Faced with lower diamond production,
The loss translates into 4 per share and compares with a year-ago loss of $800,000, or 3 per share. Revenue between the two periods slipped by $1 million to $600,000, while cash flow consumed by operations leapt to $1.5 million from $300,000.
While the average grade of material from the 50%-owned Klipspringer diamond mine in South Africa increased to 52 carats per hundred tonnes from 17 cpht, throughput dropped by 75% to 36,825 tonnes. First-quarter production was 15,504 carats, down from 25,443 during the first three months of 2001. Of that, 7,752 carats went to SouthernEra’s account, down from 16,205 carats a year earlier.
During the quarter, SouthernEra focussed its efforts on development work and construction at the 70.4%-owned Messina platinum group metals mine in South Africa. In all, SouthernEra spent $9.3 million at the mine during the three months.
The company plans to go ahead with a recently approved US$22-million deepening of the Voorspoed Main shaft at Messina. The project is designed to extend the shaft bottom to 730 metres from its current depth of 432 metres. The plan, which is expected to boost phase-1 production by 50%, 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. The mine will continue to produce 20,000 tonnes per month.
At last count, Messina’s reserves stood at 26.4 million tonnes grading 6.3 grams platinum group metals plus gold, with copper and nickel byproduct credits. The deposit should keep a proposed concentrator fed for 17 years.
To help cover the cost, the company has agreed to a bought deal with a syndicate led by National Bank Financial and BMO Nesbitt Burns. Under the plan, SouthernEra will sell 5 million shares at $7.23 apiece to raise $36.3 million. The syndicate can buy another 2 million shares at the same price at closing, which is expected by late June.
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., the company that owns the Messina project. Messina’s planned offering is aimed at reducing its debt, including US$13 million borrowed from SouthernEra.
On the exploration front, ground magnetic, electromagnetic and gravity geophysical surveys over several kimberlite targets on the Majestic and Crown projects in northern Ontario are expected to wrap up by the second quarter.
Diamond exploration also continued in the Slave Craton in Nunavut, and in the Superior Craton in Ontario.
At quarter’s end, SouthernEra had $8.3 million in cash and equivalents.
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