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TRANS HEX GROUP LIMITED
REG. NO. 63/07579/06
INTERIM REPORT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999
* DIAMOND TURNOVER +11,7%
* HEADLINE EARNINGS +27,6%
* NET INCOME (AFTER TAX) +39,8%
* INTERIM DIVIDEND +9,1%
ABRIDGED CONSOLIDATED INCOME STATEMENT
YEAR SIX MONTHS
ENDED ENDED
31.03.99 30.09.99 30.09.98
AUDITED % UNAUDITED UNAUDITED
R'000 INCREASE R'000 R'000
284 456 TURNOVER - DIAMONDS 11,7 169 261 151 536
31 287 TURNOVER - LIME 2,5 16 537 16 126
114 748 NET INCOME BEFORE THE FOLLOWING: 21,7 80 679 66 276
400 DIVIDEND RECEIVED - 400
(5 578) INTEREST PAID (2 955) (3 284)
(30 293) DEPRECIATION (18 155) (13 305)
(29 316) EXCEPTIONAL ITEMS (NOTE 2) (2 307) (4 570)
49 961 NET INCOME BEFORE TAXATION 25,8 57 262 45 517
15 709 TAXATION 3,9 18 431 17 735
34 252 NET INCOME AFTER TAXATION 39,8 38 831 27 782
3 290 OUTSIDE SHAREHOLDERS' INTEREST 1 251 1 236
(284) EQUITY ACCOUNT ADJUSTMENT 32 (334)
37 258 NET ATTRIBUTABLE INCOME 39,8 40 114 28 684
61,8 EARNINGS PER SHARE (CENTS) 35,3 64,4 47,6
96,0 HEADLINE EARNINGS PER SHARE
(CENTS) 27,6 67,0 52,5
28,5 DIVIDEND PER SHARE (CENTS) 9,1 12,0 11,0
60 270,0 TOTAL NUMBER OF SHARES IN ISSUE
('000) 64 381,6 60 270,0
60 270,0 WEIGHTED AVERAGE ISSUED SHARES
('000) 62 325,8 60 270,0
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
YEAR SIX MONTHS
ENDED ENDED
31.03.99 30.09.99 30.09.98
AUDITED UNAUDITED UNAUDITED
R'000 R'000 R'000
112 186 CASH AVAILABLE FROM OPERATING ACTIVITIES 74 302 69 327
(8 163) MOVEMENTS IN WORKING CAPITAL (23 787) (10 437)
(26 097) TAXATION PAID (4 362) (17 344)
(16 574) DIVIDEND PAID (10 547) (9 945)
61 352 CASH RETAINED FROM OPERATING ACTIVITIES 35 606 31 601
(61 002) CASH EMPLOYED (106 365) (24 007)
(19 625) FIXED ASSETS - REPLACEMENT (3 297) (7 230)
(40 657) - ADDITIONAL (27 344) (16 402)
(720) INVESTMENTS AND LOANS (75 724) (375)
350 NET CASH FLOW FOR THE PERIOD (70 759) 7 594
ABRIDGED CONSOLIDATED BALANCE SHEET
YEAR SIX MONTHS
ENDED ENDED
31.03.99 30.09.99 30.09.98
AUDITED UNAUDITED UNAUDITED
R'000 R'000 R'000
CAPITAL EMPLOYED
255 369 TOTAL SHAREHOLDERS' INTERESTS 319 756 253 263
1 459 OUTSIDE SHAREHOLDERS' INTERESTS 218 3 716
54 432 DEFERRED LIABILITIES 64 695 62 073
311 260 384 669 319 052
EMPLOYMENT OF CAPITAL
243 408 FIXED ASSETS 257 018 247 521
7 567 INVESTMENTS AND LOANS (NOTE 3) 133 173 6 540
60 285 NET CURRENT ASSETS/(LIABILITIES) (5 522) 64 991
108 905 CURRENT ASSETS 50 007 125 526
42 994 CASH RESOURCES (NOTE 3) (27 765) 50 238
65 911 OTHER 77 772 75 288
48 620 LESS: CURRENT LIABILITIES 55 529 60 535
311 260 384 669 319 052
