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TRANS HEX GROUP LIMITED - Unaudited Condensed Consolidated Interim Financial Statements for the six months ended 30 September 2017

Release Date: 09/11/2017 07:05
Code(s): TSX     PDF:  
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Unaudited Condensed Consolidated Interim Financial Statements for the six months ended 30 September 2017

TRANS HEX GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1963/007579/06
Share code: TSX
ISIN: ZAE000018552
("Trans Hex" or the "Group" or the "Company")


UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017


HEADLINES
- Group net loss amounted to R199,2 million (September 2016: profit of R32,5 million).
- Sales revenue from the wholly owned South African operations decreased by 45,6% to R149,7 million (September 2016: R275,3 million). 
- Cost of goods sold amounted to R340,7 million (2016: R261,4 million), including retrenchment costs of R111,4 million at the 
  Lower Orange River operations. 
- Gross loss from South African land operations amounted to R191,0 million (September 2016: profit of R13,9 million).
- Equity accounting loss from West Coast Resources (Pty) Ltd amounted to R13,1 million (September 2016: loss of R9,0 million). 
- Equity accounting profit from Somiluana Mine in Angola amounted to R18,7 million (September 2016: profit of R34,2 million).
- The Group's net cash position at the end of the period was R41,3 million (September 2016: R322,4 million).
- Loss per share amounted to 188,4 cents (September 2016: earnings of 31,8 cents) and headline loss per share amounted to 
  195,1 cents (September 2016: earnings of 31,4 cents).
- Net asset value per share amounted to 142,0 cents (September 2016: 540,0 cents).


CONDENSED CONSOLIDATED INCOME STATEMENT
                                                                                             
                                                             30/09/17            30/09/16            31/03/17
                                                            Unaudited           Unaudited             Audited
                                            Notes               R'000               R'000               R'000

Continuing operations

Sales revenue                                                 149 729             275 319             540 183 
Cost of goods sold                                           (340 724)           (261 440)           (631 655)
Gross (loss)/profit                                          (190 995)             13 879             (91 472)
Share of results and impairment 
of associated companies                         1               5 629              25 155             (18 959)
Royalties                                                        (695)             (1 309)             (2 669)
Selling and administration costs                              (40 167)            (48 588)            (88 802)
Mining loss                                                  (226 228)            (10 863)           (201 902)
Exploration costs                                              (2 061)             (1 571)             (2 947)
Other gains – net                               2              19 575               9 269              18 775
Finance income                                                 12 658              13 973              29 222 
Finance costs                                                  (3 975)             (2 695)             (5 391)
Impairment                                      3                   –                   –             (27 417)
(Loss)/profit before income tax                              (200 031)              8 113            (189 660)
Income tax                                                         (1)                793             (21 869)
(Loss)/profit for the period from 
continuing operations                                        (200 032)              8 906            (211 529)

Discontinued operations
Profit for the period from discontinued 
operations                                      4                 868              23 620              28 912 
(Loss)/profit for the period                                 (199 164)             32 526            (182 617)

Attributable to:
Continuing operations                                        (200 032)              8 906            (211 529)
 - Owners of the parent                                      (200 032)              9 988            (212 398)
 - Non-controlling interest                                         –              (1 082)                869 
Discontinued operations
 - Owners of the parent                                           868              23 620              28 912 
                                                             (199 164)             32 526            (182 617)

(Loss)/earnings per share – basic and 
diluted (cents)
 - Continuing operations                                       (189,2)                9,5              (200,9)
 - Discontinued operations                                        0,8                22,3                27,4 
Total                                                          (188,4)               31,8              (173,5)

Shares in issue adjusted for treasury 
shares ('000)                                                 105 699             105 699             105 699 

Headline (loss)/earnings                        5
 - Continuing operations                                     (207 042)              9 552            (150 113)
 - Discontinued operations                                        868              23 620              28 912 
Total                                                        (206 174)             33 172            (121 201)

Headline (loss)/earnings per share (cents)
 - Continuing operations                                       (195,9)                9,1              (142,0)
 - Discontinued operations                                        0,8                22,3                27,4 
Total                                                          (195,1)               31,4              (114,6)
 
