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(Registration Number: 1950/035912/06)
Share Code: MES
ISIN Code: ZAE 000004438
NEWS RELEASE
Messina Concludes Debt Financing For Platinum Group Metals Project
Johannesburg, 19 September 2001 - Messina Limited ("Messina"), a 70.4% owned
subsidiary of SouthernEra Resources Limited, announced today that it has
executed all the definitive documentation and satisfied all conditions
precedent to draw-down against its R345 million debt financing to complete
construction and start-up of its 100% owned Messina Platinum Group Metals
("PGM") project in South Africa.
This project financing completes the full funding requirement for
construction and start-up of the Messina Platinum mine at an estimated
annual production rate of 160,000 ounces of PGMs at a projected cash
operating cost of under US$150 per ounce. Rand Merchant Bank ("RMB") is the
Lead Arranger of the financing provided by a consortium of South African
banks that also includes BOE Merchant Bank and the Industrial Development
Corporation of South Africa. First drawdown against the loan facility
occurred yesterday. Drawdown of the full facility of R345 million is
expected to take place by September 2002 when construction of the project
will be completed.
Messina and SouthernEra CEO, Patrick Evans, said "the successful conclusion
of this project financing represents a milestone in our efforts to build a
leading, independent producer of platinum group metals. Since the second
quarter of last year, when SouthernEra acquired its interest in Messina, we
have continued development of the Messina project at full-speed thanks to
the support of SouthernEra's shareholders who have provided two equity
financings. As announced recently, the Accelerated Production Initiative
(API) commenced mining on schedule during August and is now shipping
concentrate. The larger project is also on schedule and on budget for a
production start-up in the last quarter of 2002".
The loan facility consists of two tranches. Tranche A for R270 million has
a 7-year term from initial draw-down to final repayment. Tranche B for R75
million has a 7-1/2 year term from initial draw-down to final repayment. The
providers of Tranche B have also supplied a R75 million project completion
guarantee. As a condition precedent to draw-down, RMB required a R121
million underwriting of the forecasted profits of the API. SouthernEra's
largest shareholder, Rio Tinto, has provided R58 million of this
underwriting on a first call basis, with RMB providing underwriting of the
balance of R63 million.
One of the requirements of this loan facility is floor price protection on
platinum and palladium production. To satisfy this condition, an agreement
has been entered into with a major international automotive company. This
five-year agreement provides for a guaranteed minimum weighted average floor
price of US$400 per ounce for platinum and US$370 per ounce for palladium.
The agreement also provides for a weighted average ceiling price of US$600
per ounce for 80% of platinum production and US$658 per ounce for 100% of
palladium production. The contract covers up to a maximum of 232,000 ounces
of platinum production and 178,000 ounces of palladium production over the
five-year life, which represents approximately 3% of the current known PGM
resource. At the instigation of either Messina or the automotive company,
the contract may be terminated should the loan facility be repaid in full
within the five-year contract period.
SouthernEra Resources Limited is a producer of platinum group metals and a
diamond mining and exploration company. The common shares of SouthernEra are
traded under the symbol SUF on the Toronto Stock Exchange. The common
shares of Messina are traded on the JSE Securities Exchange South Africa
under the symbol MES.
FOR FURTHER INFORMATION PLEASE CONTACT:
SouthernEra Resources Limited
Patrick C. Evans, President and CEO; or
Rudi P. Fronk, Director; at
Telephone: (416) 359-9282
Fax: (416) 359-9141
e-mail: inbox@southernera.com
www.southernera.com
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