Wrap Text
TRANS HEX GROUP LIMITED
REG. NO. 63/07579/06
PRELIMINARY RESULTS
FOR THE YEAR ENDED 31 MARCH 1999
HEADLINE EARNINGS +13%
DIAMOND OPERATING INCOME +41%
FINAL DIVIDEND +6%
ABRIDGED AUDITED CONSOLIDATED INCOME STATEMENT
% 1999 1998
CHANGE R'000 R'000
TURNOVER - DIAMONDS (3,0) 284 456 293 248
TURNOVER - LIME (21,1) 31 287 39 665
NET INCOME BEFORE THE FOLLOWING:
DIVIDEND RECEIVED 400 500
INTEREST PAID (5 578) (3 317)
DEPRECIATION (30 293) (29 628)
EXCEPTIONAL ITEMS (NOTE 2) (29 316) 566
NET INCOME BEFORE TAXATION 49 961 84 901
TAXATION 15 709 39 385
NET INCOME AFTER TAXATION 34 252 45 516
OUTSIDE SHAREHOLDERS' INTEREST 3 290 7 288
EQUITY ACCOUNT DEFICIT (284) (637)
NET ATTRIBUTABLE INCOME 37 258 52 167
EARNINGS PER SHARE (CENTS) (28,6) 247,3 346,2
HEADLINE EARNINGS PER SHARE (CENTS) 13,2 384,1 339,4
DIVIDEND PER SHARE (CENTS) - INTERIM 44,0 44,0
DIVIDEND PER SHARE (CENTS) - FINAL 6,1 70,0 66,0
3,6 114,0 110,0
TOTAL NUMBER OF SHARES IN ISSUE ('000) 15 067,5 15 067,5
ABRIDGED AUDITED CONSOLIDATED BALANCE SHEET
1999 1998
R'000 R'000
CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS' INTERESTS 255 369 227 049
OUTSIDE SHAREHOLDERS' INTEREST 1 459 4 749
DEFERRED LIABILITIES 54 432 59 694
311 260 291 492
EMPLOYMENT OF CAPITAL
FIXED ASSETS 243 408 236 919
INVESTMENTS AND LOANS (NOTE 3) 7 567 6 806
NET CURRENT ASSETS 60 285 47 767
CURRENT ASSETS 108 905 108 740
CASH RESOURCES 42 994 42 644
OTHER 65 911 66 096
LESS: CURRENT LIABILITIES 48 620 60 973
311 260 291 492
NET ASSET VALUE PER SHARE (CENTS) 1 695 1 507
ABRIDGED AUDITED CONSOLIDATED CASH FLOW STATEMENT
1999 1998
R'000 R'000
CASH AVAILABLE FROM OPERATING ACTIVITIES 112 186 115 314
MOVEMENT IN WORKING CAPITAL (8 163) 3 160
TAXATION PAID (26 097) (14 553)
DIVIDEND PAID (16 574) (16 424)
CASH RETAINED FROM OPERATING
ACTIVITIES 61 352 87 497
CASH EMPLOYED (61 002) (78 255)
FIXED ASSETS - REPLACEMENT (19 625) (13 509)
FIXED ASSETS - ADDITIONAL (40 657) (63 543)
INVESTMENTS AND LOANS (720) (1 203)
NET CASH FLOW FOR THE YEAR 350 9 242
NOTES
1999 1998
R'000 R'000
1. RECONCILIATION OF HEADLINE EARNINGS
NET ATTRIBUTABLE INCOME 37 258 52 167
ADJUSTED FOR:
EXCEPTIONAL ITEMS (NOTE 2) 20 618 (1 024)
HEADLINE EARNINGS 57 876 51 143
AMOUNT AMOUNT AMOUNT
PER INCOME AFTER AFTER
STATEMENT TAXATION TAXATION TAXATION
1999 1999 1999 1998
R'000 R'000 R'000 R'000
2. EXCEPTIONAL ITEMS