Average ZAR/US$ exchange rate                                   12,98               14,72               14,02 


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                             30/09/17            30/09/16            31/03/17
                                                            Unaudited           Unaudited             Audited
                                                                R'000               R'000               R'000

(Loss)/profit for the period                                 (199 164)             32 526            (182 617)

Other comprehensive (loss)/profit net of tax:                  (7 381)              2 785               3 896
Items that may be subsequently reclassified to profit 
or loss
Translation differences on foreign subsidiaries before 
and after tax                                                  (5 079)              3 391               5 108 
Recycling of foreign currency differences on repayment 
of long-term receivables from foreign operations               (2 302)               (606)             (1 212)

Total comprehensive (loss)/income for the period             (206 545)             35 311            (178 721)

Attributable to:
Continuing operations                                        (207 413)             11 691            (207 633)
 - Owners of the parent                                      (207 413)             12 773            (208 502)
 - Non-controlling interest                                         –              (1 082)                869 
Discontinued operations
 - Owners of the parent                                           868              23 620              28 912 
                                                             (206 545)             35 311            (178 721)

 
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                             30/09/17            30/09/16            31/03/17
                                                            Unaudited           Unaudited             Audited
                                            Notes               R'000               R'000               R'000

ASSETS 

Non-current assets                                            362 691             427 015             316 064 
Property, plant and equipment                                  49 881              81 312              51 439 
Investment in associates                        6             241 709             256 424             195 822 
Investments held by environmental trust                        68 101              63 539              65 803 
Other financial assets                                          3 000               3 000               3 000 
Deferred income tax assets                                          –              22 740                   - 

Current assets                                                201 613             472 624             364 705 
Inventories                                     7              94 652             129 078              59 276 
Trade and other receivables                                    65 645              21 158              80 026 
Current income tax                                                  5                   –                   3 
Cash and cash equivalents                                      41 311             322 388             225 400 

Total assets                                                  564 304             899 639             680 769 

EQUITY AND LIABILITIES

Capital and reserves                                          149 830             572 358             356 375 

Non-controlling interest                                            –              (1 951)                  - 

Non-current liabilities
Provisions                                                    134 220             116 230             119 464 

Current liabilities                                           280 254             213 002             204 930 
Borrowings                                      8              32 000                   -                   - 
Trade and other payables                                      166 735             122 674             123 391 
Interest in joint ventures                      4              81 519              90 252              81 539 
Current income tax liabilities                                      –                  76                   - 

Total equity and liabilities                                  564 304             899 639             680 769 

Net asset value per share (cents)                                 142                 540                 337 
 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                             30/09/17            30/09/16            31/03/17
                                                            Unaudited           Unaudited             Audited
                                                                R'000               R'000               R'000

Balance at 1 April                                            356 375             535 096             535 096 
Total comprehensive (loss)/income for the period             (206 545)             35 311            (178 721)
Dividends paid                                                      –                   –                   -
Balance at end of period                                      149 830             570 407             356 375 
 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                                                             30/09/17            30/09/16            31/03/17
                                                            Unaudited           Unaudited             Audited
                                                                R'000               R'000               R'000

Cash utilised in operations                                  (211 971)            (12 391)           (120 788)
Movements in working capital                                   22 347                (899)             12 402 
Income tax received                                                 –                 471                 468 
Net cash utilised in operating activities                    (189 624)            (12 819)           (107 918)

Cash flows from investment activities                         (26 073)            (16 694)            (17 306)
Property, plant and equipment
 - Proceeds from disposal                                       4 708                   –                   - 
 - Replacement                                                 (2 943)            (14 416)            (32 147)
 - Additional                                                  (1 839)             (1 166)             (6 196)
Proceeds from repayment of loan to Trans Hex Angola                 –               1 935              18 886 
Loan to associate                                             (39 228)            (20 000)            (27 010)
Dividends received                                              4 347               4 572              11 594 
Interest received                                               8 882              12 381              17 567 

