Wrap Text
Unaudited condensed consolidated interim financial statements for the six months ended 30 September 2015
TRANS HEX GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1963/007579/06
Share code: TSX
ISIN: ZAE000018552
("Trans Hex" or the "Group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
HEADLINES
- Diamond prices declined by 30,3% compared to the corresponding previous period.
- Diamond grade declined by 23,6%.
- Sales were positively affected by a 14,6% weakening of the Rand against the
US dollar.
- Sales revenue totalled R268,7 million (September 2014: R414,1 million).
- South African land operations recorded a gross loss of R30,8 million (September 2014:
profit of R76,4 million).
- Equity accounted loss from West Coast Resources (Pty) Ltd amounted to R8,8 million
(September 2014: nil).
- Equity accounted profit from Somiluana Mine in Angola amounted to R7,1 million
(September 2014: nil).
- Group loss after tax from continuing operations amounted to R43,8 million
(September 2014: profit of R25,2 million).
- The Group's net cash position at the end of the period was R347,5 million
(September 2014: R351,1 million).
- Loss per share and headline loss per share were 30,3 cents (September 2014:
earnings of 34,1 cents).
- Net asset value per share increased to 575,0 cents (September 2014: 541,0 cents).
CONDENSED CONSOLIDATED INCOME STATEMENT
30/09/15 30/09/14 31/03/15
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
Continuing operations
Sales revenue 268 660 414 064 939 685
Cost of goods sold (299 433) (337 711) (788 847)
Gross (loss)/profit (30 773) 76 353 150 838
Share of results of associated
companies 1 (1 704) - 135 976
Royalties (1 335) (8 343) (20 656)
Selling and administration costs (41 637) (43 649) (75 899)
Mining (loss)/profit (75 449) 24 361 190 259
Exploration costs (1 139) (2 943) (2 171)
Other gains - net 2 11 590 9 071 53 369
Finance income 12 115 11 310 25 052
Finance costs (2 338) (2 978) (4 705)
Impairment 3 - - (86 170)
(Loss)/profit before income tax (55 221) 38 821 175 634
Income tax 11 449 (13 626) (6 568)
(Loss)/profit for the period from
continuing operations (43 772) 25 195 169 066
Discontinued operations
Profit for the period from discontinued
operations 4 11 244 10 642 21 508
(Loss)/profit for the period (32 528) 35 837 190 574
Attributable to:
Continuing operations (43 772) 25 195 169 066
- Owners of the parent (43 240) 25 370 169 950
- Non-controlling interest (532) (175) (884)
Discontinued operations
- Owners of the parent 11 244 10 642 21 508
(32 528) 35 837 190 574
30/09/15 30/09/14 31/03/15
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
Earnings per share - basic and
diluted (cents)
- Continuing operations (40,9) 24,0 160,8
- Discontinued operations 10,6 10,1 20,3
- Total (30,3) 34,1 181,1
Shares in issue adjusted for treasury
shares ('000) 105 699 105 699 105 699
Headline earnings 5
- Continuing operations (43 241) 25 370 61 668
- Discontinued operations 11 244 10 642 21 508
- Total (31 996) 36 012 83 176
Headline earnings per share (cents)
- Continuing operations (40,9) 24,0 58,3
- Discontinued operations 10,6 10,1 20,3
- Total (30,3) 34,1 78,6
Dividends per share (cents)
- Special - 50,0 50,0
- Ordinary - - 10,0
- Total - 50,0 60,0
Average Rand/US$ exchange rate 12,75 10,60 11,05
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
30/09/15 30/09/14 31/03/15
Unaudited Unaudited Audited
R'000 R'000 R'000
(Loss)/profit for the period (32 528) 35 837 190 574
Other comprehensive income net of tax:
Items that may be subsequently reclassified
to profit or loss
Translation differences on foreign subsidiaries
before and after tax (14 998) (9 469) (17 529)
Reclassification of foreign currency differences
on repayment of long-term receivables from
foreign operations - (4 542) (4 542)
Total comprehensive income for the period (47 526) 21 826 168 503
Attributable to:
- Owners of the parent (46 994) 22 001 169 387
- Non-controlling interest (532) (175) (884)
(47 526) 21 826 168 503
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30/09/15 30/09/14 31/03/15
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
ASSETS
Non-current assets 463 300 370 868 466 682
Property, plant and equipment 144 205 253 480 152 184
Investments in associates 6 253 500 61 509 253 635
Investments held by environmental
