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PROGRESS REPORT ON ALLUVIAL EXPLORATION PROJECTS - TRANS HEX

Release Date: 27/02/1998 17:02
Code(s): TSX
Wrap Text
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

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