London-based mining giant Rio Tinto (RTP-N) has agreed to up its stake in Toronto-based SouthernEra Resources (SUF-T) via a private placement of 2.5 million SouthernEra shares at $3.75 apiece.
The move increases Rio’s ownership in SouthernEra to nearly 6.9 million shares, or about 18.5% of the company’s issued and outstanding shares. Rio’s SouthernEra shares are held by one of its wholly owned subsidiaries.
The deal is subject to regulatory approval.
“Rio Tinto’s objective for the private placement was to return to its historic level of ownership,” says a prepared statement from Patrick Evans, SouthernEra’s president and CEO. “This support from our largest shareholder is most gratifying.”
SouthernEra intends to apply the proceeds of $9.4 million to general working capital purposes, including the further development of the fast-tracked Messina platinum project in South Africa.
Last March, SouthernEra decided to accelerate development at Messina to take advantage of surging platinum group metal prices. This plan is expected to generate US$1 million in cash flow.
In late June, Messina produced its first platinum group metals concentrate. This was six weeks ahead of schedule. Underground development is on target. Stoping activities are slated to begin in August and will be ramped up to 20,000 tonnes per month.
Progress on the main shaft and the larger mine continues on schedule. Production startup should be as planned — in the last quarter of 2002.
SouthernEra, operates and owns a 70.4% interest in Messina, where reserves are pegged at 26.4 million tonnes grading 6.3 grams platinum group elements plus gold, with copper and nickel byproduct credits.
The deposit should keep a proposed concentrator fed for 17 years.
In mid-afternoon trading on the Toronto Stock Exchange, SouthernEra shares were up a dime to $3.80.
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