Final Results

SouthernEra Diamonds 2004 Year-End Results

 

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

    Shares Issued and Outstanding: 100,566,601

    TSX: SDM

    AIM: SRE

 

    TORONTO, April 1 /CNW/ - The Board of Directors of SouthernEra Diamonds

Inc. ("SouthernEra") (the "Company") (TSX: SDM, AIM: SRE) today reported on

the Company's 2004 year-end results.

    On September 1, 2004, the Company, through a Plan of Arrangement,

transferred all of its platinum group metals and gold mining, exploration and

development businesses (the "Platinum Division") to a new public company,

Southern Platinum Corp. Shareholders of the Company on September 1, 2004 were

automatically issued shares in Southern Platinum Corp. on a one-for-one basis.

    SouthernEra is engaged in diamond exploration, mine development and

mining activities internationally. Exploration activities in 2004 were

conducted in Canada, South Africa, Gabon, the Democratic Republic of Congo

(the "DRC"), and Australia.

    The Company's 56%-owned Klipspringer Diamond Mine ("Klipspringer") in

South Africa continued on a care and maintenance basis throughout most of

2004, due to the continued strength of the South Africa Rand ("Rand"). The

Company's revenue in 2004 was derived from its share of minimal income

received from the sale of diamonds produced at the Klipspringer Diamond Mine

early in the year. The sale of PGM concentrate from the Messina Platinum

Project for the first eight months of the year is included in the net loss

from discontinued operations. Revenues for this period from the sale of PGM

concentrate amounted to $ 23.8 million.

    No significant revenue was generated in 2004 from diamond sales at

Klipspringer, compared to $3.2 million recognized in 2003 from the sale of

37,885 carats.

    Care and maintenance costs in 2004 amounted to $1.3 million and are

comprised of site maintenance, dewatering and security of the mine site.

Mining costs for mining operations in 2003 amounted to $9 million.

    In 2004 the Company revaluated the carrying cost of its plant and

equipment at Klipspringer and recognized a $1.9 million charge to the

statement of operations. Amortization in 2003 of $1.4 million recognized only

the depreciation of equipment over fixed lives.

    In summary, care and maintenance cost in 2004 and mining activities in

2003 resulted in a loss from mining operations, after amortization, of       

$4.5 million versus a loss in 2003 of $10.4 million.

    In 2004, $2 million of interest expense was recorded as a period cost

relating to accrued interest on tax liabilities and interest paid on a Rand

overdraft facility at Klipspringer. The overdraft facility was fully repaid in

September 2004.

    Corporate, general and administration expenses increased from            

$1.2 million in 2003 to $3.5 million in 2004. This $2.3 million increase

reflects the increased level of corporate activity, including legal, financial

and accounting advice associated with the division of SouthernEra Resources

Limited into two separate public companies. The administrative costs also

include a $1.0 million charge for the fair value of granted and vested share

purchase options to directors, officers and employees of the Company.

    In 2004 exploration and development project cost write-downs of the

carrying values of certain activities in Canada's Northwest Territories and in

South Africa amounted to $3.0 million. These write-downs relate to specific

diamond prospects where exploration results fell below the consistently

applied criteria the Company has set for continued involvement, and such

exploration activities have been terminated or put on hold. Where the Company

believes that exploration and development results remain promising, the

amounts expended on these projects are included in the balance sheet -

approximately $16.2 million at December 31, 2004 (2003 - $16.9 million),

exclusive of the development costs at the Camafuca Diamond Project in Angola.

    The foreign exchange loss of $1.6 million comprises, in the main, net

unrealized losses on South African and Canadian currency denominated monetary

assets and liabilities and reflects the relative movement against the

Company's reporting currency (the US dollar). South African Rand, in which

denomination the Company's main monetary liabilities are stated, strengthened

against the US dollar in the year, resulting in a net loss. In 2003 there was

a net exchange loss of $4.5 million also due to the strength in the Rand in

that year.

    Overall, the Company incurred a loss before taxes of $14.5 million in

2004, comparable to the loss in 2003 of $14.6 million.

    Please refer to the Company's website (www.southernera.com) to view the

full audited financial results for the year ended December 31, 2004.

 

    SouthernEra Diamonds is one of Canada's largest fully integrated

international diamond companies with extensive diamond exploration in five

countries including Canada, Australia, Gabon, the DRC and South Africa. This

represents the fourth most active global diamond exploration program after the

majors DeBeers, BHPB and Rio Tinto. The Company also operates the Klipspringer

Diamond Mine in South Africa and maintains an 18 percent free-carried interest

in the Camafuca Diamond Project in Angola.

   

    For further information: PLEASE CONTACT: 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)