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MAY 27, 1999
ANNUAL REPORT FOR THE YEAR ENDED MARCH 31, 1999
TORONTO, CANADA - TRANS HEX INTERNATIONAL LTD. (TSE: THI) TODAY ANNOUNCED THE
RESULTS OF ITS OPERATIONS FOR THE FISCAL YEAR ENDED MARCH 31, 1999.
COMMENCEMENT OF BULK SAMPLING AT THE NORTHBANK PROJECT IN NAMIBIA HAS BEEN
DELAYED BY THE ACTION OF THE SURFACE RIGHTS OWNER, BUT THE RULING OF THE
ARBITRATION COMMISSION HAS CLEARED MOST OF THE IMPEDIMENTS AND EXCAVATION OF
THE FIRST BULK SAMPLING SITE IS NOW EXPECTED TO COMMENCE IN MID 1999. AS
PREVIOUSLY REPORTED, THE DRILL INDICATED RESOURCE OF 30 MILLION CUBIC METRES OF
GRAVEL DEPOSITED IN A 4 KILOMETER BY 900 METRE PALEOCHANNEL AT THIS PROJECT IS
A VERY PROSPECTIVE AND EXCITING TARGET.
SIMILARLY, ALTHOUGH AT AN EARLIER STAGE, THE COMPANY'S OTHER PROJECTS IN
BRAZIL, NAMIBIA AND ZIMBABWE PROVIDE SIGNIFICANT EXPLORATION POTENTIAL. THE
EXPLORATION PROGRAMS PLANNED FOR THE NEXT FISCAL YEAR ARE DESIGNED TO PROVIDE
SOME INDICATION OF THEIR TRUE POTENTIAL.
THE INITIAL FOCUS OF THE EXPLORATION PROGRAM AT THE SKELETON COAST PROJECT, IN
NAMIBIA HAS BEEN TO DETERMINE WHETHER DIAMONDS ARE PRESENT IN THE INTERTIDAL
ZONE. BETWEEN NOVEMBER 1998 AND MARCH 1999 A DIVING TEAM EQUIPPED WITH A
TRACTOR-MOUNTED GRAVEL PUMP AND A PLIETZ JIG INVESTIGATED NINE SITES AT VARIOUS
LOCATIONS ALONG THE COAST THAT WERE CONSIDERED FAVOURABLE FOR DIAMOND
ENTRAPMENT. IN TOTAL, AN ESTIMATED 124 SQUARE METRES OF SEA FLOOR WAS SAMPLED
AND ALMOST 22 TONNES OF SIZED GRAVEL RECOVERED FROM THE NINE SITES. TWO SITES,
BOTH SOUTH OF TERRACE BAY, PRODUCED ONE 0.25 CARAT DIAMOND EACH. THE ABOVE
RESULTS LEAD TO THE CONCLUSION THAT NOT ONLY IS COMMERCIAL SURF-ZONE MINING NOT
FEASIBLE BECAUSE POOR DIVING CONDITIONS LIMIT THE NUMBER OF PRODUCTIVE HOURS,
BUT THE LOW GRADE NATURE OF THIS PARTICULAR BEACH LEVEL IS UNECONOMIC. THE NEXT
PHASE OF THE PROGRAM IS TO CARRY OUT A GEOPHYSICAL AND SAMPLING CAMPAIGN IN THE
DEEPER WATERS, FOCUSSING ON THE SWALLOW BREAKERS AREA BETWEEN TERRACE BAY AND
THE MOUTH OF THE RIVER UNIAB. A CONTRACTOR WILL BE APPOINTED TO CARRY OUT THIS
WORK.
AT THE BARRA GRANDE PROJECT, IN THE MINAS GERAIS STATE OF BRAZIL, THE COMPANY
HAS RECENTLY COMMENCED WITH A PROGRAM OF REVERSE CIRCULATION DRILLING.
FOLLOWING THE COMPLETION OF LAND USE STUDIES, THE JOINT VENTURE HAS DECIDED NOT
TO PROCEED WITH ANY WORK ON THE REQUERIMENTOS IN THE SAO PAULO STATE RESULTING
IN A 30% REDUCTION IN THE CONCESSION AREA TO 34,723 HECTARES.
IN SOUTHERN ZIMBABWE, THE COMPANY IS IN THE PROCESS OF FINALISING A JOINT
VENTURE WITH RIO TINTO ZIMBABWE AND SOMABULA EXPLORATIONS. FALCONBRIDGE, AS A
RESULT OF PRIOR WORK IN THE AREA WILL HAVE A RESIDUAL INTEREST. THE PROJECT
LIES WITHIN THE LIMPOPO MOBILE BELT, WHICH IS HOST TO THE WELL-KNOWN DIAMOND
MINES AT VENETIA IN SOUTH AFRICA AND RIVER RANCH IN ZIMBABWE.