424 NET ASSET VALUE PER SHARE (CENTS) 513 420
NOTES YEAR SIX MONTHS
ENDED ENDED
31.03.99 30.09.99 30.09.98
AUDITED UNAUDITED UNAUDITED
R'000 R'000 R'000
1. RECONCILIATION OF HEADLINE EARNINGS
37 258 NET ATTRIBUTABLE INCOME 40 114 28 684
ADJUSTED FOR:
20 618 EXCEPTIONAL ITEMS (NOTE 2) 1 615 2 971
57 876 HEADLINE EARNINGS 41 729 31 655
2. EXCEPTIONAL ITEMS
(27 876) RATIONALISATION OF LIME DIVISION
AND RELATED INTERESTS AND CANCELLATION
OF LONG-TERM CONTRACT (2 307) (4 570)
(2 000) PROVISION FOR WRITE OFF OF FIXED ASSETS
TO NET REALISABLE VALUE - -
(29 876) (2 307) (4 570)
(8 698) TAXATION (692) (1 599)
(21 178) (1 615) (2 971)
560 ATTRIBUTABLE TO OTHER MEMBERS - -
(20 618) (1 615) (2 971)
3. INVESTMENTS AND LOANS
LISTED INVESTMENTS AT COST
605 SHARES* 126 424 605
4 950 MARKET VALUE 144 554 4 281
UNLISTED INVESTMENTS AND LOANS
AT CARRYING VALUE
651 ASSOCIATED COMPANY 683 600
4 280 TRANS HEX REHABILITATION FUND 4 434 3 304
2 031 LOAN TO TRANS HEX GROUP TRUST TO
FINANCE THE SHARE SCHEME 1 632 2 031
6 962 6 749 5 935
6 962 DIRECTORS' VALUATION 6 749 5 935
* SUBSEQUENTLY TO 30 SEPTEMBER 1999 THE
SHARES IN ODM WERE DISPOSED OF FOR A CASH CONSIDERATION OF
R125,8 MILLION RESULTING IN NET CASH RESOURCES OF
APPROXIMATELY R61 MILLION ON 1 NOVEMBER 1999.
4. ADDITIONAL INFORMATION
NET OPERATING INCOME BEFORE TAXATION
IS STATED AFTER TAKING THE FOLLOWING
INTO ACCOUNT:
11 274 EXPLORATION COSTS 5 759 3 943
9 269 ROYALTIES: NAMAQUALAND DIAMOND FUND TRUST 6 617 5 147
659 PROVISION FOR REHABILITATION 385 203
39 430 5. CAPITAL COMMITMENTS (INCLUDING 63 129 23 717
AMOUNTS AUTHORISED, BUT NOT YET CONTRACTED)
6. THE FINANCIAL INFORMATION FOR THE SIX
MONTHS TO 30 SEPTEMBER 1998 WAS RESTATED
IN ACCORDANCE WITH INTERNATIONAL ACCOUNTING
STANDARDS ADOPTED DURING THE 1999 FINANCIAL
YEAR. BASED ON THE PREVIOUS ACCOUNTING
POLICIES, HEADLINE EARNINGS PER SHARE
WOULD HAVE BEEN 59,0 CENTS FOR THE SIX
MONTHS TO 30 SEPTEMBER 1999 (1998: 40,8
CENTS). EACH ISSUED SHARE OF THE COMPANY
WAS SUB-DIVIDED INTO FOUR ORDINARY SHARES
ON 28 JUNE 1999. THE COMPANY ISSUED 4 111 608
NEW SUB-DIVIDED SHARES PARTLY DISCHARGING
THE PURCHASE CONSIDERATION OF THE INVESTMENT
IN ODM SHARES.
7. INCOME DOES NOT ACCRUE EVENLY THROUGHOUT
THE YEAR AND THE INCOME FOR THE SIX MONTHS,
THEREFORE, DOES NOT NECESSARILY REPRESENT
HALF OF A FULL FINANCIAL YEAR'S INCOME.
FINANCIAL RESULTS
DIAMONDS RECOVERED FROM NEW MINE DEVELOPMENT MEGA TRENCHES AT OUR ORANGE RIVER
LEASES CONTRIBUTED SIGNIFICANTLY TO THE 11,7% INCREASE IN TURNOVER AND 39,8%
INCREASE IN NET INCOME AFTER TAX FOR THE FIRST SIX MONTHS OF THIS FINANCIAL
YEAR.
