Final Results

SouthernEra Releases 2003 Year-End Results

 

      (All amounts are in United States dollars unless otherwise noted)

    Shares Issued and Outstanding: 74,679,193

    TSX: SUF

    AIM: SRE

 

    TORONTO, April 20 /CNW/ - The Board of Directors of SouthernEra Resources

Limited ('SouthernEra') (TSX: SUF; AIM: SRE) today reported on the Company's

2003 year-end results.

 

    Key highlights of 2003 in the Company and its 73.1 percent subsidiary

Messina Limited include:

 

    -   SouthernEra's asset value increased by 183% to $291 million (2002:

        $159 million)

    -   Reef tonnes mined at Messina grew by 223% over 2002

    -   Mining revenue increased to $12 million (2002: $3.2 million)

    -   Messina's Phase 1 mine achieved commercial production status in last

        quarter 2003

    -   Direct mining costs therefore increased to $21 million (2002:

        $5 million)

    -   Resultant loss per share slightly up at $0.20 (2002: $0.19)

 

    Other highlights of 2003 include:

 

    -   Messina commissioned the four upper levels of the Phase 1 mine to

        support production of 80,000 tonnes per month

    -   Messina commenced construction of the 430 decline project to support

        the increase to full production at the Phase 1 mine

    -   Mining license was awarded to Messina's Doornvlei Section, part of

        the Phase 2 development

    -   Prospecting permit was awarded for the Dwaalkop Section, also part of

        the Phase 2 development

    -   Drill program and feasibility study commenced at the expanded Phase 2

    -   Drill program and pre-feasibility study commences at Phase 3

        (Zebediela Section)

    -   Declared an indicated resource of 3.7 million ounces at SouthernEra's

        Millennium Platinum Project

    -   Successfully concluded capital raisings at both SouthernEra and

        Messina which realized net cash of $111.5 million

    -   Discovered an extensive gold anomaly in Gabon, West Africa

    -   Advanced the Company's platinum and diamond exploration projects

 

    Commenting on the Company's 2003 performance, SouthernEra President and

CEO Patrick Evans said: 'SouthernEra continued to grow strongly on all fronts

during 2003, despite the challenges posed by the exceptional strength of the

South African Rand (Rand, R) this is best reflected in the substantial 183

percent growth in the Company's asset value during the year. For the first

nine months of 2003 we continued to capitalize costs at Messina Platinum.

Although the mine achieved commercial production status in the fourth quarter,

we continue to invest in development at the mine in the build up to full

production. SouthernEra is today the leading mid-tier PGM development company

thanks to the dedication of our employees and the support of our

shareholders.'

 

    Operations

    ----------

    In the last quarter of 2003 the Company achieved commercial production

status at Messina's Phase 1 mine. All revenue and associated costs to the end

of the third quarter of 2003 have been capitalized.

    Messina's fourth quarter platinum group metals (PGMs) sales and the

Company's portion of the Klipspringer Joint Venture's (KJV) 2003 diamond sales

generated revenue of $12 million compared to diamond sales in 2002 of    

$3.2 million. The Company's portion of diamonds recovered in 2003 was 37,885

carats (2002: 45,566 carats) and the average selling price was $85 per carat

(2002: $74 per carat).

    Direct mining costs for the year were $21 million (2002: $5 million), the

increase is due to the inclusion of Messina's operating costs for the last

quarter.

    Net interest charges increased to $1.7 million (compared to interest

income of $0.7 million in 2002) due to the interest charge being accounted for

in the income statement for the last quarter of 2003 on Messina's long-term

debt.

    Foreign exchange gains of $5.4 million were realized on cash assets,

compared to foreign exchange losses in 2002 of $3.1 million, this being

achieved due to the strength of the Canadian dollar against the US dollar, the

reporting currency.

 

    Assets

    ------

    SouthernEra's asset base growth has been substantial in 2003 mainly as a

result of the continued development at the Messina Platinum Project, with

assets increasing to $291 million (2002: $159 million). This growth has been

financed largely through capital raised during the year.