trust 59 195 55 879 57 431
Other financial assets 3 000 - 3 000
Deferred income tax assets 3 400 - 432
Current assets 499 270 607 295 553 003
Inventories 7 131 299 213 360 105 868
Trade and other receivables 20 173 42 860 37 205
Current income tax 342 - 2 750
Cash and cash equivalents 347 456 351 075 407 180
Total assets 962 570 978 163 1 019 685
EQUITY AND LIABILITIES
Capital and reserves 608 143 571 232 665 742
Non-controlling interest (416) 825 116
Non-current liabilities 111 747 142 011 117 065
Deferred income tax liabilities - 35 918 8 632
Provisions 111 747 106 093 108 433
Current liabilities 243 096 264 095 236 762
Trade and other payables 116 998 133 879 117 268
Interest in joint ventures 4 126 006 122 043 119 450
Current income tax liabilities 92 7 735 44
Borrowings - 438 -
Total equity and liabilities 962 570 978 163 1 019 685
Net asset value per share (cents) 575 541 630
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
30/09/15 30/09/14 31/03/15
Unaudited Unaudited Audited
R'000 R'000 R'000
Balance at 1 April 665 858 550 231 550 231
Total comprehensive income for the period (47 526) 21 826 168 503
Dividends paid (10 605) - (52 876)
Balance at end of period 607 727 572 057 665 858
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
30/09/15 30/09/14 31/03/15
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash (utilised in)/generated from operations (38 202) 68 608 157 583
Movements in working capital (8 987) (89 630) (6 783)
Net income tax received/(paid) 2 297 (12 576) (43 680)
Net cash (utilised in)/generated from
operating activities (44 892) (33 598) 107 120
Cash flows from investment activities (7 235) (12 813) (45 936)
Property, plant and equipment
- Proceeds from disposal of property,
plant and equipment - - 19
- Replacement of property, plant and
equipment (23 019) (14 950) (38 263)
- Additions to property, plant and equipment (4 130) (6 106) (9 657)
Proceeds from repayment of loan to associate 9 833 - 7 477
Investment in associate - - (57 200)
Investment in other financial assets - - (3 000)
Proceeds from disposal of investment - - 35 000
Interest received 10 081 8 243 19 688
Cash flows from financing activities (10 612) (918) (54 241)
Borrowings repaid - (843) (1 281)
Interest paid (7) (75) (84)
Dividends paid (10 605) - (52 876)
Effects of exchange rates on cash and
cash equivalents 3 015 854 2 687
Net (decrease)/increase in cash and
cash equivalents (59 724) (46 475) 9 630
Cash and cash equivalents at beginning of
period 407 180 397 550 397 550
Cash and cash equivalents at end of period 347 456 351 075 407 180
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
30/09/15 30/09/14 31/03/15
Unaudited Unaudited Audited
R'000 R'000 R'000
1. Share of results of associated companies
Share of results of associated companies
consists of the following categories:
- Somiluana - Sociedade Mineira, S.A. 7 095 - 12 715
The 33% investment in Somiluana is
accounted for as an investment in an
associate under the equity method.
- West Coast Resources (Pty) Ltd (8 799) - 123 261
The 40% investment in West Coast Resources
is accounted for as an investment in an
associate under the equity method.
Included in the profit for the year
ended 31 March 2015 is a gain of
R132 million, being negative goodwill
that arose as a result of the acquisition
of assets and liabilities relating to
Namaqualand Mines.
(1 704) - 135 976
2. Other gains - net
Other gains - net consist of the
following categories:
- Net foreign exchange gains 10 392 4 529 10 612
- Profit on sale of assets and investments - - 35 019
- Commission on sale of diamonds 801 - 3 196
- Marketing and management fee 396 - -
- Foreign exchange gains on repayment of
long-term receivables from
foreign operation - 4 542 4 542
11 590 9 071 53 369
3. Impairment of assets
Impairment of property, plant
and equipment
- Mining plant and equipment - - 82 867
- Mine development costs - - 3 303
- - 86 170
While conducting impairment reviews the
Group exercises judgement in making
assumptions about future rough diamond
prices, production volumes, ore reserves
and resources included in the current
life of mine plans, feasibility studies,
future development and production costs,
and macroeconomic factors such as
inflation and discount rates. Value-in-use
impairment models were prepared to assess
mining assets for impairment.
