[miningmx.com] – FUND management firm RAC, a joint venture between RECM and Calibre Ltd, has lifted its stake in Trans Hex to 24.99% in order protect its interests ahead of the R60m purchase of Namaqualand Mines (NM).
The aggregate consideration paid in respect of the aggregated acquisitions of the 24.99% of Trans Hex is a cash amount of R93.7m, RAC said. RAC bought the shares – equal to about 10% of Trans Hex’s issued shares – off market.
RAC therefore has bought its total stake in Trans Hex at a slight premium to the firm’s current market value of about R360m which puts a 25% slice at R90,1m.
RAC previously owned just under 15% of Trans Hex which mines alluvial diamonds in Richtersveld and the Lower Orange River regions of the Northern Cape. It also has an interest in Somiluana, a mine in Angola.
“RAC and Trans Hex are partners on the possible Namaqualand Mines transaction,” said RAC in a statement to the Johannesburg Stock Exchange (JSE).
“Given RAC’s significant commitment to this transaction, it was deemed strategically important to increase the company’s stake in Trans Hex to more than 20%,” it said.
Shares in Trans Hex were 3.4% weaker on the JSE. The share is 3.7% weaker on a 12-month return basis.
In October 2013, Trans Hex announced it had finalised the purchase of NM from De Beers, a deal that was more than three years in the making and sees the South African government retain its 20% stake in NM. The involvement of the government in the transaction had been a sticking point previously.
In terms of the transaction, a loan of R189m has been secured through the Industrial Development Corporation (IDC) which would be used for the initial capital and operating costs of NM which has been in mothballs.
In addition, a “rehabilitation insurance instrument” totalling R166m had also been arranged. The liability of rehabilitating NM has been another sticking point, especially as it related to government, has been another contentious aspect of the NM deal.
RECM was founded by Piet Viljoen who said a year ago that Trans Hex was “a good investment”.
“There is hard net asset value of R5/share in there, cash of R4/share, and free cash flow equal to 30c to 40c/share. It’s a small company, not recognised, but we’re very happy,’ he said. “At some point in time, it will be recognised”.
Trans Hex recently posted a one-fifth increase in sales to “positive momentum” in the rough diamond market.
“These sales reflect continued positive momentum in the rough diamond market and strong demand for Trans Hex’s production,” the company said in its interim trading statement which represents the first five months of the year.
The sales included some 1,734 high-quality carats from the mining right held by Pioneer Minerals and “… one exceptional pink stone of 3,2 carats from Baken Mine which sold for $54,750 per carat. A 132-carat stone, also from Baken Mine, realised $1,28m.
Trans Hex is in the process of selling Pioneer Minerals, a transaction valued at R35m that will, once completed, signal the end of its seven-year withdrawal from the Middle Orange River region in the Northern Cape province.
