Patrick Evans, SouthernEra's CE, said the diamond grades at Klipspringer, located in South Africa's northern Limpopo province, had always made it a marginal mine that needed a rand/dollar exchange rate of 8,50 to be viable.
"Messina is completely different. The margins at Messina are quite robust. Even at current rand levels, Messina still has a margin of more than $100 an ounce," Evans said.
The rand, one of the world's best performing currencies in 2003, was trading at 6,56 against the dollar yesterday.
The South African unit surged 40% against the dollar in 2002 and 28% last year, hiking costs miners pay in the mineral-rich country.
Margins suffered as revenues, earned in dollars, fell.
Evans said the build-up of production at Messina was on track to reach 120 000 t of ore per month by the end of the second quarter.
He said Messina is this year expected to produce 160 000 oz of platinum group metals (PGMs), out of which 55 000 oz would be platinum alone.
Platinum and palladium are the best-known metals in the PGM group.
Platinum output at Messina is anticipated to rise to 85 000 oz in 2005 out of total PGM production of 200 000 oz.
Messina also produces large quantities of nickel.
The Toronto-based company, which is also listed on London's AIM market, said it would reopen the Klipspringer diamond mine if the rand weakened enough.
"We have no intention of selling it...It's a nice and large mine and produces 100% gem quality diamonds," Evans said of the venture in which SouthernEra has a 50% stake and is partnered by De Beers and a black empowerment group.
In a bid to keep the underground diamond mine operating, SouthernEra asked the South African government last year to allow it to mine continuously instead of the standard 5,5 days a week with no mining on Sundays.
The government has not responded to the request. – Reuters.
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