The key assumptions used in performing
the impairment tests by cash-generating
unit ("CGU") were as follows:
Discount rate (%) 13,42 14,15 13,42
Diamond price per carat (US$) 994 - 1 355 1 061 - 1 705 1 292 - 1 679
Forecast US$/ZAR exchange rate 13,29 - 14,02 11,18 - 12,10 11,65 - 12,25
The South African businesses consist of
a number of CGUs that are represented by
mining areas operated by the Group.
Baken and Reuning are two separate CGUs
that form part of the South African
reporting segment. The recoverable
values of these CGUs were derived from
the value-in-use calculations performed,
which were in excess of the fair value
less costs to sell. The Reuning CGU was
impaired during the 2015 financial year
and placed under care and maintenance.
30/09/15
Unaudited
Baken Total
R'000 R'000
Carrying value pre-impairment 109 496 109 496
Recoverable amount (114 671) (114 671)
Recoverable amount in excess of
carrying value (5 175) (5 175)
As the recoverable amount is higher than
the carrying value no impairment charge
is required for the interim period. This
outcome is consistent with the
corresponding interim period.
31/03/15
Audited
Baken Reuning Total
R'000 R'000 R'000
Carrying value pre-impairment 184 219 16 720 200 939
Recoverable amount (113 195) (1 574) (114 769)
Impairment loss recognised 71 024 15 146 86 170
For the year ended 31 March 2015 an
impairment charge of R86,2 million
was recognised.
4. Discontinued operations
On 5 October 2011 the Angolan Ministry of
Geology, Mines and Industry revoked the
mining rights of the Luarica and Fucauma
joint ventures as no mining activities
had been performed at the sites for a
period of three years as a result of the
projects being placed under care and
maintenance.
The prescription of unclaimed debts of
R11,2 million (31/03/2015: R21,5 million;
30/09/2014: R10,6 million) is included below.
Angolan joint ventures
Balance at beginning of period 119 450 125 188 125 188
Profit for the period from discontinued
operations (11 244) (10 642) (21 508)
Profit before income tax (11 244) (10 642) (21 508)
Taxation - - -
Foreign exchange differences 17 800 7 497 15 770
Closing balance at end of period 126 006 122 043 119 450
5. Reconciliation of headline earnings
Continuing operations
(Loss)/profit for the period (43 241) 25 370 169 950
- Profit on sale of assets - - (19)
- Taxation impact - - 5
- Profit on sale of investment - - (35 000)
- Taxation impact - - -
- Impairment of assets - - 86 170
- Taxation impact - - (24 128)
- Foreign currency differences on repayment
of long-term receivables from foreign
operations reclassified to profit or loss - - (4 542)
- Taxation impact - - 1 272
- Negative goodwill on assets acquired
by associate - - (132 040)
Headline (loss)/earnings (43 241) 25 370 61 668
Discontinued operations
Profit for the period 11 244 10 642 21 508
Headline earnings 11 244 10 642 21 508
6. Investments in associates
- Loan to associate: Somiluana -
Sociedade Mineira, S.A. 57 767 61 509 59 276
Balance at beginning of period 59 276 59 580 59 580
Repayment of loan amount (9 833) - (7 477)
Foreign exchange differences 8 324 1 929 7 173
The loan to Somiluana represents a portion
of the exploration costs previously
incurred by the Group which is recoverable
from the newly formed mining company.
The loan does not form part of the net
investment in the associate as settlement
of the loan is considered likely to occur
in the foreseeable future.
- Investment in associate: Somiluana -
Sociedade Mineira, S.A. 24 071 - 13 898
Balance at beginning of period 13 898 - -
Share of results of associated company 7 095 - 12 715
Foreign exchange differences 3 078 - 1 183
The 33% investment in Somiluana is
accounted for as an investment in an
associate under the equity method. During
the first six months of 2014 the
investment's liabilities exceeded its
assets and, therefore, no equity accounted
profit or loss was accounted for in the
previous period.
- Investment in associate: West Coast
Resources (Pty) Ltd 171 662 - 180 461
Balance at beginning of period 180 461 - -
Proportionate shareholder funding - - 52 000
Preferential loan - - 5 200
Share of results of associated company (8 799) - 123 261
Effective 28 October 2014 West Coast
Resources (Pty) Ltd, in which the Group
holds a 40% interest, acquired assets
and liabilities relating to Namaqualand
Mines.
