Johannesburg Stock Exchange (JSE)-listed junior diamond miner Trans Hex has agreed to terms for the sale of its Baken and Bloeddrif mines, both of which are situated on the banks of the lower Orange River (LOR) in South Africa, to Lower Orange River Diamonds Proprietary Limited for $6 million (R72m) in cash, and its shareholders appreciated the gesture. Miningmx reports that speculation on the deal drove Trans Hex's share price up 52% ahead of yesterday’s announcement which came after the close of trading on the JSE. Neither of the mines is currently operating, as both were placed on care and maintenance in 2017. The company said it, "made every effort to sustain operations at Baken Mine, however the mine’s low carat production and subsequent financial losses were considered to be unsustainable."
The Baken operation lost over $11 million (R137.5m) in the six months to end-September – which included a provision for retrenchment costs – and had lost $3 million (R35.8m) in the year to end-March 2017. Bloeddrif lost $5 million (R60.1m) in the six months to end-September and $4.5 million (R55m) in the year to end-March 2017. Trans Hex explained the sale by saying it has been, "directing its efforts towards securing a sustainable future for the LOR Operations under a potential new dispensation, including exploring all reasonable ways and means of avoiding or minimising enforced retrenchments. Accordingly, the Transaction provides the Company with an opportunity to implement its strategy for the LOR Operations as well as provide the Company with additional capital that can be applied to fund its working capital requirements."
A statement by Trans Hex describes Lower Orange River Diamonds as a “Black Woman Owned company” (as defined in terms of the Broad Based Black Economic Act) indirectly holds minority interests in a small portfolio of “greenfield” prospecting rights for diamonds which are being readied for initial exploratory drilling operations. The statement adds that, "LOR Diamonds’ management team has extensive knowledge of and experience in the diamond exploration and mining industry but is currently not engaged in other diamond mining operations. LOR Diamonds intends implementing new mining techniques and recovery processes at the LOR Operations, as well as ongoing and innovative environmental rehabilitation in respect of the disturbed surface area, which it is confident will be both cost-effective and sustainable." Trans Hex will receive just over $4 million (R50m) in cash within seven days of signing the sales agreement with the rest to be paid in deferred payments of $230,000 (R2.75m) each over a period of eight months starting five months after the agreement is signed.