SouthernEra beefs up management, reduces debt

In a move aimed at strengthen- ing its operations, SouthernEra Resources (SUF-T) has appointed two South African miners to run the company.

SouthernEra has been searching for new chief executive and operating officers since June 2000, when a new board of directors was elected. Company founder Christopher Jennings retained his seat, as did Patrick Evans, one of the new appointees.

On March 1, Evans will take up the additional role of CEO. He is also a director of Messina Ltd., a South African-listed company in which SouthernEra owns a 70.4%-equity stake, and is a member of the executive council of the South African Chamber of Mines.

Evans served as South Africa’s consul general to Canada in the late 1990s, when De Beers Consolidated Mines (DBRSY-Q) wrestled away control of SouthernEra’s Marsfontein diamond project in the Northern Province. More recently, he helped Placer Dome (PDG-T) obtain a half-interest in the country’s South Deep gold mine.

Assuming the dual roles of senior vice-president and chief operating officer is Michiel Eksteen. A mining enginer by training, Eksteen spent 33 years with Gold Fields of South Africa, including five years as general manager at the Northam platinum mine. He will oversee the development of SouthernEra’s nearby Messina platinum project.

Messina, in which SouthernEra holds a 70.4% interest by virtue of its shares in Messina Limited, is scheduled to begin production in 2003, pending financing. Peak capital costs are pegged at US$69.5 million, half of which is expected to be debt-financed and the balance covered by end-market users or a joint-venture partner.

To help finance the acquisition, SouthernEra borrowed US$10 million from RMB International, a division of Rand Merchant Bank of South Africa. Half the loan is repayable in shares priced at $2.07 apiece, and of that, US$2 million has been converted. Both loans carry interest at the London Interbank Offer Rate plus 3%, though interest on the convertible portion is also repayable in shares at prevailing market prices.

Currently, SouthernEra is extracting bulk samples from the 200-metre level for metallurgical testing. Trial stopes are being developed as well, and power and water supplies for full-scale production are being sought.

Funding is being provided internally.

The appointments come on the heels of SouthernEra’s announcement that it plans to develop the Camafuca diamond project in Angola. The project hosts a resource of 209.5 million cubic metres, grading 0.11 carat per cubic metre, with a value of US$109 per carat (T.N.M., Jan. 15-21/01).