253 500 61 509 253 635
7. Inventories
Diamonds 126 834 193 250 99 456
Consumables 4 465 20 110 6 412
131 299 213 360 105 868
Slow-moving consumable stock to the value
of R14,0 million for the year ended
31 March 2015 has been written off.
8. Capital commitments
(including amounts authorised, but
not yet contracted) 28 434 38 640 66 528
These commitments will be financed from
the Group's own resources or with
borrowed funds.
9. Fair value estimation
Items carried at fair value are classified according to the fair value hierarchy,
by valuation method. The different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities
(Level 1).
- Inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (that is, as prices) or indirectly (that
is, derived from prices) (Level 2).
- Inputs for the asset or liability that are not based on observable market data
(that is, unobservable inputs) (Level 3).
Financial assets are classified as Level 1 according to the fair value hierarchy.
Investments held by the environmental trust are the only financial assets carried
at fair value, however, this fund consists primarily of cash and cash equivalents
with the largest driver of the growth in the trust fund being attributable to
interest received.
10. Segment information
Operating segments
Continuing Discontinued
Six months ended
30 September 2015 South Africa Angola Total Angola
Carats sold 22 629 - 22 629 -
R'000 R'000 R'000 R'000
Revenue 268 660 - 268 660 -
Cost of goods sold (299 433) - (299 433) -
Gross loss (30 773) - (30 773) -
Share of results of
associated companies (8 799) 7 095 (1 704) -
Royalties (1 335) - (1 335) -
Selling and administration costs (36 012) (5 625) (41 637) -
Mining (loss)/profit (76 919) 1 470 (75 449) -
Exploration costs (1 139) - (1 139) -
Other gains - net 11 674 (84) 11 590 -
Profit for the period from
discontinued operations - - - 11 244
Finance income 12 115 - 12 115 -
Finance costs (2 338) - (2 338) -
(Loss)/profit before income tax (56 607) 1 386 (55 221) 11 244
Depreciation included in the above (35 125) (7) (35 132) -
Net assets/(liabilities) 645 802 87 931 733 733 (126 006)
Capital expenditure 27 149 - 27 149 -
Net asset value per share (cents) 611 83 694 (119)
Continuing Discontinued
Six months ended
30 September 2014 South Africa Angola Total Angola
Carats sold 25 073 - 25 073 -
R'000 R'000 R'000 R'000
Revenue 414 064 - 414 064 -
Cost of goods sold (337 711) - (337 711) -
Gross profit 76 353 - 76 353 -
Royalties (8 343) - (8 343) -
Selling and administration costs (38 888) (4 761) (43 649) -
Mining profit/(loss) 29 122 (4 761) 24 361 -
Exploration costs (2 943) - (2 943) -
Other gains - net 9 970 (899) 9 071 -
Profit for the period from
discontinued operations - - - 10 642
Finance income 11 310 - 11 310 -
Finance costs (2 978) - (2 978) -
Profit/(loss) before income tax 44 481 (5 660) 38 821 10 642
Depreciation included in
the above (46 594) (16) (46 610) -
Net assets/(liabilities) 627 590 66 510 694 100 (122 043)
Capital expenditure 21 056 - 21 056 -
Net asset value per share (cents) 593 63 656 (115)
Continuing Discontinued
Twelve months ended
31 March 2015 South Africa Angola Total Angola
Carats sold 62 819 - 62 819 -
R'000 R'000 R'000 R'000
Revenue 939 685 - 939 685 -
Cost of goods sold (788 847) - (788 847) -
Gross profit 150 838 - 150 838 -
Share of results of associated
companies 123 261 12 715 135 976 -
Royalties (20 656) - (20 656) -
Selling and administration costs (66 368) (9 531) (75 899) -
Mining profit 187 075 3 184 190 259 -
Exploration costs (2 171) - (2 171) -
Other gains/(losses) - net 54 159 (790) 53 369 -
Profit for the period from
discontinued operations - - - 21 508
Finance income 25 052 - 25 052 -
Finance costs (4 705) - (4 705) -
Impairment of assets (86 170) - (86 170) -
Profit before income tax 173 240 2 394 175 634 21 508
Depreciation included in
the above (88 542) (24) (88 566) -
Net assets/(liabilities) 694 658 90 625 785 281 (119 422)
Capital expenditure 47 920 - 47 920 -
Net asset value per share (cents) 657 86 743 (113)
Revenue from transactions with certain customers can amount to 10% or more of total
revenue. During the period under review such individual customers were responsible
for aggregate sales of R35,7 million (31/03/2015: R0,0 million; 30/09/2014:
R51,8 million).
