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Trans Hex Expects Rough Diamond Prices to Stabilize

Jun 2, 2011 4:11 AM   By Avi Krawitz
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RAPAPORT... Trans Hex said it expects rough diamond prices to stabilize, despite the record levels it has recently achieved for its production.

“Prices for Trans Hex production currently stand at all-time highs, buoyed by restocking of the diamond pipeline and good demand for polished diamonds, most notably from China and India,” the South African diamond mining company stated. “The strength in the market seems likely to continue given demand levels, but pricing levels are anticipated to show greater stability in the longer-term after a sustained period of increases.''

Despite the high prices, Trans Hex reported that revenues fell 8 percent to $95.6 million (ZAR 658 million) in the fiscal year that ended on March 31, 2011. The decline came primarily as a result of grade under-performance, the decision to temporarily suspend stripping at the Baken operations and the appreciation of the South African rand against the dollar.

The company posted a loss of $6.6 million (ZAR 45.1 million) for the year, compared with a profit of $3.1 million (ZAR 21.6 million) in fiscal 2010. Trans Hex warned of the loss earlier in the week ahead of today's published results.

Production in South Africa fell 25 percent to 69,508 carats due to declines at Trans Hex’s Baken and Richtersveld operations in South Africa. The average price of South African production sold rose 21 percent to $1,162 per carat. Production is projected to ramp up to 86,000 carats in fiscal 2012 and to be boosted pending the acquisition of De Beers Namaqualand operations.

Production in Angola increased 35 percent to 27,662 carats and is expected to rise to 42,000 carats in fiscal 2012. The average price achieved for the Angola output was $351 per carat during the year.

“Demand for rough diamonds remained strong throughout the financial period, which saw a continued strengthening of prices,” the company explained.

Tags: Avi Krawitz, Baken mine, Richtersveld, Rough Diamonds, Trans Hex
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