Cash flows from financing activities                           31 955                  (1)                 (3)
Interest paid                                                     (45)                 (1)                 (3)
Borrowings                                                     32 000                   –                   - 

Net decrease in cash and cash equivalents                    (183 742)            (31 111)           (125 227)
Cash and cash equivalents at beginning of period              225 400             353 499             353 499 
Effects of exchange rates on cash and cash equivalents           (347)             (1 597)             (2 872)
Cash and cash equivalents at end of period                     41 311             322 388             225 400


NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

                                                             30/09/17            30/09/16            31/03/17
                                                            Unaudited           Unaudited             Audited
                                                                R'000               R'000               R'000

1.  Share of results of associated companies
    Consists of the following categories:

     - Somiluana – Sociedade Mineira, S.A.                     18 743              34 195              52 296 
       The 33% investment in Somiluana is 
       accounted for as an investment in 
       an associate under the equity method. 

     - West Coast Resources (Pty) Ltd 
       The 40% investment in West Coast Resources 
       (Pty) Ltd is accounted for as an investment 
       in an associate under the equity method. 
       
       Included in the results for the year ended 
       31 March 2017 is the Group's share of an 
       impairment charge to mining rights, after tax, 
       of R43,4 million.
       
       Share of results and impairment of associate           (13 114)             (9 040)            (71 255)
       Share of results of associate                          (13 114)             (9 040)            (27 837)
       Impairment charge to mining rights, after tax                –                   –             (43 418)
                                                                5 629              25 155             (18 959)

2.  Other gains – net
    Other gains – net consist of the following categories:
     - Net foreign exchange gains                               7 446               4 955               8 944 
     - Commission on sale of diamonds                           7 421               4 314               9 831 
     - Profit on sale of assets                                 4 708                   –                   – 
                                                               19 575               9 269              18 775 

3.  Impairment of assets 
    Impairment of property, plant and equipment
    Mining plant and equipment                                      –                   –              27 417 

    During the previous financial year, the recoverable 
    amount of the mining areas, each considered a separate 
    cash-generating unit ("CGU"), was calculated based on 
    value-in-use calculations. The impairment loss was 
    limited to the fair value less costs to sell of the 
    individual assets comprising these CGUs. In assessing 
    the fair value less costs to sell of individual assets, 
    independent market-related valuations were obtained to 
    assess the price at which the assets included in each 
    CGU could be sold at in an orderly transaction between 
    market participants. The impairment recognised during 
    the previous year was calculated with reference to 
    these valuations. The valuation inputs used were these 
    market values and costs associated with the disposal 
    of these assets. Market values obtained were specific 
    to the assets of the entity and thus along with the 
    costs of disposal are considered unobservable inputs. 
    The fair value is thus classified as a Level 3 fair 
    value. The impairment charges and recoverable amounts 
    relating to these CGUs are outlined below:

                                                                                                      Audited
                                                                                                     31/03/17
                                                                Baken           Bloeddrif               Total
                                                                R'000               R'000               R'000 
    Carrying value pre-impairment                              34 876              37 337              72 213 
    Recoverable amount                                        (30 232)            (14 564)            (44 796)
    Impairment loss recognised                                  4 644              22 773              27 417 

    For the year ended 31 March 2017, an impairment charge 
    of R27,4 million was recognised. No additional 
    impairment was recognised at 30 September 2017.

                                                             
                          
                                                             30/09/17            30/09/16            31/03/17
                                                            Unaudited           Unaudited             Audited
                                                                R'000               R'000               R'000

4.  Discontinued operations
    On 5 October 2011, the Angolan Ministry of Geology, 
    Mines and Industry revoked the mining rights of the 
    Luarica and Fucauma joint ventures as no mining 
    activities had been performed at the sites for a 
    period of three years as a result of the projects 
    being placed under care and maintenance.

    The prescription of unclaimed debts of R0,9 million 
    (31/03/17: R28,9 million; 30/09/16: R23,7 million) 
    is included below.

