The diamond producer seems to have turned the corner.

HILTON TARRANT: Diamond producer Trans Hex out with results for the six months to the end of September today. Revenue up to R317m and headline earnings per share from continuing operations at 9.1c/share from a  headline loss of 52c.
    Llewellyn Delport is CEO of Trans Hex. Llewellyn, some commentators and analysts were looking at the numbers six months ago, saying that it looked like you were turning the corner. It seems they were right.

LLEWELLYN DELPORT: We are pleased to be able to confirm what it is we were thinking at the time. Conditions in the world still not recovered fully, from our perspective, but we are certainly beyond the point where survival is something that we are considering seriously. It's more coming through this downturn in the market as fit and as strong as we possibly can.

HILTON TARRANT: Llewellyn, how bad were things? We had the Sappi CEO with us last night and, aside from paper producers, I imagine diamond producers were possibly the worst affected.

LLEWELLYN DELPORT: Look, we went through a phase at the bottom of the market where not only prices significantly dropped, but also demand fell to zero. So for us, mildly put, times were really, really, difficult and for periods even I think for some smaller producers now, surviving was almost a ... thought.

HILTON TARRANT: Llewellyn, demand returning though to the market, what's the health of the underlying diamond market look like?

LLEWELLYN DELPORT: For our quality of goods the current demand is strong. We are selling as we produce. Pricing is fair to buoyant. However, all industry analysts - and, very important to note, in this industry we as a tenderer of goods, as a price taker - are of the view that December diamond sales in the States hold the key to the future. So everybody, including the Indians who are currently the most keen buyers and payers, are looking to the States because it still remains to be the biggest jewellery consumer market.

HILTON TARRANT: Your production, coming back, especially in South Africa increasing by about 2 000 carats, and looking ahead you do say that you do look to about 100 000 carats for the current financial year -, presumably that perhaps that you will further increase into the second half.

LLEWELLYN DELPORT: During the difficult time we held our discipline. We didn't actually try to, let's call it, high-grade in any way, shape or form. We have now actually entered into what I would call a medium- to high-grade phase. So the prediction on 100 000 carats is probably reasonably fair, barring major incidents or acts of God.

HILTON TARRANT: Llewellyn, the strength of the rand has obviously had an impact in the business. You've got not only the rand pretty strong against the US dollar, but you've also got cost pressures from the likes of fuel and electricity on the horizon. Any thoughts on that?

LLEWELLYN DELPORT: Exporters would always like the rand to be weaker. We view the rand as uncontrollable and have focused - and I'm pleased that you are actually linking the level of the rand to, let's call it, cost-containment. And in our view we have and are continuing to focus on controlling our costs in very simple but sustainable ways, and from the base that we've now created are hoping to actually maintain this base and to see modest increases from here on going forward and, with a  bit of luck inflation-beating increases on costs.

HILTON TARRANT: Llewellyn, looking forward, any opportunities out there as the market recovers?

LLEWELLYN DELPORT: The unfortunate condition of the world clearly has shaken out some of the smaller players, has also brought I think some sanity in terms of the pricing of diamond assets, and clearly brings opportunities to those who are in the game and those who have what I would call cash reserves and access to financing.

HILTON TARRANT: Regarding Capital Management's Piet Viljoen was right about this one back in May when he said the share was ridiculously cheap. It's well over R4/share at the moment, from 108c in March. Llewellyn Delport is CEO of Trans Hex.

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