SouthernEra de-waters Messina

Having obtained a mining permit, SouthernEra Resources (SUF-T) is de-watering the Messina platinum group elements (PGM) mine in northern South Africa.

Messina Platinum, a South African-listed company in which SouthernEra owns a 70.4%-equity stake, is focusing on the Voorspoed section, one of two that were briefly developed by Impala Platinum in the late 1980s. It was Impala that sold SouthernEra its initial interest, which has since increased to the current amount (T.N.M., March 5/00).

Reserves are pegged at 11.1 million tonnes grading 6.85 grams PGM plus gold per tonne, in addition to nickel and copper values. The reserve lies within 575 metres of surface and is part of a global resource, to the 1,000-metre level, of 21.2 million tonnes grading 6.85 grams precious metals.

Once the shaft is dry, Messina will begin developing and sampling the reserves. Assuming all goes well, starting in 2003, the mine will produce about 80,000 tonnes per month, yielding high- and low-grade concentrates. The concentrates would then to be shipped, in slurry form, to Impala’s smelter, near Rustenburg, for further processing.

Annual production is pegged at 159,000 oz. PGM plus gold, of which 44% will be platinum and 34% palladium. Operating costs ring in at US$150 per oz. of precious metals, net of base metal credits.

Life-of-mine capital costs top US$86 million, of which US$4.1 million will be spent this year using cash on-hand. Financing negotiations for the remaining funds continue.

In related news, reserves in the M1 kimberlite pipe will be mined out by August; however, low-grade stockpiles will supply the plant for the remainder of the year and most of 2001. M1 lies on the Marsfontein farm, 25 km northwest of the Messina mine. Marsfontein is 40%-held by SouthernEra, with the remainder divided among De Beers Consolidated Mines (DBRSY-Q) and a black empowerment group.

Attributable production topped 62,545 carats in the first quarter, down 22% from a year ago. Diamond prices were also less, averaging US$117 per carat in the recent period.

Drilling continues to test several kimberlite anomalies elsewhere on the property.

Meanwhile, SouthernEra continues to test-mine the Leopard fissure on its adjoining, wholly owned group of farms known as Klipspringer. From 28,090 tonnes extracted in the recent quarter, 9,137 carats were picked, for an average of 33 carats per 100 tonnes — significantly less than the targeted 45-50 carats per 100 tonnes.

SouthernEra notes that much of the material was weathered and hence heavily diluted. Nonetheless, the tests should enable it to predict the degree of dilution below that zone.

A feasibility study is scheduled for completion by mid-year.

Elsewhere on the property, bulk sampling has begun at the Sugarbird fissure. Four declines are being driven to below the weathered zone, and samples are to be processed later this year.

For the three months ended March 31, SouthernEra lost $1.7 million (or 6 per share) on revenue of $8.8 million, compared with earnings of $4.9 million (19 per share) on $11.8 million in the corresponding period a year ago. The difference is attributed to higher amortization charges and lower output.

In the boardroom, Norman Hardie has replaced Christopher Jennings as SouthernEra’s non-executive chairmain. Jennings remains a director and will act as an exploration and business consultant.