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TRANS HEX INTERNATIONAL LTD.
PROGRESS REPORT ON ALLUVIAL DIAMOND EXPLORATION PROJECTS
FOR IMMEDIATE RELEASE
FEBRUARY 26, 1998
TORONTO, CANADA - TRANS HEX INTERNATIONAL LTD. (TSE: THI) IS PLEASED TO REPORT
ON ITS FINANCIAL RESULTS FOR THE NINE MONTHS ENDED DECEMBER 31, 1997.
AT BLOCK 9 ON THE ORANGE RIVER, NAMIBIA, UPSTREAM FROM THE PARENT COMPANY'S
PRODUCING FLAGSHIP MINES AT BAKEN, WIDE SPACED DRILLING HAS DEMONSTRATED A
DRILL INDICATED RESOURCE OF 30 MILLION CUBIC METERS OF GRAVEL DEPOSITED IN A
600 METER WIDE PALEOCHANNEL PRESERVED OVER A STRIKE LENGTH OF 4 KILOMETRES. THE
JOINT VENTURE, IN WHICH TRANS HEX HAS A 50% INTEREST, HAS APPROVED THE BULK
SAMPLING OF INITIALLY, THE TWO MOST PROMISING SITES, REFERRED TO AS THE "PLUNGE
POOL" AND THE "TROUGH". THE PIT DESIGN HAS BEEN COMPLETED ON EACH OF THE SITES
WITH ABOUT 30,000 BANK CUBIC METERS (BCM) TO BE PROCESSED (THE BASAL OR
LOWERMOST 3 METERS) FROM EACH BULK SAMPLE. OVERBURDEN WASTE OF 293,000 BCM AND
167,000 BCM RESPECTIVELY WILL BE REMOVED, WITH GRAVELS OF 52,000 BCM AND 96,000
BCM RESPECTIVELY BEING TREATED OR STOCKPILED (INTERMEDIATE GRAVELS) FOR
EVENTUAL PROCESSING. BASED ON THE ABOVE RESULTS, THE JOINT VENTURE HAS APPROVED
THE CONSTRUCTION BY TRANS HEX OF A 100 TONNE PER HOUR PROCESSING PLANT, CAPABLE
OF TREATING 25 TONNES PER HOUR THROUGH A DENSE MEDIA SEPARATION (DMS) CIRCUIT.
WITH DETAILED DESIGN AND COSTING IN PROGRESS, THE COMPLETION OF ON SITE
CONSTRUCTION AND THE COMMENCEMENT OF WET COMMISSIONING IS PLANNED FOR SEPTEMBER
1998. THE DESIGN AND CONSTRUCTION OF CAMPS FOR THE EARTH-MOVING CONTRACTORS,
THE SECURITY TEAM AND THE PLANT PERSONNEL, IS IN PROGRESS. THE FINAL
ENVIRONMENTAL IMPACT ASSESSMENT REPORT HAS BEEN ACCEPTED BY THE NAMIBIAN
DEPARTMENT OF ENVIRONMENTAL AFFAIRS AND PERMISSION TO PROCEED WITH BULK
SAMPLING IS EXPECTED DURING FEBRUARY 1998. INVITATIONS TO TENDER FOR THE EARTH
MOVING CONTRACT ARE ALSO TO BE ADVERTISED DURING FEBRUARY, WHILE A SURFACE
OWNERS COMPENSATION AGREEMENT TO RUN FROM MARCH 1998 FOR THE LIFE OF THE
PROJECT IS EXPECTED TO BE SIGNED SHORTLY.
