Wrap Text
Unaudited condensed consolidated interim financial statements for the six months ended 30 September 2016
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" or the "Company")
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016
HEADLINES
- Group net profit amounted to R32,5 million (September 2015: loss of R32,5 million).
- Sales revenue from the wholly owned South African operations increased by 2,5% compared to the corresponding period
to R275,3 million (September 2015: R268,7 million)
- Gross profit from South African land operations amounted to R13,9 million (September 2015: loss of R24,7 million).
- Equity accounting loss from West Coast Resources (Pty) Ltd amounted to R9,0 million
(September 2015: loss of R8,8 million).
- Equity accounting profit from Somiluana Mine in Angola amounted to R34,2 million
(September 2015: profit of R7,1 million).
- The Group's net cash position at the end of the period was R322,4 million (September 2015: R347,5 million).
- Earnings per share amounted to 31,8 cents (September 2015: loss of 30,3 cents) and headline earnings per share
amounted to 31,4 cents (September 2015: loss of 30,3 cents).
- Net asset value per share amounted to 540,0 cents (September 2015: 575,0 cents).
CONDENSED CONSOLIDATED INCOME STATEMENT
30/09/15
30/09/16 Unaudited 31/03/16
Unaudited Reclassified Audited
Notes R'000 R'000 R'000
Continuing operations
Sales revenue 275 319 268 660 671 374
Cost of goods sold (261 440) (293 320) (678 158)
Gross profit/(loss) 13 879 (24 660) (6 784)
Share of results of associated companies 1 25 155 (1 704) (29 431)
Royalties (1 309) (1 335) (3 248)
Selling and administration costs (48 588) (47 750) (92 542)
Mining (loss) (10 863) (75 449) (132 005)
Exploration costs (1 571) (1 139) (2 048)
Other gains – net 2 9 269 11 590 15 115
Finance income 13 973 12 115 23 211
Finance costs (2 695) (2 338) (4 680)
Impairment 3 – – (55 096)
Profit/(loss) before income tax 8 113 (55 221) (155 503)
Income tax 793 11 449 30 730
Profit/(loss) for the period from
continuing operations 8 906 (43 772) (124 773)
Discontinued operations
Profit for the period from
discontinued operations 4 23 620 11 244 24 023
Profit/(loss) for the period 32 526 (32 528) (100 750)
Attributable to:
Continuing operations 8 906 (43 772) (124 773)
- Owners of the parent 9 988 (43 240) (123 788)
- Non-controlling interest (1 082) (532) (985)
Discontinued operations
- Owners of the parent 23 620 11 244 24 023
32 526 (32 528) (100 750)
Earnings/(loss) per share – basic and
diluted (cents)
- Continuing operations 9,5 (40,9) (117,1)
- Discontinued operations 22,3 10,6 22,7
Total 31,8 (30,3) (94,4)
Shares in issue adjusted for treasury
shares ('000) 105 699 105 699 105 699
Headline earnings/(loss) 5
- Continuing operations 9 552 (43 241) (84 119)
- Discontinued operations 23 620 11 244 24 023
Total 33 172 (31 996) (60 096)
Headline earnings/(loss) per share (cents)
- Continuing operations 9,1 (40,9) (79,6)
- Discontinued operations 22,3 10,6 22,7
Total 31,4 (30,3) (56,9)
Average ZAR/US$ exchange rate 14,72 12,75 14,06
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
30/09/16 30/09/15 31/03/16
Unaudited Unaudited Audited
R'000 R'000 R'000
Profit/(loss) for the period 32 526 (32 528) (100 750)
Other comprehensive profit/(loss) net of tax: 2 785 (14 998) (19 442)
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations - - 1 737
- Before-tax amount – – 2 412
- Tax expense – – (675)
Items that may be subsequently reclassified to profit
or loss
Translation differences on foreign subsidiaries before
and after tax 3 391 (14 998) (21 179)
Reclassification of foreign currency differences on
repayment of long-term receivables from foreign operations (606) – –
Total comprehensive income/(loss) for the period 35 311 (47 526) (120 192)
Attributable to:
- Owners of the parent 36 393 (46 994) (119 207)
- Non-controlling interest (1 082) (532) (985)
35 311 (47 526) (120 192)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30/09/16 30/09/15 31/03/16
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
ASSETS
Non-current assets 427 015 463 300 388 784