11. Mineral resources and mineral reserves
No adjustments have been made to the statement of mineral resources and mineral
reserves as contained in the 2015 Integrated Annual Report. Reconciliation of
production data takes place annually and an updated mineral resources and
reserves statement will be published in the 2016 Integrated Annual Report.
12. Contingent liabilities
There have been no material changes to contingent liabilities previously reported
in the Integrated Annual Report.
13. Events after the reporting period
No events which may have a material effect on the Group occurred between the
reporting date and the issuing of this announcement.
14. Accounting policies
The condensed consolidated interim financial statements are prepared in accordance
with International Financial Reporting Standard (IAS) 34, "Interim Financial
Reporting", the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and the requirements of the Companies Act of
South Africa. The accounting policies applied in the preparation of these interim
financial statements are in terms of International Financial Reporting Standards
and are consistent with those applied in the previous consolidated annual
financial statements.
15. Preparation of financial statements
The preparation of the unaudited condensed consolidated interim financial
statements was supervised by the Financial Director, IP Hestermann CA(SA).
OVERVIEW
In this commentary results are compared with the first six months of the 2015 financial
year (in brackets).
Sales revenue from the South African operations decreased by 35,1% in Rand terms from
R414,1 million to R268,7 million. The disposal of Remhoogte and the ending of
operations at Reuning accounted for 22,9% of the decrease. Sales from the Lower Orange
River ("LOR") Operations and Shallow Water Operations decreased by 15,0% due to a
decline of 30,3% in US$ diamond prices. Revenue was, however, positively affected by
a 14,6% weakening in the Rand.
South African production decreased by 26,2% to 23 940 carats (September 2014:
32 450 carats) due to the removal of Reuning and Remhoogte (10,7%) and a 23,6% decrease
in average grade at the remaining LOR Operations to 1,07 carats/100 cubic metres
(September 2014: 1,40 carats/100 cubic metres) while volumes treated increased by 6,3%.
The cost of goods sold decreased to R299,4 million (September 2014: R337,7 million),
mainly due to the termination of the Reuning operations, a decrease in contractor
fees in respect of Remhoogte (R64,5 million), lower depreciation, and a stock movement
of R48,2 million. The LOR unit cost of production for current operations increased
by 4,4% due to an 11% increase in operating costs, while volumes treated increased
by 6,3%.
Gross loss for the South African operations amounted to R30,8 million (September 2014:
profit of R76,3 million).
The South African operations recorded a loss before tax of R56,6 million
(September 2014: profit of R44,5 million).
At West Coast Resources, in which Trans Hex holds a 40% stake, production from the
Kleinzee tailings dumps amounted to 4 821 carats. Sales amounted to R7,2 million, at
an average price of US$170 per carat. The equity accounted loss for the period amounted
to R8,8 million.
In Angola production at Somiluana Mine, in which Trans Hex holds a 33% stake, amounted
to 67 981 carats (September 2014: 44 400 carats), due to a 19,8% increase in gravel
treated and a 27,8% increase in average grade. Total sales amounted to US$20,2 million
at an average price of US$300 per carat (September 2014: sales of US$21,3 million at
an average price of US$513 per carat). Repayments of US$750 000 were made to Trans Hex
against the outstanding investment amount. The balance of cash generated was retained
to develop the Mine.
Profit from the Angolan continuing operations amounted to R1,4 million (September 2014:
loss of R5,7 million), consisting of Somiluana's equity accounted profit of R7,1 million
less head office costs of R5,7 million.
The Group reports an after-tax loss for the period from continuing operations of
R43,8 million (September 2014: profit of R25,2 million).
Profit from the discontinued Luarica and Fucauma operations amounted to R11,2 million
(September 2014: R10,6 million).
The Group therefore reports a loss for the period of R32,5 million (September 2014:
profit of R35,8 million).
Cash and cash equivalents at the end of the reporting period amounted to R347,5 million
(September 2014: R351,1 million).
