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OCTOBER 7, 1999
TORONTO, CANADA - TRANS HEX INTERNATIONAL LTD. (TSE: THI) IS PLEASED TO
ANNOUNCE THE RESULTS OF THE REGIONAL DRILLING PROGRAM AT BARRA GRANDE, WHERE
THE COMPANY IS REQUIRED TO SPEND US$2 MILLION ON EXPLORATION IN ORDER TO EARN A
50% INTEREST IN A JOINT VENTURE WITH VERENA MINERALS CORPORATION ("VERENA").
TRANS HEX INTERNATIONAL IS THE OPERATOR OF THE PROGRAM. THE FIRST PHASE OF
EXPLORATION, CONSISTING OF 4,901 METRES OF WIDELY SPACED REVERSED CIRCULATION
DRILLING IN 144 HOLES, HAS AT FOUR LOCATIONS ALONG THE DRILL TRAVERSE
INTERSECTED BODIES OF GRAVEL FROM 2 METRES UP TO 16 METRES THICK AND CONTINUOUS
OVER WIDTHS OF 3 TO 5 KILOMETRES. THESE GRAVEL BODIES APPEAR TO EXTEND OVER THE
FULL WIDTH OF THE PENINSULA, SOME 4 TO 6 KILOMETRES IN EXTENT, INDICATING
SEVERAL EXTENSIVE BODIES WITH COMBINED VOLUMES OF SEVERAL HUNDRED MILLION CUBIC
METRES.
THE BARRA GRANDE PROJECT AREA IS LOCATED ON BOTH BANKS OF THE RIO GRANDE, WHICH
FORMS THE BORDER BETWEEN SAO PAULO AND MINAS GERAIS STATES IN BRAZIL. THE
PROJECT AREA IS WELL SERVED BY ROADS, AND ELECTRIC POWER IS GENERATED BY TWO
HYDROELECTRIC POWER PLANTS LOCATED SOME 10 KILOMETRES UPSTREAM AND 20
KILOMETRES DOWNSTREAM OF THE PROJECT AREA. THE LOCAL TOWN OF FRUTAL, WITH A
POPULATION OF SOME 50,000 PEOPLE, LIES 10 KILOMETRES NORTH OF THE PROJECT AREA
AND FUEL, CONSUMABLE SUPPLIES AND GENERAL SERVICES ARE FREELY AVAILABLE HERE.
THERE ARE FOUR GARIMPEIRO WORKINGS (SMALL-SCALE MINERS) ON THE MINAS GERAIS
BANK OF THE RIVER OVER A DISTANCE OF SOME 70 KILOMETRES. THREE OF THESE SMALL
WORKINGS HAVE BEEN CONTINUOUSLY MINED SINCE THE 1940'S AND THE LARGEST OF THESE
WORKINGS, THE GARIMPO BANDEIRA, HAS BEEN CLOSELY MONITORED BY THE SURFACE OWNER
WHO DERIVES A ROYALTY FROM PRODUCTION. THE PRODUCTION RECORDS FROM BANDEIRA
(ANALYSED BY VERENA) INDICATE THAT OVER A PERIOD OF 12 YEARS, 4,407 CARATS WERE
RECOVERED WITH AN AVERAGE STONE SIZE OF 0.83 CARATS. APPLYING INFLATION FACTORS
TO THE SALE PRICES ACHIEVED OVER THIS PERIOD INDICATES THAT THE AVERAGE 1999
PRICE FOR DIAMONDS FROM BANDEIRA WOULD BE IN EXCESS OF US$400 PER CARAT. DURING
THE PAST YEAR, A SMALL-SCALE DREDGING OPERATION IN THE RIVER CHANNEL HAS BEEN
ESTABLISHED AND THERE ARE UNCONFIRMED REPORTS THAT AMONGST THE DIAMONDS
RECOVERED WERE TWO STONES GREATER THAN 20 CARATS AND ONE STONE OF "FANCY"
PURPLE COLOUR. THE GENERAL ATTITUDE OF THE FARMERS TOWARDS GARIMPEIROS IN THIS
DISTRICT IS POOR, PARTICULARLY IN THE SAO PAULO STATE AND IS THE MAIN REASON
WHY WORKINGS ARE CONFINED TO ONLY FOUR LOCATIONS ON THE MINAS GERAIS BANK.
