[miningmx.com] — SHARES in diamond miner Trans Hex hit gravel on Monday, plummeting almost 9% following an unfavourable interim trading update.
Trans Hex was trading at 330c at about noon on thin volumes, down 8.59% for the day. It earlier said it was expecting a loss of R103m for the six months to end-September, compared to a R9m profit in the previous corresponding period.
The trading update followed a warning in August that carat production at Trans Hex’s South African operations was significantly below target, primarily as a result of grade under-performance at Baken Mine, with an average of 1.30 carats/100m3 against an estimated 1.75 carats/100m3.
Trans Hex elaborated on the output shortfall in Monday’s trading statement, saying production at its South African projects during the reviewed period were down 29% to 32,288 carats.
It has also burnt 28% of its cash reserves, reporting a net cash position of R177m (R247m in 2009).
Trans Hex’s main South African projects are situated along the lower Orange River in the Northern Cape. In recent years it has either sold off or shut down various operations, such as the Saxendrift mine on the Middle Orange and its marine diamond mining activities.
Its remaining projects are all either conventional alluvial mines or large-scale open pit mining on alluvial deposits, as at Baken in the Northern Cape.
Trans Hex is due to release its interim figures on Thursday.
The market would also be looking for an update on its Angolan operations.
In Monday’s trading update, it said the Luana project achieved sales of $11.3m – realising $2.3m in revenue for Trans Hex.
The share is trading close to its 12-month low figure of around 320c in September, compared to 500c/share achieved in January.
Imara SP Reid mining analyst Percy Thanduka said one shouldn’t read too much into the Trans Hex share price, which trades on low liquidity levels.
“It seems as if they’ve hit gravel somewhere, but one will only be able to make a proper assessment when the numbers (results statement) come out.’
In June, investment group Remgro announced the unbundling of its investment in Trans Hex – equating to 28.49% of the entire issued share capital of Trans Hex.
