Diamond producer Trans Hex has finally pulled the plug on its ageing Baken mine in the Northern Cape and intends placing it on care and maintenance by the beginning of November.
The company announced on Friday it had notified the National Union of Mineworkers that it intended starting a Section 189 consultation process over retrenchments at the mine which employs 332 workers.
The Trans Hex statement said Baken had been in operation for more than 45 years and that, “the company has made every effort to sustain operations at Baken. However, the mine’s low carat production and subsequent financial losses are now considered to be unsustainable.
“Baken incurred a loss of R35.8m in the 2017 financial year and an approximate loss of R46.5m for the period April – July 2017. In terms of the notice it is envisaged that operations at Baken will continue during the consultation process and that the mine will then be placed on care and maintenance effective from November 1, 2017. “
In February last year, Trans Hex said it would retrench 125 employees at the Baken and Bloeddrif mines in an effort to extend the operating lives of those mines. The company also changed the operating regime from a four-shift system operating seven days a week to a three-shift system working a five-and-a-half day week.
Trans Hex reported an overall loss of R182.6m for the year to end-March 2017 after losing R100.7m in the prior financial year.
An impairment charge of R27.4m was taken against both operations in the year to end-March 2017 following a R55.1m impairment charge realised in the 2016 financial year. The Bloeddrif mine was put under care and maintenance in May this year.
Production from Baken and Bloeddrift was estimated at around 37,000 carats for the current financial year to end-March 2018 in a company presentation given in June.
Trans Hex will now be dependent on its West Coast Resources operations which are forecast to produce 150,000 carats in the year to March 2018 and its Somiluana mine in Angola which is forecast to produce around 120,000 carats over the same period.
In his outlook for the 2018 financial year CEO Llewellyn Delport commented “the group is actively evaluating potential new diamond properties and pursing opportunities to expand its diamond-marketing activities. “
In August last year a consortium consisting of Christo Wiese’s Magenta Cream and Metcap 14 Proprietary Limited and Piet Viljoen’s RAC Investment Holdings took a majority shareholding in Trans Hex and then bid for outright control so as to be able to delist the company.
The offer was made at 394c a share but was largely shunned by the minorities. The results of the offer announced on November 28 were that only 4.46% of the minority shareholders had accepted it bringing the total held by the Wiese/Viljoen consortium to 76.74%.
Trans Hex shares traded as high as 550c in January but have since slumped to current levels around 350c.