[miningmx.com] – SHARES in Trans Hex Group, the diamond producer, tell their own story. Virtually unchanged for a year, the company remains hamstrung by red tape and bureaucracy as it attempts to conclude the purchase of Namaqualand Mines, a process CEO Llewellyn Delport described as “torturous”.
“The only obstacle preventing the deal from going through is the resolution of the state’s 20% stake in the asset,” said Delport at the presentation of Trans Hex’s full-year figures in Johannesburg today.
It’s unclear whether the South African government intends to sell this stake in Namaqualand Mines or have it distributed to the local Namaqualand community. Tom Tweedy, spokesperson for De Beers, said it was the governments call, but he’s hopeful of a resolution in the third quarter.
Assuming there is a decision by then, it will mean Trans Hex will have waited for the better part of three years for the transaction to close. In its final form, Trans Hex will pay R84m for a 50% share of the special purpose vehicle Emerald Panther Investments that will, in turn, own 100% of Namaqualand Mines.
Delport doesn’t help his company’s cause, however, by being the most reticent of CEOs. He declines to comment on the benefit to the Trans Hex business of owning a stake in Namaqualand Mines. He does say, however, he’s as frustrated as everyone else with lack of progress. “It’s a torturous process transferring the rights,” he says.
The company reported an R85m profit for the 2013 financial year, heavily down on the previous year’s R208m profit which included recoupment of an impairment related to two Angolan mines from which it had divested. On a like-for-like basis – a comparison of profits from continuing operations – the 2013 profit declined a somewhat more gentle R15m.
Following the draw-down on cash for Namaqualand Mines, Trans Hex will still have about R300m in cash. Given that the company’s mainstay South African mines have a life of mine of between four and seven years, there’s pressure to find fresh resources.
Delport says the company remains vigilant in respect of seizing on opportunities near to where it operates. This would presumably include Angola even though the company has withdrawn from the Luarica and Fucauma assets leaving it with a single asset in the southern Africa country, Somiluana.
Delport declined to provide details on the kind of asset in which Trans Hex would be interested in the future. In the shorter term, however, it would seem as if the benefits from Namaqualand Mines will only come into the second half of Trans Hex’s current financial year.
