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Trans Hex, DBCM Amend Namaqualand Mines Sale Agreement

Jun 9, 2014 6:26 AM   By Deena Taylor
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RAPAPORT... Trans Hex reported that its 40-percent-owned subsidiary, Emerald Panther Investments (EPI) 78  Ltd.,  signed a sale agreement amendment with De Beers Consolidated Mines (DBCM) to acquire DBCM's Namaqualand mines.

The amendment provides for the creation of a special purpose vehicle, which will house the state's 20 percent interest in the project and in EPI.

Once the sale agreement is completed, Trans Hex will own a combined 60 percent stake in the project with the state. Asset management companies RECM and Calibre Ltd.,  will own a 27.2 percent stake in EPI and Dinoka Investment Holdings will own an 8.8 percent stake, while the Namaqualand Diamond Fund Trust (NDFT), which represents the interests of various communities in Namaqualand region, will hold a 4 percent stake.

“The acquisition by EPI of Namaqualand Mines (NM) will increase the life of mine of Trans Hex’s South African operations to 14 years. In addition, commencement of operations at NM will provide much needed employment in the region,” said Llewellyn Delport, the CEO of Trans Hex.

DBCM initially agreed to sell its Namaqualand Mines to Trans Hex in a transaction valued at $21.2 million (ZAR 225 million) in May 2011. The deal has since been delayed subject to the fulfillment of a number of conditions and precedents, including all necessary statutory and regulatory approvals.

The company expects to close the deal on October 31, but noted that the implementation of the sale agreement is still conditional on the approved of revised loan terms by the Industrial Corporation of South Africa (IDC), which previously approved $17.9 million (ZAR 189 million) for the project. The transaction is also conditional on DBCM's signing the mining and prospecting rights acquired pursuant to the deal into EPI's name.

Meanwhile, Trans Hex reported that revenue for fiscal 2014, which ended on March 31, declined 7.4 percent to $65.7 million (ZAR 695.7 million) as the amount of carats sold fell 16 percent. The average price per carat decreased 7 percent due to less special stones sold. However, the decline in revenue was somewhat offset by a 14 percent weakening of the rand against the dollar. Profit dropped 73 percent to $2.1 million (ZAR 22.7 million).

The company's South African production decreased 22 percent to 52,081 carats during the year. This was the result of a 15 percent decrease in volume treated due to the termination of joint-venture contracts, coupled with a 21-day strike over wages by members of the National Union of Mineworkers. Production was also impacted by a 12 percent drop in ore grade due during the first six months of the year.

South African operations generated a loss before tax of $840,700 (ZAR 8.9 million) compared with a profit of $8.3 million (ZAR 88.2 million) in the same period one year ago.

Meanwhile, production at the Somiluana mine in Angola rose 74 percent to 72,041 carats, while sales more than doubled to $32.4 million. Profit from the mine reached  $10.5 million compared to a loss of $3 million one year ago. 
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Tags: De Beers Consolidated Mines, Deena Taylor, EPI, Namaqualand Mines, Trans Hex
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