NEGOTIATIONS WITH AN AUSTRALIAN COMPANY ARE IN PROGRESS IN ORDER TO FORMALISE
THE JOINT VENTURE AGREEMENT TO EXPLORE AND DEVELOP THE DIAGEMA CONCESSION AREA
IN LUNDA NORTE PROVINCE, ANGOLA. THE OTHER TWO CONCESSION AREAS SUBJECT TO THE
AGREEMENT ANNOUNCED IN JULY OF 1997, KUPOLU AND SOMICOA, ARE EXPECTED TO BE
ACCESSIBLE SOON DUE TO THE IMPROVING SECURITY SITUATION IN THE AREA. THE
COMPANY IS ALSO INVESTIGATING A NUMBER OF FURTHER OPPORTUNITIES IN THE LUNDA
NORTE AND LUNDA SUL PROVINCES. THE COMPANY HAS ESTABLISHED AN OFFICE IN LUANDA,
WHERE A GENERAL MANAGER WAS APPOINTED IN JANUARY WHO IS CURRENTLY REGISTERING
THE COMPANY AS A FOREIGN INVESTOR.
TWO TRANS HEX EMPLOYEES HAVE RECENTLY VISITED THE SITE AT BAMINGUI, IN THE
CENTRAL AFRICAN REPUBLIC TO ASSESS THE CONDITION OF VARIOUS ITEMS OF PLANT AND
EQUIPMENT WITH OUR JOINT VENTURE PARTNERS, UNITED REEF. THE COMPANY
ANTICIPATES MAKING AN OFFER TO PURCHASE EARTH MOVING EQUIPMENT, AN X-RAY
SORTER, GENERATORS, DRILL EQUIPMENT, VARIOUS SPARES AND LOOSE EQUIPMENT FROM
THE JOINT VENTURE FOR USE ON ITS ANGOLAN PROJECTS.
FORMAL NOTICE OF CESSATION OF FURTHER EXPLORATION AT THE ACORDO PROPERTY IN
TOCANTINS STATE, BRAZIL WAS GIVEN TO THE COMPANY'S JOINT VENTURE PARTNERS IN
THE FIRST WEEK OF DECEMBER 1997, WITH FINAL REPORT WRITING AND DATA COLLATION
TO BE COMPLETED SHORTLY. PRELIMINARY INVESTIGATIONS ARE UNDERWAY ON VARIOUS
ALLUVIAL DIAMOND PROPERTIES IN BRAZIL, INCLUDING THOSE OF CANABRAVA DIAMOND
CORPORATION WITH WHOM A LETTER OF INTENT WAS SIGNED ON JANUARY 9, 1998.
TRENCH SAMPLING WAS COMPLETED AT THE END OF NOVEMBER AT THE SUNDA SHELF
PROJECT, INDONESIA AND THE DREDGE RETURNED TO ITS OWNERS IN PHUKET, THAILAND
AFTER THE DIAMOND PLANT WAS DISMANTLED AND REMOVED. THE EXPLORATION RESULTS DO
NOT WARRANT FURTHER EXPLORATION SPENDING AND THE MINISTRY OF MINES WILL BE
NOTIFIED OF THE COMPANY'S INTENTION TO RELINQUISH THE COW CONCESSION AREA.
FINANCIAL RESULTS
OPERATING RESULTS
A TOTAL OF $2.1 MILLION WAS SPENT ON THE COMPANY'S PROPERTIES FOR THE QUARTER
ENDED DECEMBER 31, 1997, COMPARED WITH $1.7 MILLION AND $2.3 MILLION DURING THE
PREVIOUS TWO QUARTERS. THE LARGEST COMPONENTS OF THE THIRD QUARTER EXPENDITURE
WERE $1.3 MILLION SPENT ON THE SUNDA SHELF (A PORTION OF WHICH IS TO BE
RECOVERED FROM A JOINT VENTURE PARTNER) AND $0.5 MILLION AT THE ACORDO PROJECT.
BASED ON THE DISAPPOINTING EXPLORATION RESULTS AT THE SUNDA SHELF AND ACORDO
PROJECTS, ALL EXPENDITURE CAPITALISED IN RESPECT THEREOF ($8.9 MILLION FOR
SUNDA SHELF AND $3.3 MILLION FOR ACORDO) HAS BEEN WRITTEN OFF, AS WELL AS ALL
EXPENDITURE INCURRED ON INVESTIGATING OTHER OPPORTUNITIES THAT HAVE NOT YET
RESULTED IN ANY DEFINITIVE PROJECTS.