    Angolan joint ventures
    Balance at beginning of period                             81 539             120 650             120 650  
    Share of income from joint ventures                          (868)            (23 620)            (28 912) 
    Profit before income tax                                     (868)            (23 620)            (28 912) 
    Taxation                                                        –                   –                   –  
    Foreign exchange losses/(profits)                             848              (6 778)            (10 199) 
    Closing balance at end of period                           81 519              90 252              81 539  

5.  Reconciliation of headline earnings

    Continuing operations
    (Loss)/profit for the period                             (200 032)              9 988            (212 398)
     - Impairment of assets                                         –                   –              27 417 
     - Taxation impact                                              –                   –              (7 677)
     - Foreign currency differences on repayment 
       of long-term receivables from foreign 
       operations recycled to profit or loss                   (2 302)               (606)             (1 212)
     - Taxation impact                                              –                 170                 339 
     - Impairment of assets acquired by associate                   –                   –              43 418 
     - Profit on sale of assets                                (4 708)                  –                   – 
     - Taxation impact                                              –                   –                   – 
    Headline (loss)/earnings                                 (207 042)              9 552            (150 113)

    Discontinued operations
    Profit for the period                                         868              23 620              28 912 
    Headline earnings                                             868              23 620              28 912
 

6.  Investment in associates

    - Loan to associate: Somiluana – Sociedade Mineira, S.A.   30 159              47 611              29 840 
      Balance at beginning of period                           29 840              52 912              52 912 
      Repayment of loan amount                                      –              (1 935)            (18 886)
      Foreign exchange differences                                319              (3 366)             (4 186)

      The loan to Somiluana represents a portion of the 
      exploration costs previously incurred by the Group 
      which is recoverable from the mining company. The 
      loan does not form part of the net investment in the 
      associate as settlement of the loan is considered 
      likely to occur in the foreseeable future.


    - Investment in associate: Somiluana – Sociedade 
      Mineira, S.A.                                            54 042              28 028              38 820
      Balance at beginning of period                           38 820                   –                   –
      Share of results of associated company                   18 743              34 195              52 296 
      Dividends paid                                           (4 347)             (4 572)            (11 594)
      Foreign exchange differences                                826              (1 595)             (1 882)

      The 33% investment in Somiluana is accounted for 
      as an investment in an associate under the equity 
      method. 

    - Loan to associate: West Coast Resources (Pty) Ltd        71 487              20 735              28 677 
      Balance at beginning of period                           28 677                   –                   –
      Loan advances during the period                          39 228              20 000              27 010 
      Capitalised interest                                      3 582                 735               1 667 

      The loan does not form part of the net investment 
      in the associate as settlement of the loan is 
      considered likely to occur in the foreseeable future.

    - Investment in associate: West Coast Resources (Pty) Ltd  86 021             160 050              98 485 
      Balance at beginning of period                           98 485             166 865             166 865 
      Share of results of associated company                  (13 114)             (9 040)            (71 255)
      Capitalised interest                                        650               2 225               2 875 

      The 40% investment in West Coast Resources (Pty) Ltd 
      is accounted for as an investment in an associate under 
      the equity method.

                                                              241 709             256 424             195 822 

7.  Inventories
    Diamonds                                                   88 680             124 289              55 068 
    Consumables                                                 5 972               4 789               4 208 
                                                               94 652             129 078              59 276 

8.  Borrowings
    Related party loan                                         32 000                   -                   -
                                                               32 000                   -                   -

    Revolving loan facility secured by a special notarial 
    bond to the value of R264 000 000 over certain movable 
    assets, cession of certain book debts, shares and 
    claims. The loan carries interest at the rate of 
    2% per month and is repayable by 31 December 2019. 
    The total amount available under the facility is 
    R220 000 000.

9.  Capital commitments
    (including amounts authorised, but not yet contracted)         26              20 143              36 291 
    These commitments will be financed from the Group's 
    own resources or with borrowed funds.