Property, plant and equipment 81 312 144 205 82 955
Investment in associates 6 256 424 253 500 219 777
Investments held by environmental trust 63 539 59 195 61 186
Other financial assets 3 000 3 000 3 000
Deferred income tax assets 22 740 3 400 21 866
Current assets 472 624 499 270 502 079
Inventories 7 129 078 131 299 110 997
Trade and other receivables 21 158 20 173 37 109
Current income tax – 342 474
Cash and cash equivalents 322 388 347 456 353 499
Total assets 899 639 962 570 890 863
EQUITY AND LIABILITIES
Capital and reserves 572 358 608 143 535 965
Non-controlling interest (1 951) (416) (869)
Non-current liabilities
Provisions 116 230 111 747 112 449
Current liabilities 213 002 243 096 243 318
Trade and other payables 122 674 116 998 122 668
Interest in joint ventures 4 90 252 126 006 120 650
Current income tax liabilities 76 92 –
Total equity and liabilities 899 639 962 570 890 863
Net asset value per share (cents) 540 575 506
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
30/09/16 30/09/15 31/03/16
Unaudited Unaudited Audited
R'000 R'000 R'000
Balance at 1 April 535 096 665 858 665 858
Total comprehensive income/(loss) for the period 35 311 (47 526) (120 192)
Dividends paid – (10 605) (10 570)
Balance at end of period 570 407 607 727 535 096
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
30/09/16 30/09/15 31/03/16
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash utilised in operations (12 391) (38 202) (32 982)
Movements in working capital (899) (8 987) 708
Income tax received 471 2 297 2 220
Net cash utilised in operating activities (12 819) (44 892) (30 054)
Cash flows from investment activities (16 694) (7 235) (17 069)
Property, plant and equipment
- Proceeds from disposal – – 2 931
- Replacement (14 416) (23 019) (51 045)
- Additional (1 166) (4 130) (5 714)
Proceeds from repayment of loan to Trans Hex Angola 1 935 9 833 18 386
Loan to associate (20 000) – –
Dividends received 4 572 – –
Interest received 12 381 10 081 18 373
Cash flows from financing activities (1) (10 612) (10 588)
Interest paid (1) (7) (18)
Dividends paid – (10 605) (10 570)
Effects of exchange rates on cash and cash equivalents (1 597) 3 015 4 030
Net decrease in cash and cash equivalents (31 111) (59 724) (53 681)
Cash and cash equivalents at beginning of period 353 499 407 180 407 180
Cash and cash equivalents at end of period 322 388 347 456 353 499
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
30/09/16 30/09/15 31/03/16
Unaudited Unaudited Audited
R'000 R'000 R'000
1. Share of results of associated companies
Consists of the following categories:
- Somiluana – Sociedade Mineira, S.A. 34 195 7 095 (15 835)
The 33% investment in Somiluana is accounted
for as an investment in an associate under
the equity method.
- West Coast Resources (Pty) Ltd (9 040) (8 799) (13 596)
The 40% investment in West Coast Resources
is accounted for as an investment in an
associate under the equity method.
25 155 (1 704) (29 431)
2. Other gains – net
Other gains – net consist of the following categories:
- Net foreign exchange gains 4 955 10 392 10 368
- Commission on sale of diamonds – 807 4 747
- Marketing and management fee 4 314 396 –
9 269 11 590 15 115
3. Impairment of assets
Impairment of property, plant and equipment
Mining plant and equipment – – 55 096
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:
30/09/16 30/09/15 31/03/16
Unaudited Unaudited Audited
Discount rate 15,50% 13,42% 15,72%
Diamond price per carat US$1 094 – US$1 690 US$984 – US$1 355 US$983 – US$1 503
Forecasted ZAR/US$ exchange rate R14,25/US$ – R14,76/US$ R13,29/US$ – R14,02/US$ R14,75/US$ – R15,01/US$
The South African businesses consist of a
number of CGUs that are represented by mining
areas operated by the Group. Baken is a separate
CGU that forms part of the South African
reporting segment. The recoverable value for
this CGU was derived from the value-in-use
calculations performed, which were in excess
of the fair value less costs to sell. The
impairment charge and recoverable amount
relating to this CGU, as at 31 March 2016,
are outlined below. No additional impairment
was recognised at 30 September 2016.