RATIONALISATION OF LIME DIVISION
AND RELATED INTERESTS AND
CANCELLATION OF LONG-TERM CONTRACT (27 876) (8 698) (19 178) 3 511
PROVISION FOR WRITE OFF OF FIXED
ASSETS TO NET REALISABLE VALUE (2 000) - (2 000) (2 185)
PROVISION FOR REHABILITATION
COMMITMENT - - - (302)
(29 876) (8 698) (21 178) 1 024
ATTRIBUTABLE TO OTHER MEMBERS 560 - 560 -
(29 316) (8 698) (20 618) 1 024
1999 1998
R'000 R'000
3. INVESTMENTS AND LOANS
LISTED INVESTMENTS AT COST :
SHARES 605 605
MARKET VALUE 4 950 5 351
UNLISTED INVESTMENTS AND LOANS AT
CARRYING VALUE :
ASSOCIATED COMPANY 651 969
TRANS HEX REHABILITATION FUND 4 280 3 101
LOAN TO TRANS HEX GROUP TRUST TO
FINANCE THE SHARE PURCHASE SCHEME 2 031 2 131
6 962 6 201
DIRECTORS' VALUATION 6 962 6 201
4. ADDITIONAL INFORMATION
NET OPERATING INCOME BEFORE TAXATION IS STATED
AFTER TAKING THE FOLLOWING INTO ACCOUNT:
EXPLORATION COST 11 274 25 597
NET MINE DEVELOPMENT COST 9 984 6 439
GROSS MINE DEVELOPMENT COST 12 170 10 453
LESS PROCEEDS INCLUDED IN TURNOVER 2 186 4 014
ROYALTIES: NAMAQUALAND DIAMOND
FUND TRUST 9 269 10 182
PROVISION FOR REHABILITATION 659 1 050
5. CAPITAL COMMITMENTS (INCLUDING AMOUNTS
AUTHORISED, BUT NOT YET CONTRACTED) 39 430 27 218
COMMENTS
FINANCIAL RESULTS
VIEWED IN THE LIGHT OF THE DEPRESSED STATE OF THE WORLD'S ROUGH DIAMOND MARKET
WHICH PREVAILED FOR MOST OF THE FINANCIAL YEAR AS WELL AS THE POOR RESULTS FROM
THE LIME DIVISION, THE GROUP'S RESULTS ARE CONSIDERED SATISFACTORY.
HEADLINE EARNINGS PER SHARE INCREASED FROM 339,4 CENTS TO 384,1 CENTS.
OPERATING INCOME FROM PRODUCTION BEFORE DEPRECIATION AND EXPLORATION OF THE
DIAMOND DIVISION INCREASED BY 41% OVER THE PREVIOUS YEAR, WHILE CASH FLOW AFTER
TAXATION AND REPLACEMENT CAPITAL AMOUNTED TO R58,3 MILLION. THE LIME DIVISION
INCURRED AN OPERATING LOSS BEFORE DEPRECIATION AND EXPLORATION OF R1,8 MILLION.
ONGOING EFFORTS TO REDUCE OPERATING COSTS HAVE PROVED SUCCESSFUL AND HAVE
SUPPORTED THE APPLICATION OF STRICT FINANCIAL MANAGEMENT THROUGH A DIFFICULT
YEAR. THE INCREASE IN HEADLINE EARNINGS AND POSITIVE CASHFLOW ENABLED THE GROUP
TO CONTINUE ITS MINE DEVELOPMENT AND EXPLORATION AT HIGH LEVELS IN WORLD TERMS.
DURING 1999 R27,5 MILLION (1998 : R14,3 MILLION) WAS SPENT ON MINE DEVELOPMENT
OF WHICH R17,5 MILLION (1998 : R7,9 MILLION) WAS CAPITALIZED AND R11,3 MILLION
(1998 : R25,6 MILLION) ON EXPLORATION.
