Wrap Text
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)
Date: 09/11/2017 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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