Statement re private placement

SouthernEra Diamonds Closes Private Placement

 

    Shares issued and outstanding: 128,313,101           

    TSX: SDM

    AIM: SRE

 

    TORONTO, ON and LONDON, UK, Dec. 30 /CNW/ - SouthernEra Diamonds Inc.

("SouthernEra") (TSX: SDM, AIM: SRE) announced today that it has closed the

previously announced private placement with BHP Billiton ("BHPB"). The Company

has issued a total of 15,684,000 shares at a price of C$0.60 per share for

gross proceeds of US$8 million (approx C$9.4 million) resulting in BHPB

becoming SouthernEra's largest shareholder with an approximate 12% holding. An

application has been made to AIM for 15,684,000 common shares to be admitted

and it is expected that trading will commence shortly.

    US$4 million of the US$8 million proceeds from the BHPB private placement

will be used to fund the exploration for primary diamonds and all other

minerals within SouthernEra's exploration permits covering in excess of 13,000

square kilometres of ground in the Democratic Republic of the Congo (DRC)

under a recently announced Memorandum of Agreement with BHPB (see News Release

dated 19 October 2005). BHPB can earn a 50% or a maximum 65% interest in the

joint venture. Once the US$4 million has been fully utilised, BHPB shall fully

fund exploration up to and including the completion of a pre-feasibility study

and will earn a 50% interest in the project. Full funding of a Bankable

Feasibility study will grant BHPB an additional 15% interest. SouthernEra

retains a 100% right to all alluvial diamonds. The remaining US$4 million will

be used to support SouthernEra's global exploration and development program

and for general corporate purposes.

 

    SouthernEra Diamonds is one of Canada's largest fully integrated diamond

companies with extensive advanced diamond exploration in five countries

including Canada, Gabon, the DRC, Zimbabwe and South Africa. 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.

 

    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

statements.

  

    For further information: SouthernEra Diamonds Inc., Chris Reynolds,

Senior Vice President and Chief Financial Officer, or Howard Bird, Senior Vice

President, Exploration, Telephone: [phone], Fax: [phone],

E-mail: inbox(at)southernera.com, www.southernera.com; London: 4C-Burvale,

Carina Corbett, Director, Telephone: ++44 (0) 207-907-4761, Fax:

++44 (0) 207-907-4769, Email: Corbett(at)4c-burvale.co.uk

    (SDM. SRE)