THE GROUP HAS DECIDED TO CHANGE ITS FINANCIAL REPORTING STANDARDS TO
INTERNATIONAL ACCOUNTING STANDARDS (IAS) SO AS TO CONTINUE ITS LOGICAL
PROGRESSION TO THE INTERNATIONAL STAGE. THE FINANCIAL INFORMATION FOR THE
PREVIOUS YEAR HAS THUS BEEN RESTATED ACCORDINGLY, AND THE FINANCIAL RESULTS OF
TRANS HEX INTERNATIONAL LTD HAVE ALSO BEEN CONSOLIDATED WITH THOSE OF THE
GROUP. BASED ON THE PREVIOUS ACCOUNTING POLICIES, HEADLINE EARNINGS PER SHARE
WOULD HAVE AMOUNTED TO 277,0 CENTS (1998: 374,0 CENTS). DUE TO THE PROPOSED
MERGER WITH OCEAN DIAMOND MINING HOLDINGS LTD (ODM) THESE RESULTS ARE BEING
PUBLISHED EARLIER THAN PREVIOUSLY. THE FULL ANNUAL REPORT WILL BE MAILED BY MID
JULY AND THE ANNUAL GENERAL MEETING IS SCHEDULED FOR 16 AUGUST 1999.
OPERATIONS
SOUTH AFRICAN OPERATIONS AND EXPLORATION
DIAMOND DIVISION
PRODUCTION - TOTAL CARAT PRODUCTION DROPPED TO 114 502 CARATS (1998 : 143 205
CARATS), HOWEVER THE EFFECT ON TOTAL PROFITS WAS MINIMAL. THIS CAN BE ASCRIBED
TO: (A) THE SUSPENSION OF OPERATIONS AT HONDEKLIP BAY FROM NOVEMBER 1998
ONWARDS (WHERE A MAJOR PLANT REVAMP AND UPSCALE WAS COMMENCED WHICH WILL BE
COMPLETED DURING MAY 1999), AND LOWER THAN BUDGETED ORE GRADES FROM SEVERAL OF
THE SO VER KIMBERLITE TAILINGS DUMPS. THESE TWO OPERATIONS PRODUCE THE LOWEST
VALUE AND PROFIT MARGINS OF THE GROUP'S PRODUCTION SPECTRUM; (B) THE BAKEN MINE
WHICH IS THE COMPANY'S MAJOR INCOME CONTRIBUTOR, HAD A PARTICULARLY GOOD YEAR.
DESPITE A THREE WEEK STRIKE IN JULY/AUGUST BY THE NATIONAL UNION OF
MINEWORKERS, TARGETED PRODUCTION WAS EXCEEDED. PRODUCTION AT ALL OTHER
OPERATIONS WAS AS PLANNED.
MINE DEVELOPMENT AND EXPLORATION - THE GROUP'S STRATEGY IS TO EXTEND MINE
DEVELOPMENT BEYOND THE RATE REQUIRED TO MAINTAIN CURRENT PRODUCTION LEVELS.
ACTIVITIES WITHIN THE ORANGE RIVER MINING LEASE AREA CONTINUED TO PRODUCE
POSITIVE AND ENCOURAGING RESULTS AT BAKEN AND BLOEDDRIF. A NEW SAMPLING PLANT
IS CURRENTLY BEING COMMISSIONED AT NXODAP AND THE FULL EVALUATION OF THIS
EXCITING PROSPECT IS SCHEDULED FOR COMPLETION LATER THIS YEAR. AFTER THE
COMPLETION OF BAKEN'S PK4 AND PK28/1 EXPLORATION MEGA TRENCHES, PRODUCTION
EXPANSION FEASIBILITY STUDIES FOR THE ENTIRE ORANGE RIVER ENTITY ARE LIKEWISE
SCHEDULED TO BE COMPLETED BEFORE THE END OF 1999. THE GEOPHYSICAL
INTERPRETATIONS OF SURVEYS COMPLETED ON TRANS HEX'S MARINE CONCESSIONS 11(B),
11(C) AND 13(B) BY BENGUELA CONCESSIONS (AS JOINT VENTURE MANAGER AND PROJECT
FUNDER) HAVE ENCOURAGED THE JOINT VENTURE PARTNERS TO COMMENCE THE FIRST
SAMPLING PROGRAMME IN OCTOBER 1999.
VARIOUS OTHER EXPLORATION PROJECTS IN SOUTH AFRICA HAVE COMMENCED AND ARE BEING
EVALUATED ON AN ONGOING BASIS.
