RMB International (Dublin) is converting US$2 million in exchangeable capital units (issued by SouthernEra Resources (SUF-T) on March 1, 2000) into 1.5 million shares at a strike price of $2.07 per share.
The conversion will bring SouthernEra’s total number of issued and outstanding shares to just less than 31.2 million. It will reduce the outstanding units to US$1 million.
Originally, US$5 million in units were used to acquire a portion of SouthernEra’s 70.4% interest in Messina Ltd., which holds a 100% interest in the Messina platinum group metals (PGM) project in South Africa. Rand Merchant Bank was appointed to arrange and structure senior debt financing for the completion of construction and startup at Messina. Finalization is expected soon.
The property covers a 16-km strike length of the UG2 and Merensky reefs. These are two of the world’s largest repositories of PGMs.
Resting on the eastern limb of the Bushveld igneous complex, the project is divided into two sections, Voorspoed and Doornvlei. A third section, Zebediela, hosts an inferred resource of 19.6 million tonnes averaging 5.04 grams PGM plus gold. It never saw any development and has therefore been placed aside in favour of the other two.
A feasibility study on Voorspoed indicates that reserves are sufficient for 17 years of production. The 26.4-million-tonne deposit, which averages 6.3 grams PGM plus gold, is expected to yield 159,000 oz. precious metals annually at a cash cost of US$150 per oz.
Due to elevated metal prices, SouthernEra has been fast-tracking Messina’s development. Mining will focus on a secondary shaft so as not to impede development of the main shaft, which will gear up in 2003.
The company expects Messina to begin churning out 20,000 tonnes of concentrates, or a quarter of full production, monthly in August. Cash flow from initial production is pegged at US$1 million.
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