Messina moves to production

Rand Merchant Bank has agreed to participate in a R345-million loan agreement being sought by a subsidiary of SouthernEra Resources (SUF-T) to construct the Messina platinum group elements mine in South Africa.

Rand is one of several banks expected to provide the loan. In order for the deal to become final, the remaining participants must approve a R75-million closing guarantee, and SouthernEra’s subsidiary must complete a rights issue and a marketing agreement.

SouthernEra, which operates and owns a 70.4% interest in Messina, has spent R25 million on the project so far and expects to spend another R463 million before the day is done. The difference between the amount of the loan and the total capital cost is to be covered by the rights issue and cash flow from a small-scale plant under development (T.N.M., May 28/01).

Reserves at Messina are pegged at 26.4 million tonnes grading 6.3 grams platinum group elements plus gold, with copper and nickel byproduct credits. The deposit should keep the proposed concentrator fed for 17 years.

Limited output is expected to begin in August, with full-scale production of 159,000 oz. precious metals annualy to follow in 2003. Life-of-mine cash costs are pegged at US$150 per oz.

South African-listed Impala Platinum Holdings, which sold SouthernEra its initial interest in Messina, will refine all concentrates produced there. Accordingly, it must approve the marketing agreement under discussion.