LIME DIVISION
VERY WEAK MARKET CONDITIONS FOR ALL PRODUCTS RESULTED IN A RATIONALIZATION OF
THE VREDENDAL AND LANGVLEI OPERATIONS WHEREBY THE DIVISIONS' TOTAL STAFF
COMPLEMENT HAS BEEN REDUCED FROM 248 TO 130. EXPLORATION DRILLING IN THE
VREDENDAL VICINITY HAS OUTLINED A NEW MULTI-MILLION TON HIGH GRADE LIMESTONE
DEPOSIT THE FUTURE OF WHICH, TOGETHER WITH THE DIVISION AS A WHOLE, REMAIN THE
SUBJECT OF ONGOING NEGOTIATIONS WITH SEVERAL INTERESTED PARTIES BASED BOTH IN
SOUTH AFRICA AND OVERSEAS.
TRANS HEX INTERNATIONAL
IN NAMIBIA THE MINERAL ANCILLARY RIGHTS COMMISSION RULED IN FAVOUR OF THE
COMPANY IN THE MATTER OF SURFACE USE COMPENSATION AT THE NORTHBANK PROJECT
ADJACENT TO THE ORANGE RIVER IN CONCESSION BLOCK 9 AT AUSSENKEHR. THE COMPANY
AWAITS THE ISSUE OF A WRIT OF EXECUTION TO COMMENCE BULK SAMPLING IN MID 1999.
LIMITED SHALLOW WATER GEOLOGIC MAPPING OF SECTIONS OF THE SKELETON COAST MARINE
CONCESSIONS WAS COMPLETED. MARINE GEOPHYSICAL SURVEYS, IN CONJUNCTION WITH ODM
WHO HOLD THE ADJACENT DEEPER WATER CONCESSIONS, ARE SCHEDULED TO COMMENCE LATER
IN THE YEAR. IN CONJUNCTION WITH JOINT VENTURE PARTNERS VERENA MINERALS,
EXPLORATORY DRILLING ON THE RIO GRANDE ALLUVIAL PROSPECT IN BRAZIL HAS JUST
COMMENCED. AS A RESULT OF THE DETERIORATING SECURITY SITUATION THE COMPANY
CEASED ALL ITS ACTIVITIES IN ANGOLA IN NOVEMBER 1998. A WATCHING BRIEF WILL BE
MAINTAINED.
TRANS HEX GROUP OWNS 72% OF TRANS HEX INTERNATIONAL LTD.
FURTHER CAUTIONARY ANNOUNCEMENT
IT WAS ANNOUNCED ON 12 MARCH 1999 THAT THE BOARDS OF DIRECTORS OF TRANS HEX AND
ODM HAD, SUBJECT TO THE FULFILLMENT OF CERTAIN CONDITIONS PRECEDENT, REACHED
AGREEMENT IN PRINCIPLE TO MERGE THEIR RESPECTIVE COMPANIES.
SHAREHOLDERS ARE ADVISED THAT THE DETAILS OF THE PROPOSED MERGER ARE BEING
FINALISED AND AN ANNOUNCEMENT IN THIS REGARD, INCLUDING INTER ALIA THE DATES
AND TIMES OF THE PROPOSED MERGER, WILL BE MADE SHORTLY. SHAREHOLDERS ARE
ACCORDINGLY ADVISED TO CONTINUE TO EXERCISE CAUTION IN THE TRADING OF THEIR
SHARES UNTIL SUCH TIME AS THE FURTHER ANNOUNCEMENT IS MADE.
PROSPECTS
THE GROUP'S TWO ROUGH DIAMOND TENDER SALES HELD IN MARCH 1999 INDICATED A
MARKED UPTURN IN ALL PRICES BUT PARTICULARLY FOR THE HIGHER QUALITY GOODS. THIS
WAS THE FIRST ENCOURAGING INDICATION RECEIVED FROM THE MARKET SINCE THE
DRAMATIC FALL IN PRICES IN MAY 1997 (FOLLOWING ALL-TIME PEAKS EARLIER IN 1997)
WHICH PERSISTED UP UNTIL THE END OF 1998. IN THE LIGHT OF THE AFORESAID AS WELL
AS THE LIKELY FUTURE DECLINE OF THE RAND VERSUS THE US DOLLAR AND THE STEADILY
IMPROVING RELATIONS WITH THE NATIONAL UNION OF MINEWORKERS WITH CONCOMITANT
PRODUCTIVITY IMPROVEMENT, PROSPECTS FOR THE FORTHCOMING YEAR APPEAR BRIGHT.