IT APPEARED FROM EARLY GEOLOGICAL APPRAISALS OF THE GARIMPOS THAT THE DIAMONDS
ARE BEING RECOVERED PRIMARILY FROM A 3 TO 5 METRE THICK ALLUVIAL GRAVEL HORIZON
DEPOSITED ON UNEVEN RED ARGILLIC BEDROCK OF VARIABLE THICKNESS, WHICH IS IN
TURN DEPOSITED ON AN UNEVEN BASALTIC VOLCANIC UNIT. THE ALLUVIAL GRAVEL HORIZON
IS GENERALLY MATRIX SUPPORTED, BUT OCCASIONAL BANDS OF CLAST SUPPORTED GRAVELS
HAVE BEEN OBSERVED. CLASTS VARY IN SIZE UP TO SOME 30 CENTIMETRE DIAMETER
BOULDERS AND IT CAN BE STATED THAT THE SEQUENCE IS GENERALLY UPWARD FINING.
CLAST COMPOSITION IS PREDOMINANTLY QUARTZITE, WITH A LESSER ARKOSIC AND
BASALTIC COMPONENT. CLASTS ARE VERY WELL ROUNDED AND THERE IS LITTLE EVIDENCE
TO SUGGEST ANY IMBRICATION OR PREFERENTIAL ORIENTATION. THE MATRIX IS COMPOSED
OF MINOR SAND AND PREDOMINANTLY RED CLAY FRACTIONS.
THE FIRST PHASE OF THE EXPLORATION PROGRAM BEGAN WITH WIDELY SPACED REVERSED
CIRCULATION DRILLING ALONG THE CENTRAL PUBLIC ROAD OF THE BARRA GRANDE
PENINSULA IN THE MINAS GERAIS STATE. A TOTAL OF 4,901 METRES WERE DRILLED IN
144 HOLES. THE INITIAL SPACING OF 1 KILOMETRE WAS DESIGNED TO INDICATE MERELY
THE REGIONAL DISTRIBUTION AND CHARACTERISTICS OF THE ALLUVIAL GRAVELS. AT FOUR
LOCATIONS ALONG THE DRILL TRAVERSE, BODIES OF GRAVEL FROM 2 METRES UP TO 16
METRES THICK AND CONTINUOUS OVER WIDTHS OF 3 TO 5 KILOMETRES WERE INTERSECTED.
INFILL HOLES AT 500M SPACING HAVE NOW BEEN COMPLETED IN CERTAIN OF THOSE AREAS
WHERE GRAVEL WAS INITIALLY INTERSECTED AND CONFIRM THE CONTINUITY OF THE BODIES
ALONG THE LONGITUDINAL SECTION OF THE PENINSULA. AT THIS STAGE OF THE PROGRAM,
THE OVERALL FORM AND DEPOSITIONAL HISTORY OF THESE GRAVEL BODIES IS UNKNOWN.
FROM SEVERAL WIDELY SPACED CROSS-SECTIONAL LINES OF DRILL HOLES HOWEVER, THE
GRAVEL BODIES APPEAR TO EXTEND OVER THE FULL WIDTH OF THE PENINSULA, SOME 4 TO
6 KILOMETRES IN EXTENT. IT CAN BE FAIRLY STATED THAT OUR PRELIMINARY DRILLING
INDICATES SEVERAL EXTENSIVE GRAVEL BODIES WITH COMBINED VOLUMES IN THE ORDER OF
SEVERAL HUNDRED MILLION CUBIC METRES.
GRAVEL BODY NUMBER OF OVERBURDEN - AVERAGE GRAVEL - AVERAGE
EVALUATION HOLES THICKNESS (M) THICKNESS (M)
1 11 17.6 7.1
2 7 9.3 9.7
3 3 7.0 2.3
4 10 11.3 4.7
THE SECOND PHASE OF THE PROGRAM INCLUDES DRILLING ON 500 X 500 METRE CENTRES
OVER A RECTANGULAR AREA OF 8,500 METRES (N-S) BY 4,500 METRES (E-W) TO DEFINE
THE FORM AND CONTINUITY OF THE MOST EXTENSIVE OF THE GRAVEL BODIES, WHICH LIES
BETWEEN TWO GARIMPO WORKINGS. AN INDEPENDENT BRAZILIAN COMPANY OPERATING OUT OF
RIO DE JANEIRO, SETA SERVICOS TECNICOS MINERAIS, OPERATING UNDER THE
SUPERVISION OF THE COMPANY, HAS BEEN CONTRACTED TO UNDERTAKE THE DRILLING.