31/03/16
Audited
Baken Total
R'000 R'000
Carrying value pre-impairment 96 601 96 601
Recoverable amount (41 505) (41 505)
Impairment loss recognised 55 096 55 096
For the year ended 31 March 2016, an impairment
charge of R55,1 million was recognised.
30/09/16 30/09/15 31/03/16
Unaudited Unaudited Audited
R'000 R'000 R'000
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 R23,7 million
(31/03/16: R24,0 million; 30/09/15: R11,2 million)
is included below.
Angolan joint ventures
Balance at beginning of period 120 650 119 450 119 450
Share of income from joint ventures (23 620) (11 244) (24 023)
Profit before income tax (23 620) (11 244) (24 023)
Taxation – – –
Foreign exchange (profits)/losses (6 778) 17 800 25 223
Closing balance at end of period 90 252 126 006 120 650
5. Reconciliation of headline earnings
Continuing operations
Profit/(loss) for the period 9 988 (43 241) (123 788)
- Impairment of assets – – 55 096
- Taxation impact – – (15 427)
- Foreign currency differences on repayment
of long-term receivables from foreign operations
reclassified to profit or loss (606) – –
- Taxation impact 170 – –
Headline earnings/(loss) 9 552 (43 241) (84 119)
Discontinued operations
Profit for the period 23 620 11 244 24 023
Headline earnings 23 620 11 244 24 023
6. Investment in associates
- Loan to associate: Somiluana – Sociedade Mineira, S.A. 47 611 57 767 52 912
Balance at beginning of period 52 912 59 276 59 276
Repayment of loan amount (1 935) (9 833) (18 386)
Foreign exchange differences (3 366) 8 324 12 022
The loan to Somiluana represents a portion of
the exploration costs previously incurred by
the Group which is recoverable from the 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. 28 028 24 071 –
Balance at beginning of period – 13 898 13 898
Share of results of associated company 34 195 7 095 (15 835)
Dividends paid (4 572) – –
Foreign exchange differences (1 595) 3 078 1 937
The 33% investment in Somiluana is accounted
for as an investment in an associate under the
equity method. During 2016, Somiluana recorded
losses to the extent that the Group's share of
these losses exceeded its investment in
Somiluana. Accordingly, the Group discontinued
the recognition of its share of further losses
after the investment was reduced to zero, as
the Group has not provided any guarantees to
Somiluana creditors.
- Loan to associate: West Coast Resources (Pty) Ltd 28 160 5 200 5 200
Balance at beginning of period 5 200 5 200 5 200
Loan advances during the period 20 000 – –
Capitalised interest 2 960 – –
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: West Coast Resources
(Pty) Ltd 152 625 166 462 161 665
Balance at beginning of period 161 665 175 261 175 261
Share of results of associated company (9 040) (8 799) (13 596)
The 40% investment in West Coast Resources (Pty) Ltd
is accounted for as an investment in an associate
under the equity method.
256 424 253 500 219 777
7. Inventories
Diamonds 124 289 126 834 105 322
Consumables 4 789 4 465 5 675
129 078 131 299 110 997
8. Capital commitments
(including amounts authorised, but not yet contracted) 20 143 28 434 43 999
These commitments will be financed from the Group's
own resources or with borrowed funds.
9. Reclassification of costs previously included under
"Cost of goods sold"
Previously a percentage of head office costs was
included under "Cost of goods sold". The Company
reviewed its cost allocations and reporting
requirements during 2016 and decided that it would
be more accurate and transparent to include all
head office costs under "Selling and administration
costs" in order to more appropriately reflect the
way in which economic benefits are derived from
these costs.
