Strategic Review

SouthernEra Initiates Strategic Review

 

    Board Restructured

 

    Shares Issued and Outstanding: 159,428,601

    TSX: SDM

    AIM: SRE

 

    TORONTO and LONDON, June 7 /CNW/ - The Board of SouthernEra Diamonds Inc.

(TSX: SDM, AIM: SRE) ("the Company") today announced that a special committee

of the Board has been formed to conduct a comprehensive strategic review of

the Company's asset base and business plans with a view to accelerating the

Company's transition to becoming a profitable diamond production company.

    SouthernEra Diamonds has its roots as one of Canada's most successful

international diamond exploration companies. Over the past fifteen years the

Company has conducted a highly successful global diamond exploration campaign,

discovering more that 80 diamondiferous kimberlites in Canada, South Africa,

Australia and Gabon.

    Through this investment in exploration, the Company was successful in

finding, building and operating two diamond mines, both in South Africa. The

Marsfontein Mine - a joint venture with De Beers - generated approximately

$250 million in revenue in less than 24 months. The Klipspringer Mine -

construction of which was fully funded by De Beers - was commissioned in

January 2003 to produce 120,000 carats of diamonds per annum. Following a

steep appreciation of the South African rand (Klipspringer's operating

currency) against the US dollar, the mine was placed on care and maintenance

in January 2004. With a life of more than ten years, it is expected that

Klipspringer will be able to resume production once the rand depreciates.

    Profits generated from the Marsfontein Mine and subsequent capital

raisings have enabled SouthernEra to develop one of the largest and most

diversified global diamond exploration programs, managed by a focused and very

accomplished diamond operating team. This has placed the Company in a strong

position to resume its position as a profitable diamond producer.

    Confidence in the potential of SouthernEra's asset base has been

demonstrated by the world's leading mining company, BHP Billiton, which is

both the Company's joint venture partner in the extensive DRC primary

kimberlite exploration program and also a major shareholder in the Company,

having subscribed to a C$9.4 million private placement last December. This

confidence was further demonstrated last March when the US fund manager OZ

Management LLC subscribed for the majority of a further C$13.4 million private

placement. OZ Management now controls 14.59 percent of the Company and BHP

Billiton controls 9.84 percent.

    SouthernEra also announced the restructuring of the Company's Board of

Directors. A reduced slate of four directors has been proposed for election at

the Company's annual general meeting scheduled for June 29, 2006. The Company

is pleased to announce that Mr. Paul Brink, a resident of Toronto, is being

proposed as a new independent director, to join continuing directors Messrs.

Jennings, Dawsonand Evans. Mr. Brink is the Chief Financial Officer of NRX

Global Corp., a Toronto based maintenance information solution provider to the

power, oil and gas and mining industries. Prior to that, he held the following

positions: Vice President for Investment Banking, BMO Nesbitt Burns in

Toronto; Assistant Treasurer, Project Finance, Union Bank of Switzerland (New

York) and Assistant Treasurer, Structured Finance, Union Bank of Switzerland

(Zurich). Mr. Brink has a Master of Philosophy in Management Studies from St

John's College, Oxford University, and a B. Sc. Mechanical Engineering from

the University of Witwatersrand, South Africa.

 

                                    xxxx

 

    SouthernEra Diamonds Inc is one of Canada's largest fully integrated

diamond companies with extensive diamond exploration in five countries

including Canada, Gabon, the DRC, Zimbabwe and South Africa. This represents

the fourth most active global diamond exploration program after the majors

DeBeers, BHPB and Rio Tinto. The Company also operates the Klipspringer

Diamond Mine in South Africa and maintains an 18 percent free-carried interest

in the Camafuca Diamond Project in Angola.

 

    For further information: SouthernEra Diamonds Inc., Dr. Chris Jennings,

Chairman, Telephone: [phone], Fax: [phone], E-mail:

inbox(at)southernera.com, www.southernera.com

    (SDM SRE)