SouthernEra eyes $36 m for deeper shaft

A bought deal with a syndicate led by National Bank Financial and BMO Nesbitt Burns paves the way for SouthernEra Resources (SUF-T) to raise about C$36.3 million to help fund a recently approved US$22-million deepening of the Voorspoed Main shaft at the Messina platinum-group-metals (PGM) mine in South Africa.

Under the deal, SouthernEra will sell 5 million shares at C$7.25 apiece. The syndicate can buy another 2 million shares at the same price at closing, which is expected by June 26.

The shaft deepening at Messina is aimed at sending the shaft bottom from its current depth of 432 metres to 730 metres, and boosting phase 1 production by 50%. The plan calls for production to hit 80,000 tonnes per month by the end of the 2003 third quarter. The rate is expected to climb to 120,000 tonnes per month by the end of the first quarter of 2004. The expansion will not affect the company’s accelerated production plan at Messina, which will continue to produce at 20,000 tonnes per month.

At last count, Messina’s reserves stood at 26.4 million tonnes grading 6.3 grams PGM plus gold, with copper and nickel byproduct credits. The deposit should keep a proposed concentrator fed for 17 years.

The company also plans to use some of the proceeds to take down its share of rights in a proposed Messina rights offering and also to increase its 70.4% stake in Messina Ltd. Messina’s planned offering is aimed at reducing its debt, including about US$13 million borrowed from SouthernEra.