The impact on the income statement for the six
months ending 30 September 2015 is as follows:
Cost of goods sold
As reported - 299 433 -
Head office costs previously included under
"Cost of goods sold" - (6 113) -
Reclassified - 293 320 -
Selling and administration costs
As reported - 41 637 -
Head office costs previously included under
"Cost of goods sold" - 6 113 -
Reclassified - 47 750 -
There was no impact on the statement of financial
position or the statements of comprehensive income
as a result of the reclassification of these costs.
10. 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.
11. Segment information
Operating segments
CONTINUING DISCONTINUED
Period ended 30 September 2016 South Africa Angola Total Angola
Carats sold 18 192 - 18 192 -
R'000 R'000 R'000 R'000
Revenue 275 319 – 275 319 –
Cost of goods sold (261 440) – (261 440) –
Gross profit 13 879 – 13 879 –
Share of results of associated companies (9 040) 34 195 25 155 –
Royalties (1 309) – (1 309) –
Selling and administration costs (36 124) (12 443) (48 567) –
Mining (loss)/profit (32 595) 21 732 (10 863) –
Exploration costs (1 571) – (1 571) –
Other gains – net 9 448 (179) 9 269 –
Profit for the period from discontinued
operations – – – 23 620
Finance income 13 973 – 13 973 –
Finance costs (2 695) – (2 695) –
Impairment of assets – – – –
(Loss)/profit before income tax (13 440) 21 553 8 906 23 620
Depreciation included in the above (17 240) (4) (17 244) –
Net assets/(liabilities) 546 633 114 026 660 659 (90 252)
Capital expenditure 15 294 – 15 294 –
Net asset value per share (cents) 517 132 625 (85)
CONTINUING DISCONTINUED
Period 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 (293 320) – (293 320) –
Gross (loss) (24 660) – (24 660) –
Share of results of associated companies (8 799) 7 095 (1 704) –
Royalties (1 335) – (1 335) –
Selling and administration costs (42 125) (5 625) (47 750) –
Mining (loss) (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) –
Impairment of assets – – – –
(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
Year ended 31 March 2016 South Africa Angola Total Angola
Carats sold 48 708 - 48 708 -
R'000 R'000 R'000 R'000
Revenue 671 374 – 671 374 –
Cost of goods sold (678 158) – (678 158) –
Gross (loss) (6 784) – (6 784) –
Share of results of associated companies (13 596) (15 835) (29 431) –
Royalties (3 248) – (3 248) –
Selling and administration costs (73 559) (18 983) (92 542) –
Mining (loss) (97 187) (34 818) (132 005) –
Exploration costs (2 048) – (2 048) –
Other gains – net 16 724 (1 609) 15 115 –
Profit for the year from discontinued
operations – – – 24 023
Finance income 23 211 – 23 211 –
Finance costs (4 680) – (4 680) –
Impairment of assets (55 096) – (55 096) –
(Loss)/profit before income tax (119 076) (36 427) (155 503) 24 023
Depreciation included in the above (67 953) (15) (67 968) –
Net assets/(liabilities) 560 737 94 975 655 712 (120 616)
Capital expenditure 56 759 – 56 759 –
Net asset value per share (cents) 531 89 620 (114)
During the previous financial year, the Group changed the measurement method used to determine reported segment profit
or loss. This was done by including in the Angola segment some costs paid in South Africa in relation to activities in
Angola. During the previous year, this resulted in the loss for Angola being (31/03/16: R7 533 701; 30/09/15: R3 823 453)
higher than it would have been had the measurement methods not changed. As this does not amount to a change in the
composition of the segments, the comparative figures have not been reclassified to account for this change.
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 R74,5 million (31/03/16: Rnil;
30/09/15: R35,7 million).
12. Mineral resources and mineral reserves
The Independent Expert Report: Valuation of Mineral Assets, as compiled by Snowden Mining Industry Consultants (Pty)
Limited and published on the Company website on 23 September 2016 as part of the Combined Offer Circular distributed to
shareholders on 23 September 2016, is substantially in line with the Company's Mineral Resources and Reserves Statement
dated 31 December 2015. The only respect in which the Snowden Report, dated 31 July 2016, differs materially from
the Company's Mineral Resources and Reserves Statement is that it reports a 43% reduction in the carats and gravel
volume for Baken Mine's probable reserves due to the ongoing depletion of the reserve through production activities
and as a result of changes in economic factors.