10. Fair value estimation
    Items carried at fair value are classified according 
    to the fair value hierarchy, by valuation method. The 
    different levels have been defined as follows: 

     - Quoted prices (unadjusted) in active markets for 
       identical assets or liabilities (Level 1).
     - Inputs other than quoted prices included within 
       Level 1 that are observable for the asset or 
       liability, either directly (that is, as prices)
       or indirectly (that is, derived from prices) (Level 2).
     - Inputs for the asset or liability that are not based 
       on observable market data (that is, unobservable inputs)
       (Level 3).

    Financial assets are classified as Level 1 according
    to the fair value hierarchy. Investments held by the
    environmental trust are the only financial assets carried 
    at fair value. However, this fund consists primarily of 
    cash and cash equivalents with the largest driver of growth 
    in the trust fund being attributable to interest received.

    The nominal value less impairment provisions of trade 
    receivables, cash and cash equivalents, trade payables, 
    other financial assets and borrowings are assumed to 
    approximate their fair values. The fair value of financial 
    liabilities for disclosure purposes is estimated by 
    discounting the future contractual cash flows at the 
    current market interest rate that is available for the 
    Group for similar financial instruments.

11. Segment information
 
    Operating segments
    
                                                                      CONTINUING                            DISCONTINUED
    Period ended 30 September 2017                 South Africa              Angola               Total              Angola
    Carats sold                                          14 029                   –              14 029                   –
                                                          R'000               R'000               R'000               R'000
    Revenue                                             149 729                   –             149 729                   –
    Cost of goods sold                                 (340 724)                  –            (340 724)                  –
    Gross loss                                         (190 995)                  –            (190 995)                  –
    Share of results of associated companies            (13 114)             18 743               5 629                   –
    Royalties                                              (695)                  –                (695)                  –
    Selling and administration costs                    (32 923)             (7 244)            (40 167)                  –
    Mining (loss)/profit                               (237 727)             11 499            (226 228)                  –
    Exploration costs                                    (2 061)                  –              (2 061)                  –
    Other gains – net                                    19 690                (115)             19 575                   –
    Profit for the period from discontinued 
    operations                                                –                   –                   –                 868
    Finance income                                       12 658                   –              12 658                   –
    Finance costs                                        (3 975)                  –              (3 975)                  –
    Impairment of assets                                      –                   –                   –                   –
    (Loss)/profit before income tax                    (211 415)             11 384            (200 031)                868
    
    Depreciation included in the above                   (6 289)                 (1)             (6 290)                  –
    Net assets/(liabilities)                             84 875             137 075             221 950             (81 519)
    Capital expenditure                                   4 696                   –               4 696                   – 
    Net asset value per share (cents)                        80                 130                 210                 (77)


                                                                      CONTINUING                            DISCONTINUED
    Period ended 30 September 2016                 South Africa              Angola               Total              Angola
    Carats sold                                          18 192                  -              18 192                   - 
                                                          R'000               R'000               R'000               R'000
    Revenue                                             275 319                  –            275 319                  – 
    Cost of goods sold                                 (261 440)                  –           (261 440)                  – 
    Gross profit                                         13 879                  –             13 879                   – 
    Share of results of associated companies             (9 040)             34 195             25 155                  – 
    Royalties                                            (1 309)                  –             (1 309)                  – 
    Selling and administration costs                    (36 124)            (12 443)            (48 567)                  – 
    Mining (loss)/profit                                (32 595)             21 732             (10 863)                  – 
    Exploration costs                                    (1 571)                  –             (1 571)                  – 
    Other gains – net                                     9 448               (179)              9 269                  – 
    Profit for the period from discontinued 
    operations                                                –                   –                  –             23 620
    Finance income                                       13 973                  –             13 973                  – 
    Finance costs                                        (2 695)                  –             (2 695)                  – 
    Impairment of assets                                      –                  –                  –                  – 
    (Loss)/profit before income tax                     (13 440)             21 553              8 906             23 620
    
    Depreciation included in the above                  (17 240)                 (4)            (17 244)                  – 
    Net assets/(liabilities)                            546 633            114 026            660 659            (90 252)
    Capital expenditure                                  15 294                  –             15 294                  – 
    Net asset value per share (cents)                       517                132                625                (85)