 

    Earnings

    --------

    With the inclusion of Messina's fourth quarter mining costs and

amortization charges, the loss before taxes from mining operations in 2003 was

$13.9 million (2002: $3.3 million). The Company's overall net loss in 2003 was

$12.3 million (2002: $9 million). The loss per share in 2003 was $0.20 (2002:

$0.19), the major contributor being the impact of the strength of the Rand in

2003 against all major currencies.

 

    Exploration

    -----------

    The Company continued with exploration activities in Canada, South

Africa, Australia, the Democratic Republic of the Congo and Gabon. In both

2002 and 2003 the Company wrote down the carrying value of certain exploration

projects in Canada and South Africa that have been discontinued, as they do

not meet the Company's criteria for continued involvement. Exploration and

development cost write-downs in 2003 amounted to $1.6 million (2002:     

$1.2 million).

 

    Outlook for 2004

    ----------------

    It is anticipated that Messina's Phase 1 (Voorspoed) mine will see

operations achieve economic production levels. The continued strength of the

Rand is likely to impact on the cash flows of Messina, this being partially

offset by the improved US dollar selling price of PGM's and nickel.

    The feasibility study for the expanded Phase 2 of the Greater Messina

remains on track for completion at mid-year. Results from the first phase of

the drilling program indicate a 21 percent increase in the PGM resource at the

Dwaalkop Section.

    Encouraging gold results were returned from the initial phase of the

drilling program that tested a gold-in-soil geochemical anomaly located to the

west of the main Mainou Vein gold mineralisation trend on the Koumba Gold

Project, Gabon, where SouthernEra has a 95 percent interest. The drilling to

test the Mainou Vain has been completed and results are expected in May.

    The Company continues to focus on expanding its mining assets and on

exploration activities aimed at identifying future mining assets. The Company

is well placed to devote considerable attention to both areas of activity.

 

    Subsequent Events

    -----------------

    Subsequent to the year-end, SouthernEra has provided support to its

subsidiary Messina Platinum to meet its first payment in terms of the Rand

Merchant Bank syndicated project loan facility. Through an inter-company

facility arranged by SouthernEra, Messina has paid R63 million (approx.  

$9.5 million) of the outstanding five year R471 million (approx. $70 million)

facility, comprised of principal plus accrued interest as at February 28,

2004.

    On April 12, 2004, the Company announced that its Board of Directors is

actively considering reorganization proposals that would allow the Company to

separate its platinum and diamond holdings into two separate public

corporations. The reorganization plan is subject to receipt of all necessary

regulatory and legal approvals and subject to final approval by the Board of

Directors and shareholders. SouthernEra anticipates that it will be in a

position to provide further details of the reorganization proposal in an

information circular that will be mailed to shareholders with the 2003 Annual

Report in early June for the annual and special general meeting at the end of

June.

    President and CEO Patrick Evans added: 'Since our entry into the platinum

business in 2000 the PGM asset base under our control has grown from

approximately 10 million ounces to 28 million ounces. Through this period the

market focus has been on our platinum assets, with our diamond assets

receiving little or no value. We believe the proposed unbundling of the

Company will unlock the substantial value in our diamond assets and also

enable us to invest more heavily in the development of these assets without

compromising our key focus at Messina Platinum.'

    The complete financial statements and management's discussion and

analysis will be available on the Company's website at www.southernera.com on

Wednesday April 21, 2004.

    SouthernEra Resources is an independent producer of platinum group metals

and diamonds. The company also has an extensive PGM, gold and diamond

exploration program. The common shares are listed on the Toronto Stock

Exchange and the London Stock Exchange's AIM market.

 

  

    For further information: SouthernEra Resources Limited: Mr. Patrick

Evans, President and CEO, Telephone: [phone], Fax: [phone],

E-mail: inbox(at)southernera.com, www.southernera.com

    (SRE)