An updated Mineral Resources and Reserves Statement will be published in the 2017 Integrated Annual Report.
13. Contingent liabilities
There have been no material changes to contingent liabilities previously reported in the 2016 Integrated Annual Report.
14. 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.
15. Accounting policies
The condensed consolidated interim financial statements are prepared in accordance with International Financial
Reporting Standards, (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.
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.
16. Preparation of financial statements
The preparation of the condensed consolidated 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 2016 financial year (in brackets).
Sales revenue from the South African operations increased by 2,5% in Rand terms from R268,7 million to R275,3 million.
The average US$ diamond price increased by 10,4%, mainly as a result of firmer global prices and increased demand.
Sales were positively affected by a 15,4% weakening of the Rand against the US$, partly offset by a 19,6% decline
in carats sold.
South African production decreased by 20,6% to 18 997 carats (September 2015: 23 940 carats) in line with a new
operating model which was introduced at the Lower Orange River operations in February 2016 in order to extend
the viable life-of-mine of these operations for as long as possible. These changes have resulted in reduced
overburden stripping and less gravel mined.
The cost of goods sold decreased to R261,4 million (September 2015: R293,3 million), mainly due to lower labour,
fuel and maintenance costs, as well as depreciation.
Gross profit for the South African operations amounted to R13,9 million (September 2015: loss of R24,7 million).
The South African operations showed a loss before tax of R13,4 million (September 2015: loss of R56,6 million).
At West Coast Resources, in which Trans Hex holds a 40% stake, production amounted to 37 153 carats
(September 2015: 4 821 carats). Sales amounted to R78,4 million at an average price of US$176 per carat
(September 2015: sales of R7,2 million at an average price of US$170 per carat). The 40% equity accounted loss for
the period amounted to R9,0 million (September 2015: loss of R8,8 million).
In Angola, production at Somiluana Mine, in which Trans Hex holds a 33% stake, increased significantly to 91 033 carats
(September 2015: 67 981 carats) due to a 50,3% increase in average grade, partly offset by a 10,9% decrease in gravel
treated. Total sales amounted to US$32,5 million at an average price of US$477 per carat (September 2015: sales of
US$20,2 million at an average price of US$300 per carat). Repayments of US$250 000 (September 2015: US$ 750 000) were
made to Trans Hex against the outstanding investment amount and the Group received US$330 000 (September 2015: US$ nil)
in dividends.
Profit from the Angolan continuing operations amounted to R21,6 million (September 2015: profit of R1,4 million),
consisting of Somiluana’s equity accounted profit of R34,2 million less Angolan head office costs of R12,6 million.
The Group reports an after-tax profit for the period from continuing operations of R8,9 million
(September 2015: loss of R43,8 million).
Profit from the discontinued Luarica and Fucauma operations amounted to R23,6 million (September 2015: R11,2 million).
The Group therefore reports a profit for the period of R32,5 million (September 2015: loss of R32,5 million).
Cash and cash equivalents at the end of the reporting period amounted to R322,4 million (September 2015: R347,5 million).
OPERATING PERFORMANCE
Detailed project information
Period ended 30 September 2016 Period ended 30 September 2015
Average Average
price per price per
Detailed project Average Average carat Average Average carat
information grade per Carats carats per achieved grade per Carats carats per achieved
(unaudited) 100 m3 produced stone (US$) 100 m3 produced stone (US$)
SOUTH AFRICA
- Baken 2,30 13 108 1,34 1 043 1,11 18 566 1,37 923
- Bloeddrif 0,51 1 111 2,51 2 196 0,85 2 340 2,02 1 462
- Shallow water – 4 778 0,30 585 – 3 033 0,33 479
Total South Africa 1,80 18 997 0,73 1 028 1,07 23 940 0,99 932
West Coast Resources 34,47 37 153 0,28 176 297,46 4 821 0,38 170
Angola
- Somiluana 57,50 91 033 0,63 477 38,26 67 981 0,56 300
Note: Average grade in South Africa is calculated excluding shallow water production.