                                                                      CONTINUING                            DISCONTINUED
    Year ended 31 March 2017                       South Africa              Angola               Total              Angola
    Carats sold                                          40 187                   –              40 187                   –
                                                          R'000               R'000               R'000               R'000
    Revenue                                             540 183                   –             540 183                   –
    Cost of goods sold                                 (631 655)                  –            (631 655)                  –
    Gross loss                                          (91 472)                  –             (91 472)                  –
    Share of results and impairment of 
    associated companies                                (71 254)             52 295             (18 959)                  –
    Royalties                                            (2 669)                  –              (2 669)                  –
    Selling and administration costs                    (68 520)            (20 282)            (88 802)                  –
    Mining (loss)/profit                               (233 915)             32 013            (201 902)                  –
    Exploration costs                                    (2 947)                  –              (2 947)                  –
    Other gains/(losses) – net                           19 046                (271)             18 775                   –
    Profit for the year from discontinued 
    operations                                                –                   –                   –              28 912
    Finance income                                       29 133                  89              29 222                   –
    Finance costs                                        (5 391)                  –              (5 391)                  –
    Impairment of assets                                (27 417)                  –             (27 417)                  –
    (Loss)/profit before income tax                    (221 491)             31 831            (189 660)             28 912
    
    Depreciation included in the above                  (42 435)                 (5)            (42 440)                  –
    Net assets/(liabilities)                            352 476              85 438             437 914             (81 539)
    Capital expenditure                                  38 343                   –              38 343                   –
    Net asset value per share (cents)                       333                  81                 414                 (77)

    Revenue from transactions with certain customers can amount to 10% or more of total revenue. During the period under 
    review such individual customers were responsible for aggregate sales of R71,3 million (31/03/17: R82,3 million; 
    30/09/16: R74,5 million).
    
12. Contingent liabilities
    There have been no material changes to contingent liabilities previously reported in the 2017 Integrated Annual Report.

13. Events after the reporting period
    Trans Hex entered into a consultation process, in accordance with section 189 of the Labour Relations Act, 
    No. 66 of 1995, with regard to potential retrenchments at its Baken Mine, as published on SENS on Friday, 
    1 September 2017. Baken Mine was placed on care and maintenance effective from Wednesday, 1 November 2017. 

    Furthermore, Trans Hex shareholders were advised in an announcement published on SENS on Monday, 9 October 2017 and 
    in a circular posted to shareholders on Thursday, 2 November 2017 ("Circular") of a potential acquisition by the Group 
    of a further 27,2% shareholding in West Coast Resources (Pty) Ltd from RAC Investments Holdings (Pty) Ltd ("Transaction") 
    and a potential future specific issue of shares for cash ("Specific Issue").

    Save for the above, there are no events which may be expected to have a material effect on the Group which occurred 
    between the reporting date and the issuing of this announcement.

14. Accounting policies
    The condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting 
    Standards, (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting 
    Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council. The accounting 
    policies applied in the preparation of these interim financial statements are in terms of International Financial 
    Reporting Standards and are consistent with those applied in the previous consolidated annual financial statements.

15. Preparation of financial statements
    The preparation of the condensed consolidated financial statements was supervised by the Financial Director, 
    IP Hestermann CA(SA). The condensed consolidated financial statements have not been reviewed or audited by the 
    Company's external auditors.

    
OVERVIEW

In this commentary, results are compared with the first six months of the 2017 financial year (in brackets).

Sales revenue from the South African operations decreased by 45,6% in Rand terms from R275,3 million in September 2016 to 
R149,7 million in September 2017. The average US$ diamond price decreased by 20,1%, mainly due to a weaker market and a 
decrease in average stone size. Sales were negatively affected by an 11,8% strengthening of the Rand against the US$ and
a 22,9% decrease in carats sold.

South African production decreased by 16,2% to 15 917 carats (September 2016: 18 997 carats) mainly due to the closure 
of Bloeddrif Mine and underperformance at Baken Mine. 