WITH ONGOING ORANGE RIVER EXPLORATION SUCCESSES AND THE VERY EXCITING
POSSIBILITIES PRESENTED BY THE PROSPECTS OF MERGING WITH ODM, THE GROUP FIRMLY
BELIEVES THAT TOGETHER WITH ODM, IT WILL INCREASINGLY BECOME AN INTERNATIONALLY
IMPORTANT INDUSTRY PARTICIPANT PRODUCING SUPERIOR RETURNS FOR SHAREHOLDERS.
DURING 1998 THE INHABITANTS OF THE RICHTERSVELD LODGED VARIOUS CLAIMS AGAINST
THE GOVERNMENT WITH THE COMMISSION ON RESTITUTION OF LAND RIGHTS IN TERMS OF
THE RESTITUTION OF LAND RIGHTS ACT 22 OF 1994. SHORTLY BEFORE THE CUT OFF DATE
OF 31 DECEMBER 1998, A CLAIM PERTAINING TO THE COMPANY'S ORANGE RIVER MINING
LEASE AREA WAS ALSO LODGED. IN TERMS OF THE ACT, IF THE CLAIMS COMMISSIONER
CONSIDERS THIS CLAIM WORTHY OF REFERRAL TO THE LAND CLAIMS COURT AND IF IT IS
SUCCESSFUL, IT IS THE GOVERNMENT WHICH WILL HAVE TO PAY COMPENSATION, NOT THE
COMPANY.
THE COMPANY'S ONGOING RELATIONSHIP WITH THE STATUTORY BODY REPRESENTING THE
RICHTERSVELD COMMUNITY REMAINS CLOSE AND CORDIAL.
A FINAL DECISION AS TO THE FUTURE OF THE LIME DIVISION IS IMMINENT AS IT IS NOT
THE GROUP'S INTENTION TO PLAY A SIGNIFICANT ROLE IN THIS BUSINESS IN THE FUTURE
YEAR 2000 COMPLIANCE
CORE ASPECTS OF THE GROUP'S ACTION PLAN ARE AS FOLLOWS :
* A NEW YEAR 2000 COMPLIANT INFORMATION TECHNOLOGY SYSTEM WHICH LINKS ALL
OPERATING CENTRES HAS BEEN INSTALLED AT A COST OF R8,4 MILLION. THE SYSTEM
BECAME FULLY OPERATIONAL ON 1 APRIL 1999.
* A TASK GROUP AND EXTERNAL CONSULTANTS HAVE BEEN APPOINTED TO AUDIT THE AGENTS
OF, AND SUPPLIERS TO, THE GROUP.
NO MATERIAL OPERATIONAL DIFFICULTIES HAVE AS YET BEEN EXPERIENCED, NOR ARE THEY
ANTICIPATED
DIVIDEND
A FINAL DIVIDEND OF 70 CENTS PER SHARE (1998: 66 CENTS) HAS BEEN DECLARED,
PAYABLE ON 9 JULY 1999 TO ORDINARY SHAREHOLDERS REGISTERED IN THE BOOKS OF THE
COMPANY AT THE CLOSE OF BUSINESS ON 28 MAY 1999. THE TOTAL DIVIDEND PAID FOR
THE YEAR IS THUS 114 CENTS (1998 : 110 CENTS).
