Drilling Report

SouthernEra Releases Second Quarter Results

 

    Company Now Controls More than 24 Million Ounces of Platinum Group Metals

    Production Expected to Grow to More than 500,000 ounces per year

    MessinaPhase 1 Shaft Commissioned

    Shares Issued and Outstanding: 51,611,800

    TSX: SUF

    AIM: SRE

 

    TORONTO, Aug. 29 /CNW/ - SouthernEra Resources Limited is pleased to

announce the following highlights from the second quarter of 2002:

 

    -  Immediate deepening of Messina Phase 1 shaft, to increase production

       by 50 percent

    -  Common shares to list on the London Stock Exchange's AIM

    -  Completed $32 million equity financing

    -  Appointed new senior management members

 

    Subsequent to June 30:

 

    -  Camafuca diamond operating joint venture approved

    -  Yamba Lakediamond project yields encouraging diamond results

    -  SouthernEra Joint Venture awarded new platinum properties in

       South Africa

    -  Drill program defines 1.44 million ounce mineral resource at

       Millennium Platinum

    -  SouthernEra underwrites Messina Platinum Rights Issue

    -  Messina Phase 2 Feasibility Study completed by SRK, upgrading mineral

       resource to 6.3 million ounces.

    -  SouthernEra Joint Venture announces 7.8 million ounce mineral resource

       on newly acquired platinum properties.

 

    Operations Update

 

    The Company's 70.4 percent subsidiary, Messina Platinum Mines, continued

to make good progress in developing the Phase 1 Mine. Equipping of the main

shaft to 430 metres progressed well, while development and production at the

150 and 200 metre levels continued through the API shaft.

    As planned, the Phase 1 Main Shaft was commissioned on August 19.

Preparations for the deepening of the Main Shaft to 730 metres are well

underway. The focus of mining activity has now shifted to development on the

275, 350 and 400 metre levels to support the build-up of production.

    Construction of the Phase 1 Main 90,000tpm plant continued during the

quarter. Commissioning of the new plant is expected to take place ahead of

schedule during early September.

    At the Klipspringer Joint Venture (KJV), sinking of the decline was

completed. Fissure development and mining is now the focus of activity. In the

current quarter, tonnage throughput was 52,472 tonnes compared to 162,200

tonnes in the second quarter of 2001. Average grade in the quarter was 41

cpht, compared to 15 cpht yielding 21,443 carats in the current quarter and

24,288 in the comparable quarter of 2001. SouthernEra's portion is 50% of the

KJV's production.

    The Company incurred a net loss for the three months to June 30 of $2.2

million (5 cents per share) on revenue of $0.7 million, compared to a loss of

$2.3 million (8 cents per share) on revenue of $1.0 million in the second

quarter of 2001. Cash flow provided by operations for the quarter was $0.4

million (0 cents per share), compared to a use of $0.7 million (2 cents per

share) in the second quarter of 2001.

    For the six months ended June 30, the net loss was $3.6 million (9 cents

per share) versus $3.2 million (11 cents per share) for the comparable period

in 2001. Cash used in operations totaled $1.1 million (3 cents per share)

compare to $0.8 million (3 cents per share) for the six months in 2001.

 

    Deepening of the Main Shaft

 

    In April, the Company decided to proceed with an immediate deepening of

the Phase 1 Main Shaft at the Messina Platinum Project. The Main Shaft is

being deepened from its current level of 432 metres to 730 metres. The

deepening will increase Phase 1 production by 50 percent. A production rate of

80,000 tonnes per month will be achieved by the end of Q3, 2003 and will

continue to a full production rate of 120,000 tonnes per month by the end of

Q1, 2004.

    The shaft deepening will defer approximately $20 million in cash flow

from 2003 to 2004, and thereafter is expected to generate an additional $20

million in cash flow each year thereafter, assuming no changes in metal

prices.

    Capital costs for the expansion are estimated at $22 million, of which

nearly half is future expenditure moved forward. The current banking syndicate

is co-funding this initiative.

 

    Common Shares admitted to trading on the London Stock Exchange's AIM

 

    In May, the Company announced plans to proceed with a secondary listing

of its common shares on the London Stock Exchange's AIM. The Company retained

Nabarro Wells & Co. Limited as its nominated advisor and Brewin Dolphin

Securities Limited as its UK broker and financial adviser in listing

SouthernEra on AIM.

    Subsequent to the second quarter the Company submitted an application for

admission to AIM and trading in the Company's common shares commenced in mid-

August. The AIM listing will enable the Company to broaden its shareholder

base and to expand its international profile.

 

    Equity Financing

 

    In June, the Company closed a $32 million equity financing through a

syndicate co-led by National Bank Financial and BMO Nesbitt Burns Inc. The

financing consisted of 5 million common shares at C$7.25 per share and a

further 1.7 million common shares at the same price by way of a green-shoe

option.

    The financing will contribute towards the funding of Messina's Phase 1

mine expansion. It will also enable the Company to take down its share of

rights in a Messina rights offering and to take up additional unexercised

rights in order to increase its percentage ownership in Messina Limited. A

rights offering will enable Messina to restructure its balance sheet and

reduce its debt, including money borrowed from SouthernEra, which totals

approximately $13 million.

 

    Additions to Management

 

    During the quarter and subsequent to June 30 two senior managers, Dr.

Sally Eyre and Mr. John Barker, were appointed to the Company.

    SouthernEra Resources is a fully integrated international mining company,

which generates projects offering exceptional rates of return. The Company's

focus is on platinum group metals and diamonds. Its operations in South Africa

include the 70.4 percent owned Messina Platinum Mine and the 50 percent owned

Klipspringer Diamond Mine. The common shares of SouthernEra are traded on the

Toronto Stock Exchange (SUF) and the London Stock Exchange's AIM (SRE).

 

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    The full text of the quarterly report is being mailed to shareholders and

    is available on the Company's website, www.southernera.com

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        For further information: SouthernEra Resources Limited - Patrick C.

Evans, President and CEO; or Dr. Sally Eyre, Vice President Corporate Affairs,

Telephone: [phone], Fax: [phone], e-mail:

inbox(at)southernera.com

    (SUF.)