F.P.O. Trans Hex launches global search for gems

Alluvial and marine diamond projects may not garner as much attention as primary ones, but their promise of higher quality gems has attracted a devout few, including Trans Hex International (THI-V).

Since its formation in 1995 as an international unit of Trans Hex Group, one of South Africa’s largest diamond miners, the Toronto-based company has scoured the globe in hopes of echoing such success abroad. Today, its efforts are focused on Brazil, Namibia and Zimbabwe.

Brazil has long been a favoured, though frustrating, destination for diamond exploration companies. Renowned for its artisanal output, most companies have focused on the country’s alluvial diamond potential, a less elusive target than primary deposits. Trans Hex is no exception.

In 1998, Trans Hex inked a deal with Verena Minerals (VMCO-C) to earn a half-interest in more than 50,000 ha situated along the banks of the Rio Grande river, which separates the Minas Gerais and Sao Paulo states. The deal followed three years and $3.3-million worth of fruitless efforts in Tocantins state, in northern Brazil.

Known as Barra Grande, the property has been an active site of artisanal mining since the 1940s. Four such workings occur on the Minas Gerais side, the largest of which has yielded 4,407 carats worth US$1.8 million, accounting for inflation.

Using the local workings as beacons, drilling began in earnest in 1999 and has since identified three prospects worth following up with bulk sampling. The first to be sampled, which lies between two of the workings, is estimated to host some 25 million cubic metres of prospective gravels.

Geologically, Barra Grande’s diamonds are hosted mainly by a 3 to 5-metre thick matrix-supported gravel horizon deposited on an undulating red argillic bed of variable thickness. The argillite, in turn, rests on a similarly uneven basaltic volcanic sequence.

Clasts can reach up to 30 centimetres in diameter, but generally fine upwards. Most are quartzite, in contrast to the gravel’s predominantly red clayey matrix, and all are very well rounded and devoid of any characteristic suggestive of a preferred orientation of deposition.

With an environmental permit expected shortly, Trans Hex has begun constructing a pan plant capable of treating 15 tonnes of gravel per hour. It will be commissioned this fall and results of the first trench are expected early next year. This will provide the initial estimate of the diamond grades and values.

The program is expected to cost $2.2 million to complete, adding to the $1.6 million spent to date. Following this, Trans Hex will have satisfied its obligations to earn its half-interest in the project.

Agreements have been secured for rights of access (and related compensation) with owners whose properties cover some of the targets. The necessary environmental permits are already in hand.

In Namibia, Trans Hex is exploring two properties, one on the northern bank of the Orange River and the other on the Skeleton Coast. Efforts at the former have offered the most promise to date.

Known as Northbank, the property covers 2,950 ha and is owned equally by Trans Hex and a Namibian company, though the former must fund 75% of exploration expenditures to commercial production.

In 1997, Trans Hex began drilling what quickly became a 30-million-cubic-metre terrace deposit, which represents a cutoff meander some 4 km in length and 900 metres in width. Tighter drilling soon pinpointed the two best areas to bulk sample, though this has been prevented from taking place by an ongoing legal dispute with a local landowner.

Several attempts have been made to resolve the dispute, which pits mining activities against the landowner’s agricultural enterprise. While Trans Hex takes the view that both can co-exist (a view supported by viticulture experts and government officials), mining pays higher wages than farming, which has led to fears of labour problems in the region. The company believes these fears are unfounded and says good-paying jobs and the establishment of housing, medical and schooling facilities are just some of the short-term beneifts on hold for the economically disadvantaged residents of the region.

Once the dispute is settled, Trans Hex will begin a 12-month excavation and processing campaign to determine the diamond content of the gravels. Given the nature of alluvial diamond deposition, such data can not be gleaned from drilling; however, the same gravels are being profitably mined further downstream by Trans Hex Group and De Beers Consolidated Mines (DBRS-Q), thus justifying the expense.

Once the program begins, more than 460,650 cubic metres of overburden are to be removed to allow for the extraction of 150,000 cubic metres of gravel. From that, more than half must be processed in order to provide sufficient data for the estimation of an upper limit of diamond grades, says Trans Hex.

To date, Trans Hex and its partner have spent $2.9 million at Northbank.

North of there, on Namibia’s Skeleton Coast, Trans Hex plans to sample 13 areas in a deep-water embayment that were chosen from earlier bathymetric surveys. Previous efforts had been focused closer to shore, but treacherous diving conditions and the recovery of only two diamonds made this an undesirable area in which to continue exploration.

Trans Hex will fund the program as part of its requirements to maintain a 90% interest in the property, which spans some 150 km of coastline and extends 5 km offshore. A private vendor holds the remaining interest.

The Limpopo project in southern Zimbabwe was one of the first diamond projects to be acquired by Trans Hex, though responsibility for its management now falls to partner, Rio Tinto (RTP-N).

In 1996, Trans Hex and a private company signed a deal with Falconbridge (FL-T) to explore for alluvial diamonds at its EPO 780 licence along the Limpopo river. A preliminary program came up dry and the partners decided against further work.

Subsequently, Rio Tinto acquired the rights to explore the concession for primary diamond deposits. This, in turn, prompted Trans Hex and its partner to renegotiate their own agreement with Falconbridge to enable all three the right to jointly subscribe for a 30% stake in any deposit found and advanced to production by Rio.

Rio must cover all expenditures on the property.

More recently, Trans Hex broadened its search to Botswana, a country known for primary, rather than alluvial, diamonds. But notable deposits such as Jwaneng, Orapa and Letlhakane, which provided De Beers with over 21 million carats in 1999 alone, are enough to make any company salivate.

Trans Hex optioned the Rainbow property, which lies 190 km northwest of Orapa, and agreed to spend US$1 million to earn a 60% interest from a private company. The 1.8-sq.-km property contains several circular magnetic anomalies beneath the Kalahari formation, the largest of which is 900 metres in diameter.

In 1999, Trans Hex began sinking a hole to test one of the anomalies, but only succeeded in penetrating 197 metres of Kalahari cover. The hole was deepened this year to 245 metres without intersecting kimberlite. No further work is intended and the option agreement has been terminated.

At the wholly owned Ngami property, which covers 4,872 sq. km of northwestern Botswana, crews are testing stream sediments for diamond indicator minerals. A recent airborne magnetometer survey by the government suggests cratonic rocks may underlie the Kalahari formation exposed at surface. Two clusters of diamondiferous kimberlites to the south and southwest lend credence to this interpretation.

A total of $95,000 has been budgeted in fiscal 2001 for Ngami.

On June 30, Trans Hex had $1.7 million in working capital. However, future funding for Barra Grande and Northbank has been ensured through a US$4.6-million financing facility with Trans Hex Group. The funds are to be drawn down as needed, and to be repaid from 75% of surplus cash from either project.

Trans Hex has over 32 million shares outstanding, of which 73.2% are owned by Trans Hex Group.