Marsfontein still producing

The Land Claims Court of South Africa has dimissed an application to halt activities at the Marsfontein diamond mine, reports SouthernEra Resources (SUF-T).

The Ga-Magashula Community Trust had filed for the injunction, pending the outcome of a land caim dispute initiated by the Ledwaba community in 1995. SouthernEra says the claim involves surface rights only.

Situated in Northern Province, Marsfontein is a joint venture involving SouthernEra, with 40%, De Beers Consolidated Mines (DBRSY-Q), with 30.6%, and a black empowerment group, with the remainder. SouthernEra manages daily operations, while De Beers markets production.

Mining ended in the third quarter, though production from gravel stockpiles will continue for the remainder of this year and most of 2001. The gravels are expected to generate significant cash flow for SouthernEra during this time.

Meanwhile, SouthernEra has issued 728,696 shares, at $2.07 apiece, in exchange for a US$1-million principal of a US$5-million debt financing arranged last March. A portion of the proceeds from that deal were used to fund the acquisition of a 70.4% interest in the Messina platinum group metals (PGM) mine, near Marsfontein.

SouthernEra is extracting bulk samples from the 150 and 200 levels to confirm previous metallurgical results. Material will be taken from both the Merensky and UG2 reefs, the two PGM-bearing strata mined in the Bushveld Complex.

An independent feasibility study envisions the simultaneous mining of the reefs at a combined rate of 80,000 tonnes per month. High- and low-grade concentrates would be produced on-site and then shipped to the Rustenburg smelter of Impala Platinum. Impala initially sold SouthernEra a 54% interest in Messina, and this was subsequently raised to the current amount.

Reserves are pegged at 11.2 million tonnes grading 6.85 grams combined PGMs and gold per tonne. The reserve is expected to sustain production for 17 years at an annual rate of 159,000 oz. (of which 44% will be platinum; 24%, palladium; 5%, rhodium; 11%, ruthenium; 3%, iridium; and 3%, gold).

The development program is expected to cost $6.7 million to complete. Life-of-mine capital costs are pegged at US$86 million.

Negotiations for project financing are continuing, with production to begin in 2003.

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