Llewellyn Delport, CEO Trans Hex
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Trans Hex pull the plug on KCM jv
Allan Seccombe
Posted: Wed, 16 Jul 2008

[miningmx.com] -- DIAMOND group Trans Hex has pulled the plug on a potential joint venture with newly listed Kimberley Consolidated Mines (KCM) at the Carter Block concessions in South Africa, the company said in an update on its diamond sales.

Trans Hex CEO Llewellyn Delport has said the company has adopted a far more cautious approach to new business opportunities.

Trans Hex conducted a due diligence into a joint venture with KCM at the Carter Block concessions in the Northern Cape, where exploration is underway.

In May, Trans Hex agreed to investigate whether it would enter a joint venture with KCM by spending R30m over two years to earn 51% of KCM's holdings in the Carter Block concessions. The one prospect on interest is called Shone and is close to De Beers' Finsch mine.

“Trans Hex has decided not to pursue a potential joint venture with KCM, as a review of available and new exploration and mineral chemical data, has indicated that the project’s potential was unlikely to meet the Group’s exploration criteria and expectations,” the company said.

Trans Hex executive George Zacharias said the company had weighed up the JV against other business opportunities Trans Hex was investigating and decided the R30m could be better spent elsewhere like Angola and other new business projects.

"From a priority point of view we didn't think it was worth spending that money there," he told Miningmx.

Alt-X-listed KCM's shares dived nine percent to R0.50, a third of its high of R1.50. The company listed in May. Trans Hex shares were untraded at R9.10.

KCM told the market on 1 July analyses of core samples of the Shone kimberlite pipe at KCM’s Carter Block between Kimberley and Postmasburg were "optimistic in terms of diamond bearing potential".

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The Carter Block prospecting right is located adjacent to De Beers' Finsch Mine, and KCM’s selling point has been that several kimberlite dykes are supposedly "physically linked" to the Finsch pipe and that two alluvial exploration targets are apparently "genetically derived" from the Finsch kimberlite.

KCM CEO Hein le Riche said at the time the results of the indicator mineral chemistry of samples of Shone kimberlite were significant, and that the recovery of 16 micro diamonds confirmed the presence of diamonds in the Shone kimberlite.

On Wednesday, le Riche told Miningmx his company believed in the project and were not sad to now have 100% unfettered access to it.

"There are no hard feelings. We are quite happy to have the full benefits of this deposit flow through to our shareholders," he said.

KCM will take a 500 tonne bulk sample to its washing plant in Kimberley where it is treating tailings and by the end of August know whether it will relocate the plant closer to Shone and what the grade and quality of the deposit is, he said, reiterating that initial work showed it to be possibly superior to Finsch.

"If we thought it was like Finsch we would have stuck it out. There is certainly a difference of opinion on the technical data. Kimberlites are so difficult. It didn't meet our expectations or criteria," Zacharias said. "Time will tell who is right."

Meanwhile, Trans Hex said it had sold 11,823 carats in its July sale, generating revenue of $17m. The average price per carat was $1,426 and 45 stones of 10 carats and more were sold.

“The 2008 calendar year has seen a significant strengthening in rough diamond prices in all categories but particularly in the large high quality stones which constitute the bulk of the Trans Hex production,” the company said.