INITIALLY ONLY SELECTED SECTIONS OF THIS GRID WILL BE DRILLED. IT IS
ANTICIPATED THAT THIS PHASE WILL BE COMPLETED BY THE END OF NOVEMBER 1999 AND
WILL COST APPROXIMATELY C$150,000, WHEREUPON THE THIRD PHASE OF DRILLING - ON
250M CENTRES - WILL DEFINE THE BEST FEATURES THAT WILL BE USED TO SELECT THE
FIRST BULK SAMPLE SITE.
DURING THE SECOND AND THIRD PHASES OF DRILLING, SEVERAL PARALLEL STUDIES WILL
BE UNDERTAKEN:
- A BASELINE ENVIRONMENTAL STUDY, WHICH WILL BE FOLLOWED BY AN ENVIRONMENTAL
IMPACT STUDY.
- A STUDY TO DEFINE THE AVERAGE GRANULOMETRY AND OTHER METALLURGICAL
CHARACTERISTICS OF THE GRAVEL BODIES.
- A SMALL-SCALE BOXHOLE-SAMPLING PROGRAM TO DETERMINE WHETHER SELECTED FEATURES
OF THE ALLUVIAL SYSTEM CAN BE CORRELATED WITH DIAMOND OCCURRENCES.
EXCAVATION OF THE FIRST BULK SAMPLE, TO DETERMINE AN INITIAL ESTIMATE OF THE
GRADE AND AVERAGE VALUE OF THE DIAMONDS CONTAINED IN THE GRAVELS, IS EXPECTED
TO COMMENCE IN MID-2000. THE JOINT VENTURE IS PROGRESSING WELL WITH THE SIGNING
OF LETTERS OF UNDERSTANDING WITH THE LOCAL LANDOWNERS CONFIRMING THE RIGHTS OF
ALL PARTIES. ALTHOUGH NO PROBLEMS ARE EXPECTED, THE COMPANY HAS RECEIVED LEGAL
CONFIRMATION THAT SHOULD ANY LANDOWNER REFUSE TO RECOGNIZE THE COMPANY'S RIGHT
TO EXPLORE AND DEVELOP THE MINERAL RESOURCES, JUDICIAL REMEDIES EXIST TO
ENFORCE THESE RIGHTS WITHIN A REASONABLE PERIOD OF TIME. WHEN MINING
CONCESSIONS HAVE BEEN GRANTED, A "FINANCIAL COMPENSATION" (A ROYALTY OF AT
LEAST 0.1% OF GROSS SALES REVENUE) IS PAYABLE TO THE SURFACE OWNERS OF PROPERTY
IN ORDER TO COMMENCE WITH BULK SAMPLING, AN EXPLORATION LICENCE (LICENCA DE
OPERACAO PARA PESQUISA) IS REQUIRED FROM THE MINAS GERAIS STATE ENVIRONMENTAL
AGENCY ("FEAM"). THE REQUIREMENTS FOR GRANTING THIS LICENSE, WHICH IS EXPECTED
TO TAKE APPROXIMATELY 6 MONTHS, INCLUDE THE SUBMISSION OF AN ENVIRONMENTAL
ASSESSMENT (RELATORIO DE CONTROLE AMBIENTALE) AND AN ENVIRONMENTAL MANAGEMENT
PLAN (PLANO DE CONTROLE AMBIENTALE). FURTHER LICENSES WILL LATER BE REQUIRED TO
CONTINUE WITH BULK SAMPLING (LICENCA PREVIA), INSTALL EQUIPMENT (LICENCA DE
INSTALACAO) AND BEGIN PRODUCTION (LICENCA DE OPERACAO). TO OBTAIN THESE
LICENCES, FEAM AND THE FEDERAL ENVIRONMENTAL AGENCY ("IBAMA") REQUIRE THE
SUBMISSION OF AN ENVIRONMENTAL IMPACT STUDY (ESTUDO DE IMPACTO AMBIENTALE) AND
AN ENVIRONMENTAL IMPACT REPORT (RELATORIO DE IMPACTO AMBIENTALE).
