Trans Hex International has received results of the first bulk sample from the Sunda Shelf, Indonesia diamond exploration property and an increase in its interest in this project as a result of a restructuring of the equity interests between the partners Indomin Resources, Ocean Resources NL and PT Indo Teras Intan.
BULK SAMPLES
Bulk sample number 1 was excavated some 2,000 metres from shore on the southern-most of two major paleochannels. This paleochannel was the first reached by the dredge digging its way in from deeper water. A trench, 90 metres long by 25 metres wide was dredged across this southern paleochannel, from which only one gem quality macro diamond weighing 0.20 carats was recovered from a three metre thick coarse, well rounded and favourable basal gravel horizon. Delays were experienced during excavation due to the excessive slumping of clay material from the front and side walls of the trench. While this problem was solved by laying back the angle of the walls, the volume of overburden stripped increased considerably. Total overburden removed was 175,680 cubic metres, while 6,750 cubic metres of gravel was treated. Modifications to the sampling plant were also required in order to separate the gravel from the clay contaminant. These operational difficulties have now been satisfactorily resolved and it is expected that the second trench will be completed on schedule.
This result reduces the prospectivity of the southern paleochannel and the dredge is being moved to the northern paleochannel, some 1,200 metres to the north, where it is planned to excavate a 100 metre long by 25 metre wide trench across the gravels of the northern paleochannel. This site has been selected on the basis of high counts of coarse rutile grains recovered from regional and infill drill samples. Rutile grains, along with platinum and gold grains, have similar hydraulic characteristics to diamonds and therefore act as indicator minerals for locating favourable depositional sites where diamonds could be concentrated.
Dredging and treatment of the second bulk sample, including excavation of the access channel is scheduled to take three months. Extensive maintenance to both the dredge and onboard treatment plant will be carried out during the digging of the access channel.
NEW JOINT VENTURE AGREEMENT
According to the terms of the existing joint venture, Trans Hex International was committed to the expenditure of US$5 million in order to earn a 30% interest in the project. This position will be reached early in August 1997. In order to complete the second bulk sample, Trans Hex International has agreed to finance further expenditure to a maximum amount of US$1 million. In return for this expenditure Ocean shall transfer an additional 12% project equity to Trans Hex International. The company has also agreed to Indomin converting its 21% project interest to a graduated royalty payment of between 1% and 5% of gross sales income less government royalty and selling expenses once commercial production has commenced. As a result of this equity restructuring, the various interests of the parties will then be Trans Hex International 51%, Ocean 42% and PTITI 7%. Further exploration expenditure will be financed by the company and Ocean in proportion to their respective interests.
The above changes in the respective interests of the joint venture partners are subject to the approval of the Indonesian authorities.
The company remains optimistic that the results of bulk sample number 2, the highest priority location based on currently available information, will confirm the presence of gem-diamonds of sufficient grade and value to support further exploration of this highly prospective target.
