SouthernEra Diamonds Releases Third Quarter Res...

SouthernEra Diamonds Releases Third Quarter Results

 

    Shares Issued and Outstanding: 85,380,418

    TSX: SDM

    AIM: SRE

 

    TORONTO, Nov. 15 /CNW/ - The Board of SouthernEra Diamonds Inc. today

announced the following highlights from the third quarter of 2004:

 

        -  The successful completion of a plan of arrangement whereby the

           platinum and gold businesses of the Company were transferred to a

           newly listed public company, Southern Platinum Corp. and

           SouthernEra Resources Limited was renamed SouthernEra Diamonds

           Inc.

        -  The discovery of new kimberlites at two of the Company's projects

           in Canada's North West Territories.

        -  Commencement of drilling at the Company's Hope 1 Project in South

           Africa and the discovery of a second kimberlitic indicator

           anomaly, Hope 2.

        -  Completion of drilling at the Yilgarn Diamond Project in

           Australia.

 

    Subsequent to the quarter, the Company announced:

 

        -  The discovery of a meta-kimberlite pipe at the Makongonio Project

           in Gabon.

        -  The appointment of Canaccord Capital (Europe) as the Company's UK

           Nominated Advisor and Broker.

        -  The discovery of further new kimberlites at the Makongonio Project

           in Gabon.

        -  The conclusion of a brokered private placement agreement with

           Canaccord Capital Corp. to place approx. 5.9 million flow-through

           common shares at a price of $0.85 per share.

 

    Earnings

    Mine operating costs at Klipspringer decreased to $0.5 million in the

third quarter of 2004 from $2.6 million in the third quarter of 2003 as the

Company incurs only costs associated with the necessary care and maintenance

of the operation.

    The Company recorded a net loss from mining operations of $0.9 million

compared to a net loss in the comparable quarter of 2003 of $2.3 million. The

Company is studying alternative mining methods and optimal levels of

production at Klipspringer with the intention of resuming mining operations in

the near term. Start up costs in all the alternatives being studied are not

expected to be significant.

    Corporate, general and administrative expenses of $0.8 million were

comparable to the third quarter of 2003. The current quarter, however,

includes a portion of non-recurring costs associated with the reorganization

of the Company.

    In the third quarter, the Company incurred an after tax loss of $2.2

million (2 cents per share) from continuing operations versus a $3.3 million

loss (5 cents per share) in the third quarter of 2003. Cash flow used in

continuing operations for the quarter was $2.7 million (3 cents per share),

compared to a use of $4.4 million (7 cents per share) in the third quarter of

2003. The Company realized a net loss, including discontinued operations, for

the three months to September 30 of $10.6 million (12 cents per share)

compared to a $4.2 million loss (7 cents per share) in the third quarter of

2003.

 

    Operations Update

    On September 1, 2004, SouthernEra transferred its platinum group metals

and gold businesses to a new Canadian public company called Southern Platinum

Corp. SouthernEra Resources Limited was also named SouthernEra Diamonds Inc.

and continues to hold all the diamond assets of the Group. Shareholders of the

Company at the close of business on September 1, 2004, were automatically

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

    Revenues generated by the Messina Platinum Mine in the months of July and

August and their associated costs are included in the Group's results in the

third quarter of 2004 but are segregated in the discontinued operations

sections of the statement of operations.

    The Klipspringer Mine continued on care and maintenance in the third

quarter. The Company therefore recognised no diamond sales in the current

quarter. In the comparable quarter of 2003, 16,100 carats were produced from

processing of 40,600 tonnes of fissure ore. Until such time as the mine is

once again placed back into operation, no revenue will be derived from the

sale of diamonds.

    During the quarter the Company continued to advance its numerous diamond

exploration projects, which included drilling programs in Canada, South

Africa, Gabon and Australia. SouthernEra's global diamond exploration program

is the fourth most active after the majors DeBeers, BHPB and Rio Tinto.

    The Company also continues to maintain its 18 percent free-carried

interest in the Camafuca Diamond Project in Angola. During the quarter

discussions continued with the Angolan Government diamond agency, ENDIAMA, to

finalise the incorporation of the operating company for Camafuca.

    The full, unaudited interim financial statements and management's

discussion and analysis for the quarter ended September 30, 2004 are available

at www.southernera.com.

 

    Some statements contained in this news release are forward-looking and,

therefore, involve uncertainties or risks that could cause actual results to

differ materially. Such forward-looking statements include comments regarding

exploration work. Actual results could differ materially from those

anticipated. The Company disclaims any obligation to update forward-looking

statement.