The cost of goods sold increased to R340,7 million (September 2016: R261,4 million) mainly due to retrenchment costs of 
R111,4 million, offset by lower maintenance costs, depreciation and stock movement of R14,7 million.

Gross loss for the South African operations amounted to R191,0 million (September 2016: profit of R13,9 million). 

At West Coast Resources (Pty) Ltd, in which Trans Hex holds a 40% stake, production amounted to 60 344 carats 
(September 2016: 37 153 carats). Sales amounted to R118,5 million at an average price of US$156 per carat (September 2016: 
sales of R78,4 million at an average price of US$176 per carat). The 40% equity accounted loss for the period amounted to 
R13,1 million (September 2016: loss of R9,0 million).

The South African operations showed a loss before tax of R211,4 million (September 2016: loss of R13,4 million). 

In Angola, production at Somiluana Mine, in which Trans Hex holds a 33% stake, decreased significantly to 67 083 carats 
(September 2016: 91 033 carats) due to a 15,0% decrease in average grade and a 13,3% decrease in gravel treated. Total 
sales amounted to US$27,7 million at an average price of US$531 per carat (September 2016: sales of US$32,5 million at 
an average price of US$477 per carat). The Group received US$330 000 (September 2016: US$330 000) in dividends.

Profit from the Angolan continuing operations amounted to R11,4 million (September 2016: profit of R21,6 million), 
consisting of Somiluana's equity accounted profit of R18,7 million less Angolan head office costs of R7,3 million. 

The Group reports an after-tax loss for the period from continuing operations of R200,0 million (September 2016: profit 
of R8,9 million). 

Profit from the discontinued Luarica and Fucauma operations amounted to R0,9 million (September 2016: R23,6 million).

The Group therefore reports a loss for the period of R199,2 million (September 2016: profit of R32,5 million).

Cash and cash equivalents at the end of the reporting period amounted to R41,3 million (September 2016: R322,4 million).
 

MINERAL RESOURCES AND MINERAL RESERVES

No adjustments have been made to the statement of mineral resources and mineral reserves as contained in the 2017 Integrated
Annual Report. Reconciliation of production data takes place annually and an updated mineral resources and reserves 
statement will be published in the 2018 Integrated Annual Report.


OPERATING PERFORMANCE

Detailed project information

                             Period ended 30 September 2017                  Period ended 30 September 2016
                                                           Average                                         Average
                                                         price per                                       price per
Detailed project                               Average       carat                             Average       carat 
information            Average      Carats  carats per    achieved     Average      Carats  carats per    achieved
(unaudited)              grade*   produced       stone       (US$)       grade*   produced       stone       (US$)

SOUTH AFRICA
 - Baken                  2,15      10 904        1,18         879        2,30      13 108        1,34       1 043
 - Bloeddrif              2,60         620        1,52         877        0,51       1 111        2,51       2 196
 - Shallow  water            –       4 393        0,25         502           –       4 778        0,30         585
Total South Africa        2,17      15 917        0,59         822        1,80      18 997        0,73       1 028

West Coast Resources     20,41      60 344        0,24         156       14,77      37 153        0,28         176

Angola
 - Somiluana             48,89      67 083        0,65         531       57,50      91 033        0,63         477

 
* Average grade is calculated per 100 m3 for South Africa and Angola, and per 100 tons for West Coast Resources. 
Average grade in South Africa is calculated excluding shallow water production.

Lower Orange River operations 

Stripping of overburden in the main channel at Baken Mine continued during the period. The average grade decreased 
slightly from 2,30 carats/100 m3 in September 2016 to 2,15 carats/100 m3 in September 2017. The average price of 
Baken stones decreased from US$1 043 per carat in September 2016 to US$879 per carat in September 2017 in line with the 
weaker market and a smaller average stone size.

In line with the Company's strategy of responsibly managing the Lower Orange River operations in the final years of their 
viable economic life cycles, these operations have gradually been downscaled. Production at Reuning Mine was halted during 
the 2015 financial year and production at Bloeddrif Mine ceased in May 2017. 

