Trans Hex H1 Earnings Fall Despite Increased Sales

Despite a surge in rough diamond prices and sales, South African diamond miner Trans Hex reported a 40 percent fall in headline earnings during the first half of its fiscal year.. The miner said cost of sales, specifically fuel and labor costs, was the main negative factor.

Rough diamond sales were 15 percent higher in rand terms at R612 million (R533 million in H1 2004) and 12 percent higher in dollar terms at $92.8 million ($82.5 million in H1 2004).

Cost of sales, up 25 percent, totaled R486 million ($71.9 million) pushing attributable income before impairments, down 44 percent to R48 million ($71 million), resulting in a 40 percent decrease in headline earnings per share to R0.461.

Mining income decreased 14 percent to R125 million ($18.5 million).

The main contributors to the increase in cost of sales were increased fuel costs and higher labor and associated costs relating to the implementation of the maximized shift system.

Startup mining activities, mainly at Fucauma, also contributed to the increase in costs, the company said in a release. Increased exploration activities, especially in Angola, contributed to the higher exploration cost of R39 million ($5.77 million).

Production from land operations in South Africa was 7 percent higher at 64,470 carats.

Production at Luarica in Angola has averaged 9,000 carats per month since June, with an average grade achieved of approximately 15 carats/100 m3.