HEADLINE EARNINGS PER SHARE INCREASED BY 27,6% FROM 52,5 CENTS TO 67,0 CENTS,
WHILE CASH FLOW AFTER TAXATION AND REPLACEMENT CAPITAL AMOUNTED TO R42,9
MILLION (PREVIOUS SIX MONTHS : R34,3 MILLION). THE LIME DIVISION INCURRED A
LOSS AFTER TAX OF R1,7 MILLION.
DIVIDEND
AN INTERIM DIVIDEND OF 12 CENTS PER SHARE (1998 : 11 CENTS PER SHARE) WAS
DECLARED ON 15 NOVEMBER 1999 PAYABLE TO ORDINARY SHAREHOLDERS REGISTERED IN THE
BOOKS OF THE COMPANY ON 3 DECEMBER 1999. DIVIDEND CHEQUES WILL BE POSTED ON OR
BEFORE 12 JANUARY 2000.
OCEAN DIAMOND MINING HOLDINGS LTD
ON 26 OCTOBER 1999 THE GROUP (THG) ACCEPTED THE OFFER BY NAMIBIAN MINERALS
CORPORATION LIMITED (NAMCO) TO THE MINORITY SHAREHOLDERS OF OCEAN DIAMOND
MINING HOLDINGS LIMITED (ODM) AT R8,25 PER SHARE PAYABLE IN CASH, IN RESPECT OF
THG'S 32,9% HOLDING OF ODM. THG BELIEVES THAT IT WILL FURTHER BENEFIT FROM ANY
INCREASE IN THE OFFER PRICE THAT MAY RESULT FROM THE RULINGS AND APPEALS
CURRENTLY BEFORE THE SECURITIES REGULATION PANEL (SRP). THE FOLLOWING EVENTS
ARE REPORTED TO PLACE ON RECORD THE FACTS LEADING UP TO AND FOLLOWING THE
FAILURE OF THE PROPOSED MERGER BETWEEN THG AND ODM:
*DURING MARCH 1999 THG/ODM AGREED (SUBJECT TO RESPECTIVE SHAREHOLDER APPROVAL)
TO MERGE BY WAY OF SCHEME OF ARRANGEMENT IN TERMS OF SECTION 311 OF THE
COMPANIES ACT. THE TERMS OF THE MERGER WERE CONTAINED IN A CIRCULAR TO
SHAREHOLDERS DATED 20 MAY 1999.
* PRIOR TO THE FINALIZATION OF THE MERGER DOCUMENT IT BECAME EVIDENT THAT A
THIRD PARTY ("THE CONSORTIUM") WAS ACTIVELY PURCHASING ODM SHARES. THG
THEREFORE PROPOSED TO ODM THAT A STANDBY OFFER, UNDER SECTION 440 OF THE
COMPANIES ACT SHOULD ALSO BE EXTENDED TO ITS SHAREHOLDERS TO COVER THE
POSSIBILITY THAT A 75 PERCENT MAJORITY MIGHT NOT BE OBTAINED AT THE ODM SCHEME
MEETING. THE BOARD OF ODM REJECTED THIS PROPOSAL ON THE GROUNDS THAT THE
CONSORTIUM HAD, DURING THE PERIOD 10 MARCH TO 7 JUNE, REPEATEDLY INDICATED THAT
IT WOULD SUPPORT THE MERGER AND THAT THE ALTERNATIVE OFFER WAS CONTRAVENING THE
SPIRIT OF NEGOTIATIONS WHICH PRECEDED THE MERGER AGREEMENT.
* ON 7 JUNE THE CONSORTIUM STATED THEY NO LONGER SUPPORTED THE MERGER AND
OFFERED THEIR 23% OF ODM TO THG FOR A CASH PRICE OF R8,00 PER SHARE. IN TERMS
OF THE SRP RULES ACCEPTANCE OF SUCH AN OFFER BY THG WOULD HAVE RESULTED IN THG
HAVING TO MAKE A SIMILAR CASH OFFER TO ALL THE ODM SHAREHOLDERS. THG WAS NOT IN
A POSITION TO CONSIDER SUCH AN OFFER AND THE CONSORTIUM SOLD THEIR INTEREST TO
NAMCO FORTHWITH.
