3rd Quarter Results

SouthernEra Diamonds 2006 Third Quarter Results

    Shares Issued and Outstanding: 165,954,229
    TSX: SDM
    AIM: SRE

    (All amounts are in United States dollars unless otherwise noted)

    TORONTO, Nov. 13 /CNW/ - The Board of Directors of SouthernEra Diamonds
Inc. ("SouthernEra") (the "Company") (TSX: SDM, AIM: SRE) today reported on
the Company's 2006 third quarter results.
    The Company recognized no revenue from diamond sales in the current
quarter or comparable quarter of 2005. In the first eight months of 2006, the
Klipspringer Diamond Mine ("Klipspringer") was in care and maintenance status
as the main operations at the mine were suspended at the end of 2003. During
the third quarter of 2006, a trial mining operation commenced at Klipspringer
with the objective of assessing a revised mining plan and returning the mine
to profitable production. Expenses related to the trial mining have been
charged to mining operations on the September 30, 2006 statement of operations
    The trial mining program is likely to continue for the balance of 2006.
During this period SouthernEra will be able to assess the impact of increased
diamond prices since main operations were suspended. The Company continues to
incur care and maintenance costs as it maintains the site in such a state that
operations could ramp up to full production without significant delays. In the
third quarter of 2006 less than $0.1 million of costs were incurred for care
and maintenance and compares to $0.1 million in the third quarter of 2005.
Amortization charges of $0.1 million in the third quarter of 2006 and in the
comparable period of 2005 relate to the Klipspringer diamond recovery plants
and the corporate group fixed assets.
    The Company therefore recorded a net loss from mining operations of $0.2
million in the third quarter of 2006, down slightly from the $0.3 million
charge in the comparable quarter of 2005.
    The Company continues to recognize an interest charge related to its
South African tax liability. The charge to the statement of operations in the
current and comparable quarter of 2005 approximates $0.2 million.
    Corporate, general and administration expenses of $0.5 million (2005 -
$2.6 million) relate to the ongoing corporate, office, payroll and
administrative costs incurred by the Company. The comparable period in 2005
included a charge to earnings of $0.8 million of the fair value of options
granted and vesting during that quarter.
    The Company evaluates the carrying values of its exploration and
development projects on a regular basis and in the third quarter of 2006
determined that results from the certain projects in the Northwest Territories
("NWT"), in particular the Yamba Lake Project, fell below the consistently
applied criteria the Company has set for continued involvement in an
exploration project. Consequently, the Company wrote down the carrying value
of its interest in those projects to nil. The write-down for the projects in
the NWT amounted to $5.9 million. In addition, certain Ontario based regional
exploration charges were written down by $1 million to nil as they also did
not meet the criteria for continued involvement by the Company. The total
charge to operations in the current quarter was $6.9 million. Where the
Company believes that exploration and development results remain promising,
the amounts expended on these projects are included in the balance sheet -
approximately $23.9 million as at September 30, 2006 (December 31, 2005 -
$35.1 million).
    The foreign exchange gain in the current quarter of $0.8 million
comprises net unrealized gains on Canadian and South African currency
denominated monetary assets and liabilities and reflects the relative movement
against the Company's reporting currency (the US dollar). The South African
Rand, in which currency the Company's main monetary liabilities are stated,
weakened versus the US dollar resulting in the net gain recognized in the
quarter. The South African Rand strengthened in the comparable quarter of 2005
and resulted in a net loss of $0.4 million.
    In summary, in the third quarter of 2006, the Company incurred an after
tax net loss of $6.9 million versus an after tax net loss of $3.5 million in
the third quarter of 2005.
    Please refer to the Company's website (www.southernera.com) or SEDAR
(www.sedar.com) to view the full financial results for the third quarter of
2006.


    SouthernEra Diamonds Inc.
    Consolidated Balance Sheets
    (in thousands of United States dollars)
    (unaudited)

                                                  September 30,  December 31,
                                                          2006          2005
    -------------------------------------------------------------------------
    Assets
    Current assets:
      Cash and equivalents                         $     5,599   $     4,337
      Accounts receivable                                1,286         1,508
    -------------------------------------------------------------------------
                                                         6,885         5,845
    Restricted cash                                          -         4,000
    Property, plant and equipment                        1,284         1,644
    Development projects                                14,956        14,596
    Exploration projects                                23,844        20,482
    Other assets                                           910         1,111
    -------------------------------------------------------------------------
                                                   $    47,879   $    47,678
    -------------------------------------------------------------------------
    Liabilities and shareholders' equity
    Current liabilities:
      Accounts payable and accrued liabilities     $     1,182   $     1,447
      Income taxes payable                              13,453        15,897
    -------------------------------------------------------------------------
                                                        14,635        17,344
    Long-term liabilities:
      Future income taxes                                  450           524
      Environmental rehabilitation provision               848         1,032
    -------------------------------------------------------------------------
                                                        15,933        18,900
    -------------------------------------------------------------------------

    Shareholders' equity:
      Common shares                                    119,814       108,882
      Contributed surplus                                3,811         3,558
      Share purchase warrants                            1,723         1,578
      Deficit                                          (91,428)      (83,266)
      Cumulative translation adjustments                (1,974)       (1,974)
    -------------------------------------------------------------------------
                                                        31,946        28,778
    -------------------------------------------------------------------------
                                                   $    47,879   $    47,678
    -------------------------------------------------------------------------

    These interim financial statements have not been subjected to a review by
    the Company's external auditors.