 

 

 

    SouthernEra Diamonds Inc.

    Consolidated Balance Sheets

    (in thousands of United States dollars)

    (unaudited)

 

                                                  September 30,  December 31,

                                                          2004          2003

    -------------------------------------------------------------------------

    Assets

    Current assets:

      Cash and equivalents                          $    3,980    $   64,023

      Accounts receivable                                4,971        13,133

      Inventories                                            -         1,197

    -------------------------------------------------------------------------

                                                         8,951        78,353

    Property, plant and equipment                        4,475       179,606

    Development projects                                13,576        13,616

    Exploration projects                                16,693        16,919

    Future income taxes                                      -         3,403

    -------------------------------------------------------------------------

                                                    $   43,695    $  291,897

    -------------------------------------------------------------------------

    Liabilities and shareholders' equity

    Current liabilities:

      Accounts payable and accrued liabilities      $    1,187    $   12,866

      Income taxes payable                              12,834        11,862

      Current portion of long term debt                      -        16,064

    -------------------------------------------------------------------------

                                                        14,021        40,792

    Long-term liabilities:

      Long term debt                                         -        55,944

      Future income taxes                                1,473         1,772

      Environmental rehabilitation provision             1,007         1,981

    -------------------------------------------------------------------------

                                                        16,501       100,489

    -------------------------------------------------------------------------

 

    Non-controlling interests                                -        17,315

 

    Shareholders' equity:

      Common shares                                    127,787       232,814

      Share purchase warrants                              518           518

      Contributed surplus                                2,293         2,293

      Deficit                                         (103,029)      (70,155)

      Cumulative translation adjustments                  (375)        8,623

    -------------------------------------------------------------------------

                                                        27,194       174,093

    -------------------------------------------------------------------------

                                                    $   43,695    $  291,897

    -------------------------------------------------------------------------

 

    These interim financial statements have not been subjected to a review by

    the Company's external auditors.

 

    The accompanying notes form an integral part of, and should be read in

    conjunction with, these consolidated financial statements.

 

 

 

    SouthernEra Diamonds Inc.

    Consolidated Statements of Operations

    For the Periods Ended September 30

    (in thousands of United States dollars, except income

    (loss) per share amounts)

    (unaudited)

 

                              Three Months Ended           Nine Months Ended

                                    September 30,               September 30,

                              2004          2003          2004          2003

    -------------------------------------------------------------------------

    Diamond sales

     revenue            $        -    $      653    $       10    $    2,313

    Direct costs:

      Mining operations       (531)       (2,557)         (917)       (5,929)

      Amortization            (337)         (355)       (1,264)       (1,048)

    -------------------------------------------------------------------------

                              (868)       (2,912)       (2,181)       (6,977)

    -------------------------------------------------------------------------

    Loss from mining

     operations               (868)       (2,259)       (2,171)       (4,664)

    Interest expense          (353)            -          (934)            -

    General and

     administration

     expenses                 (810)         (793)       (2,518)       (2,124)

    -------------------------------------------------------------------------

    Loss before the

     undernoted             (2,031)       (3,052)       (5,623)       (6,788)

    Foreign exchange

     loss                     (446)         (455)       (1,737)       (3,270)

    Interest income            154             -           154             -

    -------------------------------------------------------------------------

    Loss before taxes       (2,323)       (3,507)       (7,206)      (10,058)

    Income tax:

      Future recovery          138           233           284           362

    -------------------------------------------------------------------------

    Loss after income

     taxes                  (2,185)       (3,274)       (6,922)       (9,696)

    -------------------------------------------------------------------------

    Net (loss) profit

     of discontinued

     operations             (8,459)         (971)      (25,952)        7,434

    -------------------------------------------------------------------------

    Net loss for the

     period             $  (10,644)   $   (4,245)   $  (32,874)   $   (2,262)

    -------------------------------------------------------------------------

    Basic and diluted

     loss per share

      Continuing

       operations       $    (0.02)   $    (0.05)   $    (0.33)   $    (0.16)

      Discontinued

       operations       $    (0.10)   $    (0.02)   $    (0.09)   $     0.12

      Net per common

       share            $    (0.12)   $    (0.07)   $    (0.42)   $    (0.04)

    -------------------------------------------------------------------------

 

 

 

    Consolidated Statements of Deficit, Contributed Surplus and

    Cumulative Translation Adjustments

    For the Nine Months Ended September 30

    (in thousands of United States dollars)

    (unaudited)

 

