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Taking a shine to Trans Hex

Mining - [http://www.financialmail.co.za/incoming/2012/10/10/mining-xxx/ALTERNATES/crop_680x417/Mining+xxx} Mining - [http://www.financialmail.co.za/incoming/2012/10/10/mining-xxx/ALTERNATES/crop_680x417/Mining+xxx}

Parow headquartered diamond mining group Trans Hex has seen a significant change in shareholding – a development that hopefully points to brighter prospects in the competitive gem game for the years ahead.

Last month M Cubed Holdings – an investment entity controlled by Quinton George – surprisingly snatched a 26,18% stake in Trans Hex after institutional shareholder Kagiso Asset Management bailed out.

George, an asset manager with a penchant for resource stocks, and former Springbok rugby player Marco Wentzel have now been appointed as non-executive directors of Trans Hex. George already serves as chairman of JSE-listed Mine Restoration Investments Limited and was previously CEO of Cape Town-based Trinity Asset Management.

Trans Hex has endured a tough time in recent years as it battled to eke profitable returns from its old Orange River concessions. The company is hoping to change its fortunes with the recent acquisition of Namqualand Mines (now re-named West Coast Mining) from diamond giant De Beers.

M Cubed’s emergence as a major shareholder does intimate confidence in the company’s ability to generate decent returns from the former De Beers operations. But M Cubed’s presence may also signal that corporate action is being contemplated for Trans Hex.

M Cubed now ranks as the biggest shareholder in Trans Hex. But Cape Town-based private equity player RECM & Calibre and platinum miner Northam Platinum – with stakes of 25, 12% and 20, 3% - are also meaningful stakeholders. RECM & Calibre also holds a significant direct interest in West Coast Mining.

Whether there are further re-shufflings of shareholding remains to be seen. Presumably the stake held by Northam won’t be considered core to the platinum miner’s operational profile.

While it’s probably too early to assess the possible impact of the recently acquired West Coast Mining operations, Trans Hex has wasted no time restructuring its lower Orange River operations.

These operations – comprising the enduring Baken and Bloeddrif mines – recently saw a change to its shift arrangements to optimise mining and treatment volumes in the twilight years of these operations.

Trans Hex CEO Llewellyn Delport said the aim was to extend the viable life-of-mine of each operation for as long as possible, while constantly managing the risks inherent to mature alluvial mines.

Essentially the lower orange River operations will change from a four-shift system that ran seven days a week to a three-shift system spread over a five and a half day week.

Delport said overburden stripping rates and the volumes of gravel mined and treated would beadjusted to ensure the most sustainable model for each mine.

A total of 125 employees (around 22% of the workforce) accepted voluntary retrenchment packages. Delport disclosed the total cost of the restructuring programme would be in the order of R47m.

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