OPERATING PERFORMANCE
Detailed project information
Six months ended 30 September 2015 Six months ended 30 September 2014
Average Average
price price
Detailed project Average Average per carat Average Average per carat
information grade per Carats carats achieved grade per Carats carats achieved
(unaudited) 100 cubic metres produced per stone (US$) 100 cubic metres produced per stone (US$)
South Africa
Baken 1,11 18 566 1,37 923 1,42 22 731 1,35 1 379
Bloeddrif 0,85 2 340 2,02 1 462 1,30 2 970 2,45 2 004
Reuning - - - - 0,33 563 2,59 2 453
Remhoogte - - - - - 2 900 3,35 3 643
Shallow water - 3 033 0,33 479 - 3 286 0,30 457
Total South Africa 1,07 23 940 0,99 932 1,31 32 450 1,08 1 557
West Coast Resources 297,46 4 821 0,38 170 - - - -
Angola
Somiluana 38,26 67 981 0,56 300 29,94 44 400 0,53 513
Note: Average grade in South Africa is calculated excluding Remhoogte and shallow
water production.
South Africa
Stripping of overburden in the main channel at Baken continued during the six months
under review. The average grade decreased to 1,12 carats/100 cubic metres (September
2014: 1,42 carats/100 cubic metres).
Results at Bloeddrif Mine were negatively affected by a decrease in average grade
from 1,34 carats/100 cubic metres in September 2014 to 0,85 carats/100 cubic metres
in September 2015 and a decrease in average stone size from 2,46 carats per stone in
September 2014 to 2,02 carats per stone in September 2015.
Production from the South African operations decreased to 23 940 carats
(September 2014: 32 450 carats), mainly as a result of the disposal of Remhoogte and
the ending of operations at Reuning mine and a decrease in the average grade at the
remaining LOR operations.
West Coast Resources (Pty) Ltd, South Africa
Production from the Kleinzee tailings dumps for the period amounted to 4 821 carats
and sales amounted to R7,2 million at an average price of US$170 per carat.
The initial drilling programme targeted areas to be stripped and mined in the first six
to twelve months of production. The drill is currently targeting high-priority areas
that may identify additional resources for mining.
A 10 ton/hour mobile sampling plant was commissioned in July and is currently treating
samples from the scheduled production blocks to verify grade distribution in the blocks
in preparation for production.
Somiluana - Sociedade Mineira, S.A., Angola
Mining and exploration activities during the period remained focused on the east bank
of the Luana River where the grades and diamond values continue to exceed resource
estimations.
OUTLOOK
Lower Orange River Operations
Production at the LOR is expected to improve during the second half of the year as
higher grade gravels are accessed through overburden stripping.
South African production for the 2016 financial year is expected to be in the order of
53 000 carats.
West Coast Resources (Pty) Ltd, South Africa
Construction of the production plant is progressing well and the 50 tons/hour DMS plant
has been commissioned. The front-end of the plant will be commissioned before the end
of the calendar year.
Stripping operations have commenced. The first production gravel is scheduled to be
treated before the end of the calendar year and full production is expected early
in 2016.
Net revenue from the treatment of the small remaining tonnages of final recovery
tailings and sampling production are not expected to cover project operational
expenditure during the 2016 financial year. As this project is still in a start-up
phase, a loss is expected for the 2016 financial year.
Somiluana - Sociedade Mineira, S.A., Angola
Somiluana Mine continues to increase its production capacity through the reinvestment
of surplus internal cash flows. Due to the encouraging results and in order to speed
up the expansion of the production footprint, external funding is being considered.
Production results and geological work through drilling and bulk testing indicate that
carat production for the 2016 financial year will surpass the 94 000 carats achieved
in 2015.
Market
Sentiment in the rough market remains depressed, intensified by slowing growth figures
in China and unstable stock markets. Weak demand and trading therefore continued,
particularly in Asia, as consumer spending decreased significantly.
Demand in general continues to be low amid high stock levels and tight liquidity.
The surplus polished and rough product is likely to keep prices under pressure.
Interest in the Trans Hex November sale is however healthy, confirming that demand for
the Group's product remains strong.
However, interest in Trans Hex's tender sales continues to be healthy, confirming that
demand for the Company's product remains strong.
DIVIDEND
The Board has resolved not to declare an interim dividend.
By order of the Board
BR van Rooyen L Delport
Chairman Chief Executive Officer
Parow
4 November 2015
REGISTERED OFFICE
405 Voortrekker Road, Parow 7500
PO Box 723, Parow 7499
JSE SPONSOR
One Capital
TRANSFER SECRETARIES
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DIRECTORATE
BR van Rooyen (Chairman), L Delport (Chief Executive Officer), IP Hestermann (Financial
Director), AR Martin, T de Bruyn, BP Lekubo, DR Wolstenholme, GM van Heerden
(Company Secretary)
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