 million or 54 cents per share after write-downs
- Expenditures of $46.3 million on exploration, property, plant and
equipment, yet no debt
- Ongoing exploration in Canada, South Africa and Angola
TORONTO, March 29 /CNW/ - SouthernEra Resources Limited (SUF-TSE) today
announced that income from mining operations totalled $39.6 million on diamond
revenue of $52.4 million for 1998. As 1998 was the Company's first year of
mining operations, there are no comparable numbers for the prior year.
Net after tax income for the year after discontinued operations was $14.0
million or 54 cents per share compared to a loss of $7.7 million or (33 cents)
per share in 1997.
Cash flow from operations was $35.1 million or $1.35 per share compared
to a negative cash flow of $1.8 million in 1997, or (7 cents) per share.
Income before taxes from mining operations in the fourth quarter was
$16.9 million compared to $18.0 million in the third quarter. Net income for
the quarter was significantly affected by exploration costs written off
totaling $3.7 million and a provision for discontinued operations of $2.7
million. These costs are not deductible for income tax purposes as they
relate to projects outside of South Africa, where the mining income is earned,
giving rise to a disproportionate provision for income taxes in the fourth
quarter of $6.1 million.
Diamond production from the Marsfontein Joint Venture totalled 342,500
carats from 82,500 tonnes in the fourth quarter, a grade of 415 carats per
hundred tonnes. The Company's share of the carats produced was 137,000,
bringing total attributed production from the Klipspringer project area for
the year to 282,000 carats.
Improvements to the thickening and crushing capability in the first
quarter of 1999 are expected to result in increased throughput by the second
quarter. The grade of ore processed in 1999 will be lower than that processed
in 1998 as the grade of the kimberlite in the M-1 pipe itself is lower than
the extraordinarily rich gravels which overlay the M-1 pipe mined in 1998. In
1999, the M-1 pipe is being blended with lower grade gravels as the weathered
clay-rich kimberlite on its own was causing throughput problems on the plant.
Development work at the Klipspringer fissure system underground mining
project proceeded well, with a target of initial production at 10,000 tonnes
per month in the second half of 1999, at an expected recovered grade in excess
of 50 carats per hundred tonnes.
In Angola, the Company recovered 144,500 carats of high quality diamonds
at its joint venture alluvial and fluvial mining operations at the Luo and
Cassanguidi concessions but determined the projects to be uneconomic under
current conditions and ceased operations, recording a loss on discontinued
operations of $5.3 million (1997 - $2.6 million).
At Camafuca, Angola, (SUF 51%) a bulk sample of over 15,000 tonnes was
excavated by year end and a processing plant is being assembled to process and
confirm previous bulk sampling results, and recover a new diamond parcel for
valuation.
Exploration in South Africa, particularly on Marsfontein and the other
Klipspringer farms now totaling over 62,000 hectares, has been accelerated
with the farm Marsfontein being given top priority.
In the Northwest Territories, Canada, the Company and its partners'
winter drilling program is in full progress, with Kennecott recently
announcing their discovery of a new kimberlite pipe in shallow water 75 metres
from the south shore of Lac de Gras on property that is owned 60:40 with
SouthernEra. Analysis of the drill core is not complete, but the kimberlite
host rock is of the same type as the economic pipes on the Diavik and Ekati
properties.
Expenditures on exploration were $11.7 million in 1998 compared to $11.5
million in 1997, with expenditures on property, plant and equipment totaling
$34.5 million and $20.0, respectively. Despite these expenditures, totaling
$46.3 million, the Company had no debt at the year end. Working capital at
December 31 was reported as $10.9 million, including cash on hand of $6.5
million.
The annual report is expected to be mailed to shareholders at the end of
April. In the meantime, the Statements of Income and Cash Flow are being
posted on the website.
%SEDAR: 00004535E
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For further information: please contact: Christopher M.H. Jennings,
President; A. Lee Barker, Senior Vice-President; Kim Freeman,
Vice-President, Operations; Frank van de Water, Vice-President, Finance;
Nicholas Sayce, Investor Relations - Phone: (416) 359-9282, Fax:
(416) 359-9141, e-mail: inbox@southernera.com
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