BY ORDER OF THE BOARD
E DE LA H HERTZOG D M HOOGENHOUT
CHAIRMAN GROUP MANAGING DIRECTOR
PAROW
12 MAY 1999
REGISTERED TRANSFER SECRETARIES:
OFFICE: COMPUTERSHARE SERVICES LTD
405 VOORTREKKER ROAD 41 FOX STREET (PO BOX 61051)
PAROW MARSHALLTOWN
PRESS RELEASE
TRANS HEX AND ODM IMPROVE AGAINST THE DIAMOND PRICE TIDE
IN A YEAR IN WHICH EVEN THE LARGEST OF DIAMOND PRODUCERS FELT THE IMPACT OF
DEPRESSED MARKET PRICES, THE TRANS HEX GROUP AND OCEAN DIAMOND MINING HOLDINGS
- WHICH ARE DUE TO MERGE SOON - HAVE BOTH PERFORMED ENCOURAGINGLY IN THE 12
MONTHS ENDED 31 MARCH 1999. IN TERMS OF GROWTH IN HEADLINE EARNINGS PER SHARE,
BOTH HAVE DONE WELL TO ACHIEVE REAL GROWTH WITH TRANS HEX UP BY 13% WHILE ODM
HAS REPORTED 12,2%. TRANS HEX HAS ADOPTED THE INTERNATIONAL ACCOUNTING
STANDARDS BASIS OF REPORTING WITH THE HEADLINE EARNINGS REVISED TO 384,1 CENTS
AGAINST A PREVIOUS 339,4 CENTS A SHARE. ON THE PREVIOUS BASIS OF REPORTING, THE
HEADLINE EARNINGS WOULD HAVE BEEN 277,0 CENTS AND 374,0 CENTS FOR THE 1999 AND
1998 YEARS RESPECTIVELY. SIGNIFICANTLY, THE TRANS HEX DIRECTORS HAVE
UNDERSCORED THE IMPROVEMENT IN EARNINGS BY RAISING THE FINAL DIVIDEND BY 6% TO
70 CENTS A SHARE FOR A 3,6% HIGHER ANNUAL TOTAL OF 114,0 CENTS A SHARE, COVERED
3,4 TIMES BY EARNINGS. AT ODM, EARNINGS ROSE 5 CENTS TO 46 CENTS A SHARE,
REFLECTING A MARKED IMPROVEMENT ON THE 29,9% EARNINGS DROP AT THE INTERIM
STAGE. COMMENTING ON HIS COMPANY'S PERFORMANCE, ODM MANAGING DIRECTOR ANDRE
LOUW SAYS "A WELCOME RECOVERY IN ROUGH DIAMOND PRICES FOR ODM'S TYPE OF GOODS
TOWARDS THE END OF THE PERIOD HELPED TO BOOST YEAR-END FIGURES."
AT TRANS HEX, ANOTHER FEATURE OF THE RESULTS IS A 41% RISE IN OPERATING INCOME
FROM DIAMONDS AGAINST A 3% DECLINE IN TURNOVER, A PERFORMANCE SUBSTANTIALLY
AIDED BY REDUCED OPERATING COSTS AND STRICT FINANCIAL CONTROLS. THIS WAS
ACHIEVED IN SPITE OF PRODUCTION REDUCING FROM 143 205 CARATS TO 114 502 CARATS
FOLLOWING A SIX MONTH SUSPENSION OF OPERATIONS AT HONDEKLIP BAY TO ACCOMMODATE
UPGRADING OF THE PROCESSING PLANT. THE MAJOR CONTRIBUTOR TO THE GROUP'S
IMPROVED PERFORMANCE WAS THE BAKER MINE, WHICH REPORTED "A PARTICULARLY GOOD
YEAR" IN SPITE OF SOME INDUSTRIAL ACTION ACCORDING TO GROUP MANAGING DIRECTOR
NIEL HOOGENHOUT.
AT ODM, PRODUCTION INCREASED OVER THE YEAR TO 63 074 CARATS - ASSISTED BY THE
COMMISSIONING OF THE NEW IVAN PRINSEP MINING VESSEL - WHICH HELPED TO OFFSET A
12% DROP TO US$16 PER CARAT IN THE COMPANY'S AVERAGE PRICE RECEIVED IT ALSO
HELPED, TOGETHER WITH THE WEAKER RAND - US DOLLAR EXCHANGE RATE, TO BOOST
TURNOVER BY 17,1% TO R61,23 MILLION FROM WHICH OPERATING PROFIT GREW BY 17% TO
R20,3 MILLION.
