SouthernEra eys larger Messina stake, posts Millennium estimate

With an eye toward increasing its stake in the Messina platinum group metals mine in South Africa, SouthernEra Resources (SUF-T) has agreed to underwrite a rights issue by the mine’s owner, Messina Ltd.

Messina plans to offer shareholders 20 rights for every 100 shares currently in issue for a total of about 2.6 million rights. Each right allows the holder to buy one Messina share for R60 (US$5.77). The plan is subject to South African regulatory approval.

If fully exercised, the rights would generate about R155.6 million in proceeds. Messina plans to use the funds to substantially pay down its US$15 million in unsecured debt owed to SouthernEra, which provided financing for the construction of the Messina platinum project.

By underwriting the deal and taking up its share of rights, SouthernEra stands to increase its stake in Messina Ltd. up to 75.3% from its current level of 70.4%.

SouthernEra says it expects to continue funding Messina over the next year, and may up its stake in the mine via future rights offerings.

A recently approved US$22-million deepening (to a depth of 730 metres from the current 432 metres) of the Voorspoed Main shaft at Messina is designed to boost phase-1 production by 50%. The deepening is expected to boost the mining rate to 80,000 tonnes per month by the end of the third quarter and 120,000 tonnes by the end of the first quarter of 2004. During the expansion, the mine will continue to run at 20,000 tonnes per month.

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

Elsewhere, SouthernEra has reported an independently estimated mineral resource for portions 10 and 11 of the Blaauwbank farm, part of the Millennium project acquired last October.

Based on just six holes (two holes with two wedges drilled off each) Resource Services Group came to an inferred resource of 10 million tonnes grading 4.46 grams of 5PGMs plus gold per tonne. The estimate conforms to 1999 Australian JORC codes.

SouthernEra’s holes were assayed only for platinum, palladium, rhodium and gold, but the company converted the results to reflect 5PGEs plus gold using selected reef intersections on adjacent properties. SouthernEra says the conversion upped grades by 19%.

The resource calculation is based on a simple average of the grade intersections weighted by their width. It assumes a reef thickness of 1.252 metres and a density of 3.48 grams per cubic centimetre. It also includes a 20% loss of tonnes due to structural complexity and potholing.

Two of three initial holes at Blaauwbank cut the UG2 reef.

Hole BB01 returned 1.2 metres grading 2.12 grams platinum, 1.35 grams palladium, 0.25 gram rhodium, and 0.03 gram gold per tonne. The first wedge off the hole cut 1.17 metres running 2 grams platinum, 1.15 grams palladium, 0.21 gram rhodium, and 0.04 gram gold. The second wedge returned 1.14 metres of 2.8 grams platinum, 1.87 grams palladium, 0.32 gram rhodium, and 0.11 gram gold.

Hole BB03 encountered 1.35 metres averaging 1.96 grams platinum, 1.29 grams palladium, 0.24 gram rhodium, and 0.04 gram gold per tonne. The first wedge surrendered 1.26 metres of 2.13 grams platinum, 0.6 grams palladium, 0.25 gram rhodium, and 0.02 gram gold. The second wedge cut 1.16 metres averaging 1.55 grams platinum, 0.6 grams palladium, 0.2 gram rhodium, and 0.03 gram gold.

Hole BB02 was abandoned in a dyke above the expected level of the UG2 Reef.

SouthernEra says the platinum-palladium ratio in the intersections, at 2-to-1 to 3-to-1, is higher than typically seen on the Eastern Bushveld igneous complex (BIC).

Deepening of one of three other holes sunk on the adjoining Rietkloof property cut the reef at a depth of 578 metres. The company believes a fault has displaced the reef 500 metres downward and about 1.5 km to the south. Assay results are pending.

SouthernEra plans to deepen the other two holes and sink six new holes in anticipation of a resource evaluation at Rietkloof in December.

The Millennium property sits on the eastern limb of the BIC, just north of where it is cut by the Steelpoort fault.