* THE MERGER WAS SUBSEQUENTLY OPPOSED BY THE HOLDERS OF 29% OF ODM SHARES
REPRESENTED AT THE SCHEME MEETING HELD ON 11 JUNE 1999.
* THG SUBSEQUENTLY INCREASED ITS STAKE IN ODM TO 33% AND THE CONSORTIUM
ACQUIRED AN ADDITIONAL INTEREST OF 17%.
* ON 2 AUGUST 1999 NAMCO ACQUIRED AN OPTION OVER THE CONSORTIUM'S 17% INTEREST.
* PRIOR TO THG ACCEPTING NAMCO'S OFFER - THE SRP (ON APPEAL) RULED THAT NAMCO
AND THE CONSORTIUM HAD ACTED IN CONCERT IN ACQUIRING CONTROL OF ODM AND
ACCORDINGLY HAD TO MAKE A CASH OFFER TO ALL ODM MINORITY SHAREHOLDERS AT THE
HIGHEST PRICE EITHER PARTY PAID DURING THE PRECEDING 90 DAYS, WHICH THE SRP
WERE TOLD WAS R10,00. THIS RULING HAS BEEN APPEALED.
* IT SHOULD BE NOTED THAT AFTER THG WERE ADVISED OF THE OPTION WHICH NAMCO
ACQUIRED OVER THE CONSORTIUM'S INTEREST IN ODM, IT BECAME APPARENT THAT THG WAS
UNLIKELY TO BE ABLE TO ACQUIRE CONTROL OF ODM. HOWEVER, THG WILL PURSUE THE
RULINGS AND APPEALS CURRENTLY BEFORE THE SRP IN ORDER TO ENSURE THAT THE
COMPANY AND ALL THE ODM MINORITIES ARE PAID THE CORRECT PRICE IN TERMS OF THE
APPLICABLE RULES.
THE ROUGH DIAMOND MARKET
PRICES ATTAINED FOR THE ORANGE RIVER AND MARINE DIAMONDS WERE RESPECTIVELY 9%
AND 14% HIGHER THAN IN THE CORRESPONDING PERIOD LAST YEAR. THE SIX-MONTH PERIOD
BEGAN WITH STRONG DEMAND FOR ROUGH DUE TO A SHORTAGE BROUGHT ABOUT BY
RESTRICTED CSO SALES AND LIMITED OUTSIDE SUPPLIES. THIS DEMAND SAW PRICES
RETURN ALMOST TO THE HIGHS OF MID 1997. JULY SAW A CHANGE IN CSO POLICY
HOWEVER, WHICH HAD THE EFFECT OF REDUCING DEMAND AND EASING PRICES. THE JULY TO
SEPTEMBER 1999 PRICES ATTAINED FOR THE ORANGE RIVER PRODUCTION WERE 12% LOWER
THAN THE APRIL TO JUNE 1999 PRICES.
DEMAND FOR POLISHED DIAMONDS IN THE USA REMAINS STRONG. THIS MARKET ACCOUNTS
FOR SOME 45 TO 50% OF WORLD POLISHED RETAIL SALES. A SIGNIFICANT SALES UPTURN
IN JAPAN AND ASIA IS AWAITED SINCE INVENTORY LEVELS IN THESE REGIONS APPEAR TO
BE LOW.
THE CSO'S ONGOING STRATEGY REVIEW SEEMS TO BE DIRECTED AT REDUCING THEIR
STOCKPILE IN A MANNER NOT ANTICIPATED TO HAVE A MATERIAL IMPACT ON THE
FAVOURABLE PRICES CURRENTLY ATTAINED FOR THE GROUP'S BETTER QUALITY PRODUCTION
FOR THE BALANCE OF THE FINANCIAL YEAR.
RECENT DISPUTES BETWEEN THE GOVERNMENT DIAMOND VALUATOR AND DE BEERS, WHICH LED
TO THE DELAY IN THE EXPORT OF DIAMONDS, HAVE NOT AFFECTED TRANS HEX'S DIAMOND
SALES IN ANY WAY.