                                         2004                           2003

    -------------------------------------------------------------------------

                          CONTRI-   CUMULATIVE           CONTRI-   CUMULATIVE

                            BUTED  TRANSLATION             BUTED  TRANSLATION

                 DEFICIT  SURPLUS  ADJUSTMENTS  DEFICIT  SURPLUS  ADJUSTMENTS

    -------------------------------------------------------------------------

    Beginning

     of period  $ (70,155) $  2,293  $  8,623  $(57,869) $  1,635  $     206

    Transferred

     to Southern

     Platinum

     Corp.              -         -    (8,998)        -         -          -

    Translation

     gains

     (losses)

     net for

     the period         -         -         -         -         -      4,346

    Fair value

     of share

     options

     granted

     and vested         -         -         -         -         -          -

    Net income

     loss for

     the period   (32,874)        -         -    (2,262)        -          -

    -------------------------------------------------------------------------

    End of

     period     $(103,029) $  2,293  $   (375) $(60,131) $  1,635  $   4,552

    -------------------------------------------------------------------------

 

    These interim financial statements have not been subjected to a review by

    the Company's external auditors.

 

    The accompanying notes form an integral part of, and should be read in

    conjunction with, these consolidated financial statements.

 

 

 

    SouthernEra Diamonds Inc.

    Consolidated Statements of Cash Flows

    For the Periods Ended September 30

    (in thousands of United States dollars)

    (unaudited)

 

                              Three Months Ended           Nine Months Ended

                                    September 30,               September 30,

                               2004         2003          2004          2003

    -------------------------------------------------------------------------

 

    Net income (loss)

     for the period     $    (2,185)  $   (3,274)   $   (6,922)   $   (9,696)

    Adjustments for

     non-cash items:

      Amortization              337          355         1,264         1,048

      Accrued interest          353            -           934             -

      Fair value of

       granted and

       vested share

       options                  146         (492)          662             -

      Future income taxes      (138)        (233)         (284)         (362)

      Gain on sale of

       fixed assets               -           26             -             -

      Foreign currency

       translation loss

       (gain)                   446          455         1,737         3,270

    -------------------------------------------------------------------------

                             (1,041)      (3,163)       (2,609)       (5,740)

 

    Change in non-cash

     working capital

     balance                 (1,620)      (1,234)        3,641        11,656

    Cash used in

     discontinued

     operations              (4,646)       5,156       (23,003)      (10,896)

    -------------------------------------------------------------------------

    Cash provided by

     (used in)

     operations              (7,307)         759       (21,971)       (4,980)

    -------------------------------------------------------------------------

    Financing activities:

      Issue of common

       shares for cash            -          864            98        44,571

      Cash used in

       discontinued

       financing

       activities           (11,316)           -       (21,911)            -

    -------------------------------------------------------------------------

    Cash provided by

     financing

     activities             (11,316)         864       (21,813)       44,571

    -------------------------------------------------------------------------

    Investing activities:

      Exploration and

       development

       projects              (5,229)      (1,583)       (7,338)       (4,892)

      Property, plant

       and equipment            (13)        (140)         (430)         (274)

      Proceeds from

       sale of fixed

       assets                   397            -           397             -

    Cash used in

     discontinued

     investing

     activities              (3,606)     (12,890)       (8,457)      (31,658)

    -------------------------------------------------------------------------

    Cash used in

     investing

     activities              (8,451)     (14,613)      (15,828)      (36,824)

    -------------------------------------------------------------------------

 

    Increase (decrease)

     in cash                (27,074)     (12,990)      (59,612)        2,767

    Foreign exchange

     gain (loss) on

     cash held in

     foreign currency          (229)         279          (431)         (311)

    Cash and equivalents

     - beginning of

       period                31,283       29,092        64,023        13,925

    -------------------------------------------------------------------------

    Cash and equivalents

     - end of period    $     3,980   $   16,381    $    3,980    $   16,381

    -------------------------------------------------------------------------

    Cash and cash

     equivalents

     comprise:

      Cash                    3,980          115         3,980           115

      Short-term

       investments                -       16,266             -        16,266

    -------------------------------------------------------------------------

                        $     3,980   $   16,381    $    3,980    $   16,381

    -------------------------------------------------------------------------

 

    These interim financial statements have not been subjected to a review by

    the Company's external auditors.

 

    The accompanying notes form an integral part of, and should be read in

    conjunction with, these consolidated financial statements.

 

    For further information: SouthernEra Diamonds Inc., Patrick Evans,

President and CEO, Mark Rosslee, Senior Vice President and CFO, or

Chris Reynolds, Vice President Finance, Controller and Secretary, Telephone:

[phone], Fax: [phone], E-mail: inbox(at)southernera.com,

www: southernera.com

    (SRE)