    SouthernEra Diamonds Inc.
    Consolidated Statements of Operations
    (in thousands of United States dollars,
     except income (loss) per share amounts)
    (unaudited)

                                      For Three Months           Nine Months
                                    Ended September 30,   Ended September 30,
                                       2006       2005       2006       2005
    -------------------------------------------------------------------------
    Diamond sales revenue          $      -   $      -   $      -   $      -
    -------------------------------------------------------------------------
    Direct costs:
      Mining operations                 (36)      (129)      (302)      (331)
      Amortization                     (131)      (151)      (393)      (439)
    -------------------------------------------------------------------------
                                       (167)      (280)      (695)      (770)
    -------------------------------------------------------------------------
    Loss from mining operations        (167)      (280)      (695)      (770)
    Interest expense                   (217)      (240)      (708)      (805)
    General and administration
     expenses                          (478)    (2,623)    (2,323)    (4,662)
    -------------------------------------------------------------------------
    Loss before the undernoted         (862)    (3,143)    (3,726)    (6,237)
    Exploration project writedowns   (6,891)         -     (6,891)         -
    Foreign exchange gain (loss)        762       (403)     2,409      1,663
    Other income                          -          -          -      1,000
    -------------------------------------------------------------------------
    Loss before taxes                (6,991)    (3,546)    (8,208)    (3,574)
    Income tax:
      Current                             -        (30)       (28)      (190)
      Future recovery                    63         58         74        136
    -------------------------------------------------------------------------
    Net loss after income taxes      (6,928)    (3,518)    (8,162)    (3,628)
    Basic and diluted loss
     per share                     $  (0.05)  $  (0.04)  $  (0.06)  $  (0.04)
    -------------------------------------------------------------------------



    Consolidated Statements of Deficit, Contributed Surplus and
     Cumulative Translation Adjustments
    (in thousands of United States dollars)
    (unaudited)

    For the Nine Month Ended              2006                          2005
    -------------------------------------------------------------------------
                                     CUMULATIVE                    CUMULATIVE
                                       TRANSLA-                      TRANSLA-
                             CONTRI-     TION              CONTRI-     TION
                              BUTED     ADJUST-             BUTED     ADJUST-
                   DEFICIT   SURPLUS     MENTS   DEFICIT   SURPLUS     MENTS
    -------------------------------------------------------------------------
    Beginning of
     period       $(83,266) $  3,558  $ (1,974) $(77,460) $  2,501  $ (1,974)
    Fair value of
     share options
     granted and
     vested              -       253         -         -       814         -
    Net loss for
     the period     (8,162)        -         -    (3,628)        -         -
    -------------------------------------------------------------------------
    End of
     period       $(91,428) $  3,811  $ (1,974) $(81,088) $  3,315  $ (1,974)
    -------------------------------------------------------------------------

    These interim financial statements have not been subjected to a review by
    the Company's external auditors.



    SouthernEra Diamonds Inc.
    Consolidated Statements of Cash Flows
    (in thousands of United States dollars)
    (unaudited)

                                       Three Months           Nine Months
                                    Ended September 30,   Ended September 30,
                                       2006       2005       2006       2005
    -------------------------------------------------------------------------
    Net loss for the period        $ (6,928)  $ (3,518)  $ (8,162)  $ (3,628)
    Adjustments for non-cash items:
      Amortization                      131        151        393        439
      Accrued interest                  217        240        708        805
      Exploration writedowns          6,891          -      6,891          -
      Fair value of granted and
       vested share options               4        665        256        790
      Future income taxes               (63)      (136)       (74)      (136)
      Foreign currency translation
       loss (gain)                     (762)       403     (2,409)    (1,663)
    -------------------------------------------------------------------------
                                       (510)    (2,195)    (2,397)    (3,393)
    Change in non-cash working
     capital balance                   (211)     1,012     (1,358)     1,396
    -------------------------------------------------------------------------
    Cash used in operations            (721)    (1,183)    (3,755)    (1,997)
    -------------------------------------------------------------------------
    Financing activities:
      Issue of common shares
       for cash                         233      3,078     11,925      7,851
    -------------------------------------------------------------------------
    Cash provided by financing
     activities                         233      3,078     11,925      7,851
    -------------------------------------------------------------------------
    Investing activities:
      Exploration and development
       projects                      (4,561)    (1,793)   (10,754)    (5,224)
    Property, plant and equipment        (6)       (12)       (38)       (16)
      Restricted cash                     -          -      4,000          -
    -------------------------------------------------------------------------
    Cash used in investing
     activities                      (4,567)    (1,805)    (6,792)    (5,240)
    -------------------------------------------------------------------------
    Increase (decrease) in cash      (5,055)        90      1,378        614
    Foreign exchange loss
     on cash held                                                        (40)
     in foreign currency                (81)        (2)      (116)       732
    Cash and equivalents
     - beginning of period           10,735      1,218      4,337      1,306
    -------------------------------------------------------------------------
    Cash and equivalents
     - end of period               $  5,599   $  1,306   $  5,599   $  1,306
    -------------------------------------------------------------------------
    Cash and cash equivalents
     comprise:
      Cash                         $  1,099   $  1,306      1,099      1,306
      Short-term investments          4,500          -      4,500          -
    -------------------------------------------------------------------------
                                   $  5,599   $  1,306   $  5,599   $  3,980
    -------------------------------------------------------------------------

    These interim financial statements have not been subjected to a review by
    the Company's external auditors.


For further information: SouthernEra Diamonds Inc.: Mr. Chris Reynolds,
Senior Vice President and CFO, Telephone: [phone], Fax: [phone],
E-mail: inbox(at)southernera.com, www.southernera.com
(SDM. SRE)