Production at Baken Mine was halted on Tuesday, 31 October 2017 following the successful conclusion of a formal consultation
process with the National Union of Mineworkers.

West Coast Resources operations

Operational and infrastructure improvements continued in order to further expand the operational footprint.

During the period, production increased by 62,4% to 60 344 carats (September 2016: 37 153 carats) due to an increase in 
gravel treated and the mining of higher grade channel blocks which resulted in a significant increase in average grade from 
14,77/100 tons in September 2016 to 20,41 carats/100 tons in September 2017. The average price per carat decreased slightly 
from US$176 per carat in September 2016 to US$156 in September 2017 mainly as a result of the weaker market and a smaller 
average stone size. 

Angolan operations

Operations at Somiluana Mine remained focused on the east bank of the Luana River at Nzagi, in the south-west at Lulau and 
on the south bank of the Landa Mona River. 

During the period, production decreased by 26,3% from 91 033 carats in September 2016 to 67 083 carats in September 2017, 
mainly as a result of a decrease in average grade and a high overburden stripping ratio which negatively impacted gravel 
volumes. 


OUTLOOK 

Lower Orange River operations

Baken Mine and Bloeddrif Mine have been placed under care and maintenance.

Production from the wholly owned South African operations for the 2018 financial year is expected to be in the order of 
23 000 carats, compared to 2017 actual production of 36 532 carats.

West Coast Resources operations

Prospecting will continue to target high-priority areas that may identify additional resources for mining. 

Mining activities will remain focused on the Koingnaas area and on other sections of the Langklip area.

Production for the 2018 financial year is expected to be in the order of 140 000 carats, compared to 2017 actual production
of 80 506 carats.

Angolan operations

Mining operations will continue on the east bank of the Luana River at Nzagi, the south bank of the Landa Mona River and 
at other areas currently being evaluated.

Production results and geological work through drilling and bulk sampling indicate that carat production for the 
2018 financial year is expected to be in the order of 120 000 carats.

Market

The market softened for rough and polished stock during the period, as margins came under pressure in the both the 
manufacturing and trading sectors. 

A surplus in polished diamond inventory, particularly in the Indian factories, and concerns regarding high debt levels 
further negatively impacted prices. 

Marginal price increases are expected for the remainder of the calendar year, with prices set to recover towards the start
of 2018. 

New business

The Group is actively evaluating potential new diamond properties and pursuing opportunities to expand its diamond-marketing
activities.


DIVIDEND

The Board has resolved not to declare an interim dividend.


CHANGES TO THE BOARD OF DIRECTORS

Shareholders are advised of the following changes to the Board of Directors:

Mr Quinton George's designation changed from Non-executive Director to Independent Non-executive Director, effective 
18 July 2017.

Mr Albertus Marais was appointed as an Alternate Director to Mr George, effective 21 August 2017. 


PROPOSED ACQUISITION BY TRANS HEX OF A FURTHER 27,2% SHAREHOLDING IN WEST COAST RESOURCES (PTY) LTD AND POTENTIAL FUTURE 
SPECIFIC ISSUE OF SHARES FOR CASH

Trans Hex published an announcement on SENS on Monday, 9 October 2017 advising shareholders of the Transaction and 
Specific Issue.
 
The Transaction and the Specific Issue are to be proposed to shareholders for approval at a general meeting of shareholders
to be held on Thursday, 30 November 2017.
 
All announcements pertaining to the Transaction and the Specific Issue and the Circular are available on the Company's 
website at www.transhex.co.za.


By order of the Board

MVZ Wentzel                             L Delport
Chairman                                Chief Executive Officer 

Parow
9 November 2017


REGISTERED OFFICE
405 Voortrekker Road, Parow 7500 
PO Box 723, Parow 7499

JSE SPONSOR
One Capital

TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd

DIRECTORATE
MVZ Wentzel (Chairman), AG Rhoda, QJ George, PG Viljoen, JL Gurney (Alternate), AJ Marais (Alternate), L Delport
(Chief Executive Officer), IP Hestermann (Financial Director), GM van Heerden (Company Secretary)














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