TRANS Hex has reported a drop in profits for the year ended March, in which its diamond output fell and it moved closer to buying a stake in the Namaqualand mine, owned by De Beers.

Trans Hex reported on Monday that group net profit fell 59% to R85m from the previous year’s R208m. Headline earnings per share fell 64% to 69.9c from 195.5c.

Trans Hex will host a presentation on its results on Wednesday and Thursday in Johannesburg and Cape Town, and is likely to give the market more clarity on its operational performance.

Trans Hex sold 65,339 carats from its South African mines during its 2013 financial year, versus 83,324 carats a year earlier. Diamond inventories grew to R113m from R76m.

The South African mines posted a pretax profit of R88m compared with R114m a year ago. In Angola, Somiluana sales fell to $14.9m from $21.7m.

Trans Hex said its alluvial mines increased the amount of gravel delivered to processing plants by 11%, but the average grade fell to 1.05 carats per 100m� compared to 1.57 carats before.

The increase in mined volumes as well as higher costs of labour, fuel and electricity meant the cost of goods sold jumped to R605m from R563m.

"Improved economic conditions allowed the recommencement of stripping operations in the Baken central channel during the reporting period," Trans Hex said. "Work is now continuing to confirm the potential of higher grades and better stone sizes. South African production for the 2014 financial year is expected to be 70,000 carats."

Trans Hex is a 50% shareholder in an organisation called Emerald Panther Investments, which has bid for De Beers’s Namaqualand mine.

The outstanding condition for the transaction is a decision from the government about what to do with its 20% stake in Namaqualand, which is near the Baken operations.