OPERATIONS
DIAMOND PRODUCTION (IN CARATS) WAS 4% LOWER THAN THAT OF THE FIRST SIX MONTHS
OF THE PREVIOUS YEAR BUT WAS ONLY 82% OF THE CARATAGE BUDGETED FOR THIS PERIOD
(LAND OPERATIONS 89% MARINE OPERATIONS 57%). IN VALUE TERMS HOWEVER DIAMOND
SALES EXCEEDED BUDGET BY 6% AS A RESULT OF SEVERAL EXCELLENT NEW MINE
DEVELOPMENT RESULTS FROM THE ORANGE RIVER LEASE AREA.
EXCELLENT RESULTS WERE FORTHCOMING FROM THE THIRD MEGA TRENCH AT THE XARRIES
NORTH PROSPECT AT BLOEDDRIF. THE, AT TIMES, SPECTACULAR PRODUCTION FROM THIS
TRENCH WAS LARGELY RESPONSIBLE FOR AN ESTIMATED R14 MILLION NET SURPLUS FROM
MINE DEVELOPMENT WORK ON THE OVERALL ORANGE RIVER LEASE AREA. OVERBURDEN
STRIPPING OF THE FIRST MEGA TRENCH AT THE B1/B2 PROSPECT ALSO CONTINUED DURING
THE PERIOD. BOTH OF THESE PROSPECTS HAVE CONSIDERABLE LATERAL EXTENT AND THE
FULL EVALUATION OF THEIR PROMISING POTENTIAL WILL THUS CONTINUE FOR SOME YEARS
TO COME.
BULK SAMPLING AT THE NXODAP PROSPECT NEAR REUNING CONTINUED SATISFACTORILY WITH
THE NEW MOBILE 100 TPH SAMPLING PLANT COMMISSIONED AND OPERATIONAL. THIS
PROSPECT WILL HAVE BEEN FULLY TESTED BY APRIL 2000 AT WHICH TIME A PRODUCTION
DECISION WILL BE MADE, AND THE PLANT MOVED TO THE REUNING SOUTH GATE PROSPECT
AREA.
AT BAKEN MEGA TRENCHES PK4 AND PK28/1 WERE COMPLETED DURING THE PERIOD. THE
FORMER PRODUCED MARGINAL RESULTS BUT THE LATTER WAS POSITIVE AND 1,4 MILLION M3
(31 800 CARATS) HAVE CONSEQUENTLY BEEN ADDED TO THE PROVED ORE RESERVES. AT
CURRENT RATES OF PRODUCTION BAKEN'S PROVED AND PROBABLE RESERVES ARE NOW 10
YEARS WITH MINERAL RESOURCES ADDING A FURTHER 12 YEARS. THE EXCAVATION OF MEGA
TRENCHES PK28/2 AND PK31 ARE UNDERWAY AND SCHEDULED FOR COMPLETION EARLY 2000.
THE COMPLETION OF THE FINAL TRENCH (PK34) IN MID 2000 WILL COMPLETE THE
EVALUATION OF THE BAKEN PALAEOCHANNEL.
PRODUCTION FOR THE SIX MONTHS WAS NEGATIVELY IMPACTED BY THE FOLLOWING:
* ABNORMALLY HIGH RAINFALL IN THE ORANGE RIVER REGION WHICH ADVERSELY AFFECTED
THE SAFE MOBILITY OF MINING EQUIPMENT;
* PLANT RE-COMMISSIONING DELAYS AT HONDEKLIP BAY (WHICH IS NOW APPROACHING FULL
PRODUCTION);
* MATERIALS HANDLING PROBLEMS CAUSED BY ABNORMAL VOLUMES OF FEED OVERSIZE AT
REUNING AND JAKKALSBERG (WHICH ARE CURRENTLY BEING ADDRESSED);
* THE WORST DIVING CONDITIONS EXPERIENCED ALONG THE WEST COAST FOR MANY YEARS
DUE TO INCLEMENT WEATHER. DIVING DAYS WERE 56 THIS SIX MONTHS COMPARED TO 71 IN
1997 AND 77 IN 1998.
THE GROUP IS ACTIVELY DISPOSING OF THE LIME DIVISION. THE LOSS MAKING TROE TROE
CALCINATION FACILITY AT VREDENDAL WILL BE SHUT DOWN IN DECEMBER 1999 AFTER
CERTAIN CONTRACTUAL OBLIGATIONS HAVE BEEN FULFILLED. THE VREDENDAL AND LANGVLEI
OPERATIONS, WHICH ARE PROFITABLE, WILL BE SOLD AS SOON AS POSSIBLE.
