Tans Hex said it would join other mining companies in delisting from the JSE next month. Photo: Simphiwe Mbokazi/African News Agency (ANA)

JOHANNESBURG – Tans Hex, the South African headquartered diamond producer on Tuesday confirmed that it would join other mining companies in delisting from the JSE next month.

The Cape Town-based company's share price strengthened 5.26 percent on the JSE on Tuesday to close at R1 on the news that it would go private after almost 40 years on the bourse.

Trans Hex, which operates mines in South Africa and Angola, said that it was scheduled to terminate the listing of its shares on December 3.

In September Trans Hex said that it considered a proposed buyout of minority shareholders and told the market it was considering delisting from the JSE. 

“The board believes that the company and its subsidiaries are more suited to an unlisted environment and that the current listing provides little benefit to the company at this stage of its operating cycle. 

"In addition, the delisting will enable the company to save on the costs of operating in a listed environment,” said the group.

Trans Hex is 79.73 percent owned by a consortium comprising Cream Magenta 140 Proprietary, Metcap 14 Proprietary, and RAC Investment.   

The delisting comes as the company previously said that the declining price for smaller diamonds, which constituted the bulk of its South African production, and the costs related to security due to illegal mining issues had become "prohibitive".

Michael Treherne, a portfolio manager at Vestact Asset Management, said unlisted companies had less regulatory hurdles to jump through.

“Normally companies that need to do big restructuring like to be unlisted, because it makes the job of getting big changes done easier. Also, some companies are just too small to be listed, being listed is expensive,” Treherne said, adding that there were big advantages to being listed.

“People are more willing to lend money to a listed and more transparent company, or a company can issue shares to raise money. The other advantage is that it makes it easy for staff to cash in share options. There is also a level of prestige to being a listed entity,” Treherne said.

Trans Hex was established in 1965 by entrepreneurial investors who wanted to explore for diamonds in the Northern Cape.

It has become the latest mining company to delist amid the restructuring of the industry.

Atlatsa Resources – which owns the mothballed Bokoni mine in Limpopo, delisted from the JSE and Toronto Stock Exchange in September. 

Atlatsa reported a net loss for 

the three months ended March 31, 2019, of $21.1 million (R311.35m) and an operating cash flow shortfall of $3.5m, and said that the group’s total liabilities exceeded its total assets by $285.7m. 

The loss was primarily as a result of the Bokoni mine being placed on care and maintenance in October 2017.

Lonmin, the world’s third-biggest platinum producer was delisted in June, following its merger with Sibanye-Stillwater. 

Lonmin was the scene of the Marikana massacre, which claimed 44 lives in mid-August 2012.

Tawana Resources delisted from the bourse in February.