JSE-listed diamond exploration and mining company Trans Hex last week reported that its earnings per share for the year ended March 31 had decreased by 59.3% to 79.7c, compared with 196c in the 2012 financial year.

The group said in a statement that headline earnings per share had echoed this downward trend, declining from 195.5c a share in 2012 to 69.9c in the year under review.

The lower earnings came on the back of lower production across the group’s operations, with South African production over the reporting period amounting to 67 115 ct, a 20.4% decline on the 84 409 ct produced in 2012, with an average grade of 1.05 ct/100 m3.

In Angola, production at Somiluana, in which Trans Hex holds a 33% stake, also declined, from 45 869 ct in the previous financial year to 41 313 ct in 2013.

Despite a 10% increase in the total volume of gravel treated at the land operations, output was lower overall.

As a result of the higher volumes of gravel treated, coupled with above-inflation increases in labour, fuel and electricity costs, profitability was further eroded by a 4.4% increase in the unit cost of production, which pushed the cost of goods sold to R605.2-million.

Total sales for the group amounted to $14.9-million at an average price of $352/ct, driving an after-tax profit for the year of R65-million from continuing operations, down from R80.9-million in 2012.

Net cash generated during the reporting period was R360-million, resulting in a net cash position at the end of the year of R383.4-million.

Namaqualand Mines Acquisition
The group further reported last week that an amendment had been made to the previously announced agreement with De Beers Consolidated Mines (DBCM), which would see Trans Hex’s 50%-held subsidiary, Emerald Panther Investments (EPI), acquiring assets and liabilities relating to Namaqualand Mines.

In terms of the amended transaction, DBCM would retain in excess of 50% of the Namaqualand Mines environmental rehabilitation liability. The revised transaction was now valued at R166-million.

The Department of Mineral Resources has approved the transfer of the applicable prospecting and mining rights in respect of Namaqualand Mines from DBCM to EPI, with all necessary statutory and regulatory approvals required for entering into and implementing the transaction having been obtained.

“The only issue that remains outstanding is for DBCM and the South African government to reach agreement in respect of the State’s 20% interest in Namaqualand Mines, after which the necessary shareholder processes will be completed,” the company said.

Looking ahead, Trans Hex expected an improved showing in the coming year and would use its internal cash flow to increase the production capacity and carat production at Somiluana, while boosting output at its South African operations to 70 000 ct.

“We are currently making progress to secure third-party funding for the capital required to increase production capacity at Somiluana,” the company said.

In addition, Trans Hex would continue to advance its Orange river-based Baken mine and was working towards confirming the potential of higher grades and better stone sizes in the site’s central channel.

This would follow stripping operations currently being undertaken in the Baken central channel.

Further, the group reported that, in 2014, it would continue its exit from the discontinued Luarica and Fucaúma projects, in Angola, while exercising tight controls over cash and costs in all areas of the group’s business.

It expected rough diamond prices to remain stable during the 2014 financial year.

The company did not declare a dividend for the 2013 financial year.