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Christo Wiese’s play for Trans Hex

Acting in concert with RECM & Calibre.

Christo Wiese has returned to one of his old loves, with the announcement via Sens on Monday that vehicles under his control have amassed a 47% stake in alluvial diamond miner Trans Hex.

The 47% stake, in conjunction with the 25% stake controlled by Piet Viljoen’s RECM & Calibre that is acting in concert with Wiese, means the combined parties have to make a mandatory offer to minorities for the 28% of the business they don’t own. “Ultimately we hope to take the company private,” says Viljoen.

Wiese has owned diamond mining businesses before in the shape of Ocean Diamond Mining.

Viljoen believes the Trans Hex business model is not one that is fully appreciated – or liked – by the market.

“It’s an alluvial diamond mining business, which means you are never really sure of the quantity and grade of diamonds you are going to receive. As a consequence, the cash flows are lumpy, and the market doesn’t like these businesses very much, as they are not able to sustain earnings growth from year to year very easily. This probably explains why the share price hasn’t done too much in the recent past.”

There are no immediate plans to make changes to the management team or any aspects of the business model. But Viljoen believes that having a strong shareholder of reference that can provide a long-term perspective and supply the business with capital where and when it needs it, will be the best way to realise long-term value.

“There will be some regulatory costs we can trim by taking it private, but the main benefit will be to remove the business from the glare and whims of the market.”

The offer to minorities is expected to be published via Sens shortly, possibly later on Monday.

The Trans Hex share price was unchanged at the time of writing on Monday (13:19 SAST) at R3.70 per share.

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