Lower Orange River operations
Stripping of overburden in the main channel at Baken continued during the period. The average grade increased
significantly from 1,11 carats/100 m3 in September 2015 to 2,30 carats/100 m3 in September 2016 mainly due to the
re-evaluation of ore accounting policies that resulted in positive grade adjustments. The average price of Baken
stones increased in line with the firmer market from US$923 per carat in September 2015 to US$1 043 per carat in
September 2016.
Results at Bloeddrif Mine were again negatively affected by the stripping of lower grade suspended gravel which
resulted in a decrease in average grade from 0,85 carats/100 m3 in September 2015 to 0,51 carats/100 m3 in
September 2016 and in carats produced from 2 340 carats in September 2015 to 1 111 carats in September 2016.
The lower grade suspended gravel was mined to gain access to higher grade basal gravel which will be mined and
treated in the second half of the 2017 financial year.
West Coast Resources operations
Plant construction and improvements are continuing in order to further expand the operational footprint.
During the period, mining activities produced 36 003 carats at an average grade of 33,48 carats/100 m3. In addition,
the final recovery plant treated final recovery tailings and produced 1 150 carats (September 2015: 4 821 carats).
Angolan operations
During the period, operations at Somiluana Mine remained focused on higher grade areas which have resulted in a
substantial increase in carat production and revenue.
OUTLOOK
Lower Orange River operations
Stripping operations in the Baken central channel will continue until the economically viable gravel in the main
channel has been exhausted, which is expected to be towards the end of the 2018 financial year.
Performance at Bloeddrif Mine is expected to improve with the mining of higher grade gravel from the
exposed basal gravel.
South African production for the 2017 financial year is expected to be in the order of 41 000 carats, compared
to 2016 actual production of 48 435 carats.
West Coast Resources operations
Ongoing drilling and prospecting will continue to target high priority areas that may identify additional
resources for mining.
Stripping operations have commenced in the Langklip area, which is projected to yield gravel by November 2016.
Mining activities will remain focused here, as well as on other sections of the Koingnaas area.
Production for the 2017 financial year is expected to be in the order of 80 000 carats, compared to 2016 actual
production of 24 930 carats.
Angolan operations
Mining operations at Somiluana Mine will continue on the east bank of the Luana River and prospecting activities
will remain focused on new areas to the north-east, directing operations to areas of interest.
Self-funded new equipment purchases are planned in order to increase the Mine’s production footprint. The equipment
will enable the economical mining of lower grade areas.
Production results and geological work through drilling and bulk sampling indicate that carat production for the
2017 financial year will surpass the 99 500 carats achieved in 2016.
Market
The second half of the 2016 calendar year started with a decline in demand, but the market recovered well in
September 2016 in both trading and manufacturing sectors. The US is currently entering its year-end holiday period,
further boosting polished sales.
Rough demand is expected to remain firm during the remainder of the financial year.
DIVIDEND
The Board has resolved not to declare an interim dividend.
COMBINED OFFER CIRCULAR
Shareholders are reminded that the Company is currently in an Offer period as announced on SENS on Friday,
23 September 2016. A Combined Offer Circular was sent to shareholders on Friday, 23 September 2016 and the Offer
closes at 12:00 on Friday, 25 November 2016.
All announcements and documents relating to the Offer are available on the Company's website at www.transhex.co.za.
By order of the Board
BR van Rooyen L Delport
Chairman Chief Executive Officer
Parow
31 October 2016
REGISTERED OFFICE
405 Voortrekker Road, Parow 7500
PO Box 723, Parow 7499
JSE SPONSOR
One Capital
TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd
DIRECTORATE
BR van Rooyen (Chairman), AR Martin, T de Bruyn, BP Lekubo, LC van Schalkwyk, QJ George, MVZ Wentzel,
RM Tait (Alternate), PG Viljoen (Alternate), L Delport (Chief Executive Officer), IP Hestermann (Financial Director),
GM van Heerden (Company Secretary)
Date: 02/11/2016 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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