SouthernEra shuffles its board

In another surprise twist at SouthernEra Resources (SUF-T), shareholders have replaced nearly their entire board of directors.

Taking the place of Lee Barker, Oliver Lennox-King, Patrick Ryan, Patrick McCulloch and Norman Hardie are James Anthony, Rudi Fronk, Vahid Fathi, Louis Fox and Philip Martin, the first four of whom also sit on the board of Seabridge Resources (SEA-V). Christopher Jennings and Patrick Evans, both management nominees, retained their seats.

“I’ve never before seen so many shareholders show up with their proxies to vote at an annual meeting,” says Fronk. “I think shareholders were expecting significant changes with the new president [Steve Banning] and when the information circular came out, there was, needless to say, a great deal of disappointment.”

Banning replaced Jennings as President earlier this year and followed this by appointing other subordinates. Though the shake-up was expected, what came as a surprise was a proposed relocation of the company’s head office to Denver. The new board has since quashed that proposal, but whether it will do the same to the new management is too early to say: “This is a two-way evaluation,” says Fronk, “in that Banning accepted the job from a board that’s no longer there and we came in not knowing whether he’s the right guy for the job.”

As for the Seabridge connection, Fronk chalks this up to coincidence. He stressed that, when initially approached by Jennings, the inclusion of Fathi and Fox made sense in that both are experienced in the platinum market and can interest retail investors, while at the same time facilitating negotiations to finance the advanced Messina platinum project in South Africa.

Through Messina Platinum, a South African-listed company in which it owns a 70.4%-equity stake, SouthernEra is redeveloping the Voorspoed section of the mine, one of two briefly developed by Impala Platinum in the late 1980s. It was Impala that sold SouthernEra its initial interest, since raised to the current amount.

Reserves are pegged at 11.1 million tonnes grading 6.85 grams PGM plus gold per tonne, plus nickel and copper. The reserve lies within 575 metres of surface and is part of a global resource, to the 1,000-metre level, of 21.2 million tonnes grading 6.85 grams precious metals.

This year’s program will entail shaft de-watering, stope development and reserve sampling. Funding will come out Messina’s existing cash, though financing is necessary to cover the estimated life-of-mine capital costs of US$86 million.

Annual production is pegged at 159,000 oz. PGM plus gold, of which 44% will be platinum and 34% palladium, and operating costs ring in at US$150 per oz. precious metals, net of base metal credits.

Assuming all goes well, starting in 2003, 80,000 tonnes will be mined monthly to yield high-and low-grade concentrates. The concentrates would then be shipped, in slurry form, to Impala’s smelter, near Rustenburg, for further processing.

At the meeting, shareholders also voted down a proposed amendment to the company’s stock option plan. The new proposal would have essentially allowed for more options to be granted and their exercise price to fluctuate with the market.