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An interim dividend of 15.5 cents for the first six months of operations, representing a 10.7% increase over the same period last year, is good news for Trans Hex shareholders.
An interim dividend of 15.5 cents for the first six months of operations, representing a 10.7% increase over the same period last year, is good news for Trans Hex shareholders.
Announcing the interim results chief executive officer Calvyn Gardner re- affirmed the Company's target of producing 211 400 carats in the financial year underway.
Gardner said an oversupply of rough and polished diamonds coupled, with an economic slowdown in the world's largest jewellery market had contributed to a demanding trading period for niche producer Trans Hex.
Lower prices resulted in diamonds being retained in inventory leading to a reduction in carats sold and decrease in mining income. However, had the increase in inventory been sold at prevailing prices mining income would have been maintained.
"Commissioning problems experienced with the new Baken Central Plant delayed full production but these have now been resolved," explained Gardner. "In fact the plant is performing beyond our forecast and we fully expect to exceed the predicted 58 500 carat level."
The production increase from Baken comes on the back of a corresponding 38% reduction in treatment costs, reducing carat production costs by 7% with further savings to be realised in the second half.
Under new management, Trans Hex has completed a massive review of
operations. This has resulted in significant cost-cutting exercises
throughout the Company with the temporary mothballing of marginal
operations, re-assessment of capital expenditure and prioritisation of exploration projects.
"Arguably the most significant development during the period has been shareholder approval to issue 16 million debentures to Mvelaphanda Holdings (Mvela) in return for R152 million in cash," said Gardner. "Apart from the growth potential Mvela brings to the table, Trans Hex will comply with empowerment provisions of the Minerals and Petroleum Resources Bill - a cornerstone of future business opportunities."
Cash from the transaction will be used to fund recent land and marine capital expansions.
Marine operations have received a significant boost with the deployment of two deep-water mining vessels. The mv Ivan Prinsep entered service in the joint venture with Diamond Fields International off the Namibian coast and produced more than 10 600 carats in five months of trenching and block mining in the Marshall Fork feature.
This vessel has now been re-assigned to Trans Hex's own concessions
following the successful commissioning of the first dedicated joint venture ship, the mv Namakwa.
Shallow-water activities were affected by severe winter weather conditions resulting in lower output for the period, but following a highly successful October indications are that forecasts will be met.
"One of the most heartening aspects of the current soft diamond market has been our ability to extract extraordinary prices for selected individual stones," said Gardner. "A 11,56 carat vivid yellow fetched US$24 600 per carat, falling only fractionally short of Trans Hex's all-time high of US$25 042 achieved in 1996."
One of the Group's cost-cutting measures has been the decision to
discontinue any further funding for Trans Hex International. This follows unfavourable results obtained from bulk sampling at the Barre Grande project in Brazil.
"This has been a year of tough decisions for Trans Hex. But production from all projects is on target for the second half and we will continue to seek out areas where we can make savings without detriment to our overall goals," said Gardner. "One thing is for certain. We are ready for the market turnaround when it happens." Ends. For further information : Calvyn Gardner Trans Hex Group
Tel: (021) 937-2000 Issued by : Cullum Johnston
BHA Communications Tel: (021) 683-2685 / 083 212-2455
