October 26, 2001
Update for the Quarter Ended September 30, 2001
TRANS HEX INTERNATIONAL LTD. (CDNX: THI) today announced the results from its operations for the three and six-month periods ended September 30, 2001.
At the Barra Grande alluvial project in Brazil, treatment of some 2,400 bank cubic metres from 15 samples that represent an eight-metre thick intermediate gravel horizon, at the northern sampling site were completed during the period. Results to date indicate a low level of diamond mineralization, with a total of 12 diamonds recovered at an average grade of 0.10 carats per 100 bank cubic metres. The average stone size was 0.20 carats per stone. Treatment of the three metre thick basal gravel body will continue through to a joint venture meeting scheduled for October 31st, at which stage the Company will consider its ongoing participation in, and funding of the project. As a result of the failure to find economic diamond grades at either the southern, Villa Barroso or northern, Queixada sample sites, the Company has written off the $4.95 million of exploration expenditure incurred to date.
At the Ngamiland kimberlite project in Botswana, 192 samples from the second phase reconnaissance program have been sent for processing. These samples were collected on a two and a half kilometre square grid in the vicinity of a known kimberlite cluster. A further 31 magnetic anomalies have been selected, and to date 16 of these have been sampled. The first three samples were processed as "high priority" and kimberlitic illmenite grains were recovered from all three targets. The illmenite grains have been analyzed using a micro-probe and their chemical composition indicates that they derive from kimberlites with "moderate" diamond preservation potential. Sampling of the remaining 15 magnetic anomalies is in progress, as well as the first phase sampling of a further 675 soil sample sites on a five-by-five kilometre grid over the new concession area.
As exploration is not expected to commence in the foreseeable future at either Northbank or Limpopo, exploration expenditure incurred to date on these projects has been written off. The delays at Northbank are occasioned by the ongoing legal action in Namibia, now postponed to March 2002 and in Zimbabwe by a reluctance to invest in further exploration given the prevailing poor political situation in that country. This resulted in the expensing of $2.27 million of attributable exploration expenditure in the case of Northbank and $27,000 for the Limpopo project in Zimbabwe.
As at September 30, 2001 the Company had a net working capital deficiency of $39,000, compared with working capital of $395,000 at March 31, 2001. Cash and equivalents on hand were $1,095,000 (March 31, 2001: $1,488,000). Accounts payable and accrued liabilities included an amount due to the Company's parent company, Trans Hex Group Limited, of $861,000 (March 31, 2001: $834,000). The expensing of capitalized exploration expenditure resulted in Trans Hex International recording a net loss of $7.57 million in the second quarter ended September 30, 2001 (51 cents per common share), compared to a net loss of $328,000 (2 cents per common share) in the comparable period of fiscal 2001. General and administration expenses in the second quarter amounted to $327,000 (2001: $235,000), including $145,000 of attributable legal fees relating to the court proceedings in Namibia, while exploration expenditure amounted to $875,000 (2001: $455,000), the most material component being $598,000 incurred at Barra Grande.
Difficult capital markets in the resource sector have forced the Company to rely on the financial, as well as the technical support of Trans Hex Group. The future of the Company, and its international exploration projects, is currently under review by the board of directors, and in discussions with its principal shareholder. The design and conduct of the Company's exploration programs is the responsibility of Mr. Peter Walker, a professional geologist registered with the South African Council for Natural Scientific Professions.
FOR FURTHER INFORMATION PLEASE CONTACT:
D.M. (Niel) Hoogenhout - Chairman and C.E.O. Tel +1.416.572-2033 Fax +1.416.572-4164 E-Mail firstname.lastname@example.org
Peter W.A. Walker - Vice President, Exploration Tel +27.21.937-2010 Fax +27.21.939-0711 E-Mail PeterW@transhex.co.za
Stephen Woodhead - Chief Financial Officer Tel +1.416.572-2033 Fax +1.416.572-4164 E-Mail email@example.com