EXPLORATION
GRASS ROOTS EXPLORATION ON BOTH KIMBERLITE AND ALLUVIAL TARGETS IN THE NORTH
WEST PROVINCE CONTINUED.
* THE STATUS OF TRANS HEX INTERNATIONAL'S EXPLORATION PROJECTS IS AS FOLLOWS:
* NAMIBIA: EXPLORATION ACTIVITIES ARE STILL BEING DELAYED AT THE BLOCK 9
CONCESSION AT AUSSENKEHR BY A COMPENSATION DISPUTE WITH THE SURFACE OWNER AND
BULK SAMPLING WILL COMMENCE AS SOON AS THESE HAVE BEEN SETTLED. A MARINE
GEOPHYSICAL SURVEY OF PORTION OF THE SKELETON COAST MARINE LEASES IS UNDERWAY
WITH THE FIRST SAMPLING PLANNED FOR 2000.
* BRAZIL: DRILLING ACTIVITIES AT THE BARRE GRANDE PROSPECT IN MINEAS GERIAS
STATE CONTINUE TO OUTLINE LARGE VOLUMES OF GEOLOGICALLY FAVOURABLE GRAVEL
ADJACENT TO ARTISINAL WORKINGS WHICH ARE PRODUCING HIGH QUALITY DIAMONDS. THIS
PROSPECT WILL ALSO BE BULK SAMPLED NEXT YEAR.
PROSPECTS
GIVEN THAT THE ROUGH DIAMOND MARKET REMAINS AT CURRENT LEVELS AND A MARGINAL
WEAKENING OF THE RAND AGAINST THE US DOLLAR, A SATISFACTORY FINANCIAL OUTCOME
FOR THE FULL YEAR IS EXPECTED.
THE GROUP CONFIDENTLY CONTINUES TO PLAN AND BUILD FOR THE FUTURE BY WAY OF THE
FOLLOWING:
* CONTINUED COMMITTAL TO AGGRESSIVE EXPLORATION AND NEW MINE DEVELOPMENT ON THE
EXCITING POSSIBILITIES OFFERED BY THE ORANGE RIVER LEASE AREA;
* PRODUCTION EXPANSION: THE SUCCESSFUL EXPLORATION PROGRAMME AT BAKEN HAS NOW
PROVED SUFFICIENT RESERVES TO EXPAND OPERATIONS. A STUDY OF THE FEASIBILITY OF
INCREASING THROUGHPUT AND PRODUCTION AND THEREBY SIGNIFICANTLY LOWERING THE
UNIT OPERATING COSTS AT BAKEN BY REPLACING THE EXISTING 4 DENSE MEDIA
SEPARATION PLANTS WITH A SINGLE NEW PLANT, HAS BEEN COMPLETED. THE ESTIMATED
CAPITAL COST OF THE PROJECT IS R123 MILLION (PROCESSING PLANT R72 MILLION,
MATERIALS HANDLING SYSTEMS R27 MILLION, ADDITIONAL INFRASTRUCTURE R24 MILLION).
THE STUDY PREDICTS THAT CARAT PRODUCTION WILL BE INCREASED BY APPROXIMATELY 32%
AND THE TOTAL UNIT OPERATING COSTS WILL BE APPROXIMATELY 37% LOWER THAN
PREVAILING COSTS. PAYBACK IS EXPECTED WITHIN 2 TO 3 YEARS. AS A RESULT THE
ECONOMIC CUT-OFF GRADES FOR THE VARIOUS CATEGORIES OF ORE RESERVES AND MINERAL
RESOURCES CAN BE APPROPRIATELY LOWERED. DESPITE THE INCREASED THROUGHPUT /
PRODUCTION RATE, BAKEN'S MINE LIFE WILL STILL BE IN EXCESS OF 10 YEARS. THE THG
BOARD OF DIRECTORS
APPROVED THE PROPOSED DEVELOPMENT ON 15 NOVEMBER 1999 AND THE NEW PLANT IS
SCHEDULED TO COMMENCE FULL PRODUCTION IN APRIL 2001. THE CAPITAL REQUIRED FOR
THIS EXPANTION WILL BE FINANCED OUT OF THE GROUP'S CASH FLOW.