IN ADDITION TO THE ABOVE ACTIVE PROJECTS, THE COMPANY IS SERIOUSLY CONSIDERING
INVOLVEMENT IN CERTAIN OTHER EXTREMELY INTERESTING PROJECTS IN BOTSWANA,
NAMIBIA AND LIBERIA.
TRANS HEX INTERNATIONAL REVIEWS ITS EXPLORATION PROJECTS AND PROPERTIES ON A
REGULAR BASIS AND WRITES OFF DEFERRED EXPLORATION COSTS ATTRIBUTABLE TO
PROJECTS OR PROPERTIES WHICH ARE ABANDONED, OR IN WHICH THE COMPANY TERMINATES
ITS INTEREST. DURING THE YEAR, DEFERRED EXPLORATION COSTS WRITTEN OFF TO
OPERATIONS AMOUNTED TO $0.9 MILLION (1998: $19.7 MILLION). SOME $0.7 MILLION
OF THIS CHARGE REFLECTS THE TERMINATION IN NOVEMBER 1998 OF THE COMPANY'S
INTEREST IN THE LONGREACH AGREEMENT, FOLLOWING A RE-EVALUATION OF ITS EXPOSURE
IN ANGOLA AS A RESULT OF THE INCREASING COSTS OF EXPLORATION AND DEVELOPMENT
DUE TO THE DETERIORATION OF THE SECURITY SITUATION. THE FURTHER $0.2 MILLION IS
THE COMPANY'S SHARE OF RECLAMATION AND CLOSING COSTS IN THE CENTRAL AFRICAN
REPUBLIC.
INCLUDING THIS WRITE-OFF OF DEFERRED EXPLORATION COSTS, THE LOSS FOR THE YEAR
ENDED MARCH 31, 1999 AMOUNTED TO $2.9 MILLION (1998: $20.9 MILLION) OR $0.21
PER SHARE (1998: $1.74 PER SHARE). GENERAL AND ADMINISTRATION EXPENSES FOR THE
YEAR AMOUNTED TO $1.0 MILLION (1998: $1.2 MILLION). MOST OVERHEAD EXPENDITURE
WAS WELL CONTAINED BELOW 1998 LEVELS, EXCEPT FOR LEGAL AND AUDIT, WHICH
INCREASED FROM $90,000 TO $175,000 AS A RESULT OF THE NEGOTIATION OF VARIOUS
JOINT VENTURE ARRANGEMENTS. GENERAL EXPLORATION EXPENDITURE OF $201,000
INCLUDES $136,000 RELATING TO PRELIMINARY INVESTIGATIONS CARRIED OUT IN BRAZIL
PRIOR TO CONCLUSION OF THE JOINT VENTURE AGREEMENT WITH VERENA MINERALS.
AS AT MARCH 31, 1999, THE COMPANY HAD WORKING CAPITAL OF $3.6 MILLION (1998:
$5.6 MILLION) WHICH INCLUDED CASH AND EQUIVALENTS OF $3.4 MILLION (1998: $5.0
MILLION). LONG-TERM DEBT OF $3.2 MILLION (1998: $2.8 MILLION), DUE TO THE
COMPANY'S PRINCIPAL SHAREHOLDER, IS INTEREST FREE AND TRANS HEX GROUP HAS
UNDERTAKEN NOT TO CALL THIS LOAN BEFORE APRIL 1, 2000, UNLESS AN ALTERNATIVE
SOURCE OF FUNDING HAS BEEN ARRANGED. NO FINANCING ACTIVITIES TOOK PLACE DURING
THE FISCAL YEAR ENDED MARCH 31, 1999.
GIVEN THE COMMITMENT BY TRANS HEX GROUP TO FUND THE COMPANY'S EXPLORATION
PROGRAM IN NAMIBIA FOR THE FISCAL YEAR 2000 ON TERMS SIMILAR TO THOSE ABOVE,
TRANS HEX INTERNATIONAL HAS SUFFICIENT FINANCIAL RESOURCES TO UNDERTAKE ALL OF
ITS CURRENT PLANNED EXPLORATION PROGRAMS AND CAPITAL EQUIPMENT PURCHASES DURING
THE FORTHCOMING YEAR. THE TRANS HEX GROUP HOLDS 72% OF THE EQUITY OF THE
COMPANY.
TRANS HEX INTERNATIONAL LTD. IS AN INTERNATIONAL DIAMOND EXPLORATION COMPANY
WITH INTERESTS IN EXPLORATION PROJECTS AND JOINT VENTURES IN NAMIBIA, BRAZIL
AND ZIMBABWE. THE PRINCIPAL SHAREHOLDER OF THE COMPANY IS TRANS HEX GROUP
LIMITED, THE SECOND LARGEST PRODUCER OF HIGH QUALITY GEM DIAMONDS IN SOUTH
AFRICA (WITH TURNOVER OF US$48 MILLION IN FISCAL 1999), 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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