THI staves off extinction

Junior Trans Hex International (THI-V) has signed a letter of intent with its South African-based parent, Trans Hex Group (THG), in an attempt to settle its books.

Under the plan, THG, which mines alluvial diamonds in South Africa and Namibia, has agreed to settle THI’s $895,000 debt and assume $5.1 million in project finance loans which it, THG, made to some THI subsidiaries.

In return, THI will:

– transfer its 100% interest in Trans Hex Namibia, which owns a half-stake in Northbank Diamonds (owner of the Northbank property in Namibia) and a 90% stake in Hoanib Diamonds, which owns the Skeleton Coast diamond property in Namibia;

– transfer its 100% interest in Trans Hex Brasil, which owns a 65.5% interest in the Barre Grande property on Brazil’s Barre Grande peninsula;

– transfer its 100% interest in Trans Hex Zimbabwe, which owns a 15% interest in the Limpopo (Sengwe) property; and

– transfer its 25% interest in the equity and debt owing to Trans Hex Bermuda by Newdico, which owns the Ngami kimberlite project in Botswana.

Also included are $7.3 million in loans owing to Trans Hex Bermuda.

THI will retain a 75% interest in the Ngami property, which has an estimated fair market value in the range of $477,000-574,000. As well, THI will receive a 1% interest in all dividends received by Trans Hex Namibia from either Northbank Diamonds or Hoanib Diamonds and a half-interest in all future dividends received from Trans Hex Zimbabwe from the Limpopo property in Zimbabwe. THI will continue to serve as operator at Ngami.

The deal also calls for THI to buy, for no consideration, the 10.7 million shares (or 73.2%) of THI held by THG.

THI shareholders will vote on the proposed deal in early April. They will also vote on the continuance of THI and on changing to the company name to Tsodilo Resources. The company needs the approval of a majority of minority shareholders plus at least 66.67% of all shareholders represented at the meeting. The company has already wrapped up the support of the holders of about 1.5 million (or 38.7%) of THI’s minority-held shares.

Dissenting voters will be paid the fair value of their common shares.

THG formed THI in 1995 to function as its international exploration arm. The group had planned to kill the company as a cost-cutting measure in light of its lack of progress.

At the end of 2001, THI had a net working capital deficiency of $585,000, with cash and equivalents amounting to $621,000. For the nine months ended Dec. 31, 2001, THI posted a net loss of $8.85 million (or 61 per share).