Finweek English Edition - - Companies & markets - SHAUN HAR­RIS

DI­A­MOND MIN­ING’S not for sissies. Nei­ther is in­vest­ing in di­a­mond com­pany shares, par­tic­u­larly the ju­nior min­ers in South Africa that have caused much pain for share­hold­ers.

So it’s in­ter­est­ing to note that Piet Viljoen at RE:CM re­cently started buy­ing Trans Hex. In an ar­ti­cle largely scep­ti­cal of re­source shares on the as­set man­agers’ web­site, Viljoen says, how­ever, that RE:CM is not averse to re­source shares trad­ing at a dis­count to NAV and some of its best in­vest­ment ideas have been dis­counted min­ers – West­ern Ar­eas and Sim­mers for ex­am­ple. He sees Trans Hex as a sim­i­lar value play.

We’d swal­low hard and take the same view. There’s risk, but also a lit­tle more shine in this rough di­a­mond. OP­POR­TU­NI­TIES Af­ter stag­nat­ing for years, the share price has been re­cov­er­ing since late last year, mov­ing up strongly in the past few weeks. We know RE:CM has been buy­ing, but is it a case of some­body know­ing some­thing the mar­ket doesn’t? • The ini­tial foray into An­gola was dis­as­trous and ex­pen­sive, but man­age­ment now says the ex­pan­sion is show­ing re­sults, with Luar­ica pro­duc­ing 95 000 carats in its first year of pro­duc­tion. • Rem­gro, ma­jor share­holder with 35%, has a rep­u­ta­tion for stick­ing with un­der­per­form­ers and sup­port­ing growth plans. RISKS There’s ap­par­ent man­age­ment tur­moil and a cur­rency hedge way out of the money ( Fin­week 30 Novem­ber). An­gola has sub­stan­tial po­lit­i­cal risk. Ask the oil com­pa­nies.


Source: I-Net Bridge

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