THE DNPM (BRAZILIAN MINERAL PRODUCTION DEPARTMENT), WHICH IS ASSOCIATED WITH
THE MINISTRY OF MINES, IS RESPONSIBLE FOR REGULATING AND IMPLEMENTING THE
BRAZILIAN MINING CODE; IT MONITORS EXPLORATION AND MINING, TRADING AND
PROCESSING OF MINERALS. MINERALS ARE THE PROPERTY OF THE STATE AND EXPLORATION
AND PRODUCTION MAY BE CARRIED OUT ONLY WITH THE AUTHORISATION OF THE DNPM AND
THE CAMARA DE MEIO AMBIENT, WHICH IS MADE UP OF LAY PEOPLE WHO EVALUATE THE
PROJECT BASED ON SOCIAL AND POLITICAL CONSIDERATIONS. A REQUERIMENTO DE
PESQUISA (APPLICATION FOR EXPLORATION PERMIT) TAKES APPROXIMATELY THREE MONTHS
TO PROCESS WHEREUPON AN ALVARA (EXPLORATION PERMIT) IS GRANTED FOR AN INITIAL
PERIOD OF THREE YEARS; PROVIDED THE AREA OF INTEREST IS NOT ALREADY COVERED BY
AN EXISTING EXPLORATION PERMIT. ONCE AN ALVARA HAS BEEN GRANTED, ANNUAL TAXES
OF APPROXIMATELY R$1.00 (C$0.75) PER HECTARE ARE PAYABLE. THE ALVARA MAY BE
EXTENDED FOR A FURTHER THREE YEARS, TO CONTINUE PROSPECTING, AS WELL AS FOR ANY
TIME LOST FOR REASONS BEYOND THE CONTROL OF THE COMPANY, INCLUDING DELAYS BY
THE AUTHORITIES OR ANY DISPUTE WITH A MAJOR LANDOWNER. AT ANY STAGE DURING THE
THREE-YEAR PERIOD, OR SUBSEQUENT RENEWAL PERIOD, APPLICATION FOR A MINING
PERMIT CAN BE MADE. AN EXPLORATION REPORT MUST BE APPROVED BY THE DNPM BEFORE
THE COMPANY SUBMITS AN APPLICATION FOR A MINING PERMIT. THE APPLICATION MUST
INCLUDE A MINING PLAN, AN ENVIRONMENTAL IMPACT ASSESSMENT, AN ANALYSIS OF THE
PROJECT'S ECONOMIC VIABILITY AND EVIDENCE THAT FUNDS ARE AVAILABLE TO CARRY OUT
THE PLAN. WHEN THE MINING CONCESSION IS PUBLISHED IN THE OFFICIAL GAZETTE, THE
COMPANY HAS 90 DAYS TO REQUEST THE POSSESSION OF THE MINERAL LODE OR DEPOSIT TO
BE MINED, AND SIX MONTHS TO START THE PREPARATORY WORK SET OUT IN THE MINING
PLAN. ROYALTIES PAYABLE TO AUTHORITIES AMOUNT TO 0.2% OF TURNOVER AND MINING
COMPANIES ARE SUBJECT TO THE STANDARD CORPORATE TAX RATE OF 35% OF PROFITS.
CURRENTLY, THE PROJECT AREA EXTENDS OVER AN AREA OF SOME 57,948 HECTARES, WITH
THE MAJOR PART OF THE AREA OF IMMEDIATE INTEREST HELD IN THE FORM OF ALVARAS;
WHILE PERIPHERAL AREAS ARE HELD AS REQUERIMENTOS DE PESQUISA.
TRANS HEX INTERNATIONAL LTD. IS AN INTERNATIONAL DIAMOND EXPLORATION COMPANY
WITH INTERESTS IN EXPLORATION PROJECTS AND JOINT VENTURES IN NAMIBIA, BRAZIL,
BOTSWANA AND ZIMBABWE. THE PRINCIPAL SHAREHOLDER OF THE COMPANY IS TRANS HEX
GROUP LIMITED, A SOUTH AFRICAN PRODUCER OF HIGH QUALITY GEM DIAMONDS, WITH WELL
ESTABLISHED INDEPENDENT DIAMOND MARKETING FACILITIES. THE DESIGN AND CONDUCT OF
THE COMPANY'S EXPLORATION PROGRAMS IS THE RESPONSIBILITY OF MR. PETER WALKER, A
PROFESSIONAL GEOLOGIST REGISTERED WITH THE SOUTH AFRICAN COUNCIL FOR NATURAL
SCIENTIFIC PROFESSIONS.
FOR FURTHER INFORMATION PLEASE CONTACT:
D.M. (NIEL) HOOGENHOUT - PRESIDENT AND C.E.O.
TEL +1.416.363-5440 FAX +1.416.363-6506 E-MAIL INFO@TRANSHEX.COM
PETER W.A. WALKER - VICE PRESIDENT, EXPLORATION
TEL +27.21.92-1105 FAX +27.21.92-0711 E-MAIL PETERW@TRANSHEX.CO.ZA
STEPHEN WOODHEAD - CHIEF FINANCIAL OFFICER
TEL +1.416.363-5440 FAX +1.416.363-6506 E-MAIL SWOODHEAD@TRANSHEX.COM
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