TRANS HEX'S LIME DIVISION EXPERIENCED A DIFFICULT YEAR, RETURNING AN OPERATING
LOSS OF R1,8 MILLION ON THE BACK OF A 21% DROP IN TURNOVER. RATIONALISATION OF
LIME OPERATIONS AT VREDENDAL AND LANGVLEI RESULTED FROM THE POOR MARKET
CONDITIONS WHICH AFFECTED THE DIVISION BUT DRILLING NEAR VREDENDAL HAS REVEALED
A NEW MULTI-MILLION TON HIGH GRADE DEPOSIT. THIS, TOGETHER WITH THE FUTURE OF
THE DIVISION ITSELF, ARE THE SUBJECT OF NEGOTIATION WITH OTHER PARTIES.
BOTH COMPANIES ENJOYED STRONG NET CASH FLOWS WITH TRANS HEX'S R58,3 MILLION
OPERATING CASH FLOW AFTER TAXATION AND REPLACEMENT CAPITAL, ENABLING THE
COMPANY TO CONTINUE WITH A "HIGH LEVEL OF MINE DEVELOPMENT AND EXPLORATION IN
WORLD TERMS, INVESTING R38,8 MILLION IN TOTAL WHILE ODM EFFECTIVELY PAID FOR
ITS NEW R43,6 MINING VESSEL OUT OF OPERATING CASH FLOW.
LOOKING AHEAD, THE KEY FACTOR FOR BOTH COMPANIES CLEARLY WILL BE THE PROJECTED
MERGER WITH OCEAN DIAMOND MINING HOLDINGS (ODM), SCHEDULED TO BE FORMALISED
SOON. "THIS IS A VERY EXCITING OPPORTUNITY FOR US AND WE FIRMLY BELIEVE THAT
TOGETHER, WE WILL INCREASINGLY BECOME AN INTERNATIONALLY SIGNIFICANT
PARTICIPANT IN THE INDUSTRY, PRODUCING SUPERIOR RETURNS FOR SHAREHOLDERS."
BASED SOLELY ON OPERATING CONSIDERATIONS AT TRANS HEX, THE OUTLOOK IS POSITIVE
WITH RECENT TENDER SALES REFLECTING "A MARKED UPTURN IN PRICES, PARTICULARLY
FOR HIGHER QUALITY GOODS."
THE LIKELY CONTINUED SLIDE OF THE RAND AGAINST THE US DOLLAR AND A BETTER
RELATIONSHIP WITH THE NATIONAL UNION OF MINEWORKERS WHICH HOLDS PROMISE FOR
HIGHER PRODUCTIVITY, ARE OTHER FACTORS SUGGESTING THAT "PROSPECTS FOR THE
FORTHCOMING YEAR APPEAR BRIGHT."
ODM CAUTIONS THAT IN VIEW OF HOSTILITIES IN ANGOLA, OPERATIONS HAVE BEEN PUT ON
HOLD AND FORCE MAJEURE DECLARED IN ACCORDANCE WITH AGREEMENTS SIGNED WITH THE
COMPANY'S ANGOLAN PARTNERS.
"DUE TO THE UNCERTAINTY OF THE CONFLICT, ODM HAS DEEMED IT PRUDENT THAT
PROVISION BE MADE TO PROVIDE AGAINST THE CARRYING VALUE OF THE INVESTMENT IN
THE ANGOLAN PROJECT" SAYS ANDRE LOUW.
TRANS HEX SHARES ARE CURRENTLY TRADING AT ABOUT 3000 CENTS AT WHICH LEVEL THE
NEW HEADLINE EARNINGS GIVE A PRICE EARNINGS MULTIPLE OF AROUND 8,6 AND THE NEW
DIVIDEND YIELDS 3,8%.
ODM, LISTED ON THE JOHANNESBURG AND NAMIBIAN STOCK EXCHANGES, IS CURRENTLY
PRICED AT AROUND 460 CENTS AT WHICH LEVEL THE NEW P/E IS 10.
ENDS
FOR FURTHER INFORMATION, PLEASE CONTACT SETON THOMPSON 0832659365
Sharenet Sites 
