Sirius Real Estate Regulatory News (SRE)

7 Sep 2006 16:49

SouthernEra Diamonds Commences Trial Mining at Klipspringer Diamond Mine Shares issued and outstanding: 160,054,229 TSX: SDM AIM: SRE TORONTO, ON, and LONDON, UK, Sept. 7 /CNW/ - SouthernEra Diamonds Inc.(the "Company") (TSX: SDM, AIM: SRE) today announced the commencement of atrial mining operation at the Company's 57% owned and operated KlipspringerDiamond Mine ("Klipspringer") in South Africa. Klipspringer was developed as a 50:50 joint venture between SouthernEraand De Beers Consolidated Mines Limited ("De Beers"), with De Beers fullyfunding the R50 million development capital. The mine was commissioned inJanuary 2002, shortly before an unprecedented steep appreciation of the SouthAfrican Rand ("R") against the US$, which strengthened from a low of R11.60 in2002 to high of R6.50 in 2003. As a consequence, Klipspringer becameunprofitable and was placed on care and maintenance in January 2004. While on care and maintenance several alternative mine plans wereinvestigated with the objective of returning the mine to profitable productionat the earliest opportunity. The new mine plan proposes a modified miningmethod focussing on grade control, reduced manpower and reduced operatingcosts. If successful, the re-engineered mine is expected to produceapproximate 160,000 tonnes per annum, yielding approximately 80,000 carats perannum. Preparations for the trial mining have not required a significantcapital investment. Under the improving foreign exchange environment the trialmining is expected to generate a modest cash flow. The trial mining program is likely to continue for the balance of 2006with the objective of assessing the revised mining method and otherproductivity initiatives. During this period SouthernEra will also be able toassess the impact of increased diamond prices since 2004 when the operationwas placed on care and maintenance. Based on these results and exchange ratetrends a decision will be made on the prospect of commencing full operationsin 2007. President and CEO Alasdair MacPhee said, "With the recent devaluation ofthe Rand and the robustness of the diamond market, this is a good opportunityfor the Company to assess the potential of returning Klipspringer toprofitability. At the same time we will continue to assess other opportunitiesto unlock the value of Klipspringer for our shareholders." Klipspringer Resource Statement as of 31st December, 2005 --------------------------------------------------------- Attributable Mining Mining Block to Tonnes Grade (cpht) Carats SouthernEra Indicated Resource 761,826 49.1 374,004 213,182 Inferred Resource 3,389,431 49.1 1,663,976 948,466 Mr. Uwe Naeher (Professional Geologist), SouthernEra's WesternExploration Manager, is a qualified person, under NI 43-101, responsible forthe technical information in this release. Mr. Naeher has reviewed the contentof this release. SouthernEra Diamonds is one of Canada's fully integrated diamondcompanies with extensive alluvial and kimberlite diamond exploration in theDRC as well as other countries including Canada, Gabon, Zimbabwe and SouthAfrica. The Company also holds a 57 percent interest in the KlipspringerDiamond Mine in South Africa and maintains an 18 percent free-carried interestin 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 todiffer materially. Such forward-looking statements include comments regardingexploration work. Actual results could differ materially from thoseanticipated. The Company disclaims any obligation to update forward-lookingstatements.For further information: SouthernEra Diamonds Inc., Alasdair MacPhee,President and CEO, Telephone: + 27 11 206 5820; Sharon Allan, InvestorRelations, Telephone: (416) 359-9282, Fax: (416) 359-9141, E-mail:inbox(at)southernera.com, www.southernera.com; London: 4C-Burvale, CarinaCorbett, Director, Telephone: ++44 (0) 207-907-4761, Fax: ++44 (0)207-907-4769, Email: Corbett(at)4c-burvale.co.uk(SRE)ENDSOUTHERNERA DIAMONDS INC