PRIVATE PLACEMENT
THE COMPANY COMPLETED A PRIVATE PLACEMENT DURING NOVEMBER 1997 : IN ORDER TO
GUARANTEE UNINTERRUPTED EXPLORATION AT THE COMPANY'S PROJECTS AND ENSURE
ONGOING EVALUATION OF POTENTIAL PROSPECTIVE OPPORTUNITIES, TRANS HEX DIAMONDS
LIMITED, A WHOLLY OWNED SUBSIDIARY OF TRANS HEX GROUP LIMITED, SUBSCRIBED FOR A
FURTHER 2,775,000 SHARES AT $1.40 PER SHARE FOR GROSS PROCEEDS TO THE COMPANY
OF $3.89 MILLION. ONE MILLION DOLLARS WAS USED TO REDUCE THE INTERCOMPANY LOAN.
THE COMPANY IS IN THE PROCESS OF FINALISING ITS WORK PROGRAM AND COMPILING ITS
EXPLORATION BUDGET FOR THE FISCAL YEAR STARTING APRIL 1, 1998 AND ONGOING CASH
REQUIREMENTS WILL BE REVIEWED IN ASSOCIATION THEREWITH.
INTERIM (UNAUDITED) CONSOLIDATED BALANCE SHEETS
(THOUSANDS OF CANADIAN DOLLARS, EXCEPT AS INDICATED)
AS AT DECEMBER 31
1997 1996
CURRENT ASSETS 6,168 10,073
DEFERRED ORGANISATION EXPENSES, NET OF
ACCUMULATED AMORTISATION 317 420
PROPERTY ACQUISITION COSTS AND EXPLORATION
EXPENDITURE 1,405 15,465
FIXED ASSETS, NET OF ACCUMULATED DEPRECIATION 1,702 1,490
9,592 27,448
CURRENT LIABILITIES 2,524 1,402
COMMON SHARES AND WARRANTS 31,915 27,366
CONTRIBUTED SURPLUS 494 494
DEFICIT (25,341) (1,814)
9,592 27,448
INTERIM (UNAUDITED) CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(THOUSANDS OF CANADIAN DOLLARS, EXCEPT AS INDICATED)
FOR THE 9 MONTHS ENDED DECEMBER 31
1997 1996
INTEREST INCOME 151 -
EXPENSES
GENERAL AND ADMINISTRATION 876 554
DEPRECIATION AND AMORTISATION 85 77
MINING CLAIMS ABANDONED OR WHERE
CONTINUED EXPLORATION IS DEEMED
INAPPROPRIATE 19,666 299
LOSS FOR THE PERIOD 20,476 930
DEFICIT - BEGINNING OF PERIOD 4,865 884
DEFICIT - END OF PERIOD 25,341 1,814
LOSS PER SHARE $ 1.79 $ 0.18
TRANS HEX INTERNATIONAL LTD. IS AN INTERNATIONAL DIAMOND EXPLORATION,
DEVELOPMENT AND MINING COMPANY WITH INTERESTS IN EXPLORATION PROJECTS AND JOINT
VENTURES IN NAMIBIA, ANGOLA, BRAZIL AND THE CENTRAL AFRICAN REPUBLIC. THE
COMPANY IS A SUBSIDIARY OF TRANS HEX GROUP LIMITED, THE SECOND LARGEST DIAMOND
PRODUCER IN SOUTH AFRICA, WITH WELL ESTABLISHED INDEPENDENT DIAMOND MARKETING
FACILITIES.
FOR FURTHER INFORMATION PLEASE CONTACT:
D.M. (NIEL) HOOGENHOUT, PRESIDENT AND CHIEF EXECUTIVE OFFICER
+1 . 416 . 363-5440
PETER W.A. WALKER, VICE PRESIDENT, EXPLORATION
+27 . 21 . 92-1105
STEPHEN WOODHEAD, CHIEF FINANCIAL OFFICER
+1 . 416 . 363-5440