SouthernEra posts Q2 profit

Foreign exchange gains enabled SouthernEra Resources (SUF-T) to record net earnings of US$1.59 million for the three months ended June 30.

The US2-per-share profit came on revenue of US$564,000 and compares with a loss of US$2.19 million on US$742,000 in the corresponding period of 2002. The currency gain contributed US$3.81 million, more than enough to overcome an operational loss of US$1.31 million.

Cash flow from operations worsened to negative US$1.9 million from US$867,000. After changes to non-working capital, operations used up US$8.9 million in the recent quarter.

SouthernEra ended the period with US$359,000 in cash and US$16.21 million in short-term investments. Combined, this is half as much as what the company had at the quarter’s start.

SouthernEra derives its revenue from the half-owned Klipspringer diamond mine in South Africa, where 13,700 carats were picked from 38,900 tonnes in the recent quarter. Production was affected by a strike, though a resolution was reached in mid-July.

Meanwhile, the company has completed the shaft at its Voorspoed platinum group metals mine, about 25 km southeast of Klipspringer. Miners are now hoisting 40,000 tonnes of ore per month, and production is focused on the 150, 200, 275 and 350 levels.

During the quarter, SoutherEra mined 95,305 tonnes of ore carrying 8,777 oz. of platinum group metals plus gold, 77.4 tonnes nickel, and 60.4 tonnes copper. Headgrades averaged 3.25 grams PGMs, putting the 6-month average at 3.66 grams.

Costs at Messina are being capitalized, pending development of the Doornvlei section. Run-of-mine ore is milled on-site, and the concentrate trucked elsewhere in the Bushveld igneous complex for processing.

SouthernEra says it will support a R270.7-million rights offering by the South African subsidiary through which it holds its 70.9% stake in the mine. This means it will buy whatever rights are not exercised by minority shareholders.

The subsidiary will use the proceeds to repay some of the R313.74 million that it owes to SouthernEra. The loan was used to fund construction and development of the Voorspoed section of the mine, and to study the potential for expanding production.

SouthernEra recently announced a resource calculation for its wholly owned Millennium platinum project, which sits on the eastern, or opposite, limb of the Bushveld igneous complex. Indicated resources stand at 30.6 million tonnes grading 3.76 grams PGMs plus gold per tonne.

At June 30, SouthernEra had US$3.97 million in working capital, considerably better than last year’s deficit of US$7.65 million. The largest increase was in the form of cash and marketable securities, which jumped to US$16.6 million from US$2.9 million.