SouthernEra eyes $36m 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 $36.3 million to help fund a recently approved, US$22-million deepening of the Voorspoed main shaft at the Messina platinum-group-metals mine in South Africa.

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

The program is designed to extend the shaft bottom to 730 metres from its current depth of 432 metres; also, the company will boost production during this, the first, phase by 50%. The plan calls for production to hit 80,000 tonnes per month by the end of the third quarter of 2003. 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 at a rate of 20,000 tonnes per month.

Messina’s reserves stand at 26.4 million tonnes grading 6.3 grams platinum group metals plus gold, with copper and nickel credits, for a 17-year mine life.

The company plans to use some of the proceeds to take down its share of a proposed Messina rights offering and 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.