* EXCITING PROGRESS IS BEING MADE BY RESEARCH AND DEVELOPMENT OF MINING SYSTEMS
TO OPERATE IN THE UNEXPLORED 20 - 40 M WATER DEPTH "GAPS" IN THE GROUP'S MARINE
CONCESSIONS. A SEMI-REMOTE MINING TOOL IS BEING LOCALLY DEVELOPED AND
DISCUSSIONS WITH EUROPEAN ENGINEERING CONCERNS ARE UNDERWAY TO DESIGN AND
CONSTRUCT MOBILE MINING PLATFORMS;
* ENCOURAGING PROGRESS IS REPORTED FROM ONGOING MERGER NEGOTIATIONS WITH
BENGUELA CONCESSIONS LTD (BENCO) WHERE THE FIRST OF THE TWO MAJOR CONDITIONS
PRECEDENT HAS BEEN FULFILLED, NAMELY THE CONVERSION OF THE US $5,3 MILLION
OUTSTANDING DEBT INTO FUTURE EQUITY IN THE MERGED COMPANY AS ANNOUNCED ON 19
OCTOBER 1999. THIS PROCESS IS ANTICIPATED TO CONTINUE INTO THE FIRST QUARTER OF
2000. THE FIRST STAGE OF NEGOTIATIONS WITH BENCO RESULTED IN THG EXERCISING, IN
JOINT VENTURE WITH MVELAPHANDA DIAMONDS, ITS OPTION TO ACQUIRE 3 880 000 SHARES
IN DIAMOND FIELDS INTERNATIONAL LTD (DFI) (A CANADIAN COMPANY LISTED ON THE
TORONTO STOCK EXCHANGE) AT A PRICE OF CAN $1,30. DFI'S SHARES HAVE SINCE TRADED
AS HIGH AS CAN $2,75 (CURRENTLY CAN$1,90).
* DISCUSSIONS ARE UNDERWAY WITH SEVERAL OTHER PARTIES WHICH, IF COMPLETED
SUCCESSFULLY, WILL SIGNIFICANTLY INCREASE THG'S DIAMOND MINING AND EXPLORATION
INTERESTS.
YEAR 2000 COMPLIANCE
* THE FULLY COMPLIANT NEW COMPUTER SYSTEM LINKING HEAD OFFICE TO ALL OPERATING
CENTRES BECAME OPERATIONAL ON 1 APRIL AND NO MATERIAL DIFFICULTIES HAVE YET
BEEN EXPERIENCED OR ARE EXPECTED.
* THE AUDIT OF THE GROUP'S AGENTS AND SUPPLIERS BY AN INTERNAL TASK GROUP AND
EXTERNAL CONSULTANTS CONTINUED WITHOUT REVEALING ANY SIGNIFICANT PROBLEMS.
APPOINTMENT OF CHAIRMAN
ON 16 AUGUST 1999 DR E DE LA H HERTZOG RETIRED AS CHAIRMAN AFTER 5 YEARS AND
MR B R VAN ROOYEN WAS ELECTED IN HIS STEAD. DR HERTZOG REMAINS ON THE BOARD AS
A
NON-EXECUTIVE DIRECTOR.
BY ORDER OF THE BOARD
B R VAN ROOYEN D M HOOGENHOUT
CHAIRMAN GROUP MANAGING DIRECTOR
PAROW
15 NOVEMBER 1999
TRANSFER SECRETARIES
REGISTERED OFFICE COMPUTERSHARE SERVICES LTD
405 VOORTREKKER ROAD 41 FOX STREET, JOHANNESBURG 2001
PAROW 7500 P O BOX 61051, MARSHALLTOWN 2107
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