PAROW-based diamond mining company Trans Hex Group has been dealt a severe blow.
First the group’s plans to sell its 67.2% stake in West Coast Resources (the old De Beers Namaqualand diamond mines) fell through when talks with prospective buyers Kernel Resources were terminated.
It seems it might have been prudent for Kernal to walk away from a deal. Trans Hex has conceded that West Coast Resources’ trading activities had deteriorated over the past few months due to diamond prices declining by 27% and the average diamond grade declining due to lower than expected grades achieved.
This has meant West Coast Resources is not in a position to meet its working capital requirements without it receiving the necessary funding.
Instead of injecting in new working capital, Trans Hex has opted to apply for West Coast Resources to be placed into provisional liquidation.
The development is exposes a serious flaw in Trans Hex’s strategy. West Coast Resources was meant to give Trans Hex – which also owns Angolan based diamond mining operations – a new lease on life after its traditional Orange River alluvial mining operations had reached the end of their life.
In 2011 Trans Hex and other partners paid De Beers R225m for the Namqualand mines that make up West Coast Resources. The deal took some years to conclude, but West Coast Resources appeared to under-perform from the very start.
West Coast Resources is situated approximately 60 km south of Port Nolloth along the West Coast of the Northern Cape. The mining area spans a total geographical area of more than 2 750 square km – including two washing and screening plants. The mining area plant facilitates the treatment of the gravel from northern ore bodies of the Koingnaas Complex (KNC), and the Langklip washing and screening plant treats gravel from the southern ore bodies.
West Coast Resources also operates a final recovery plant at Kleinzee – using Bourevestnik X-ray sorting technology.
Improvements to all three plants were completed in the past financial year.
During the past financial year, West Coast Resources’ production totalled 123 884 carats compared to 173 920 carats in 2018.
Sales amounted to R240.5 million at an average price of $128 per carat (2018: sales of R302.5 million at an average price of $153 per carat).
