ROCKWELL DIAMONDS INCORPORATED - Rockwell inters Into Acquisition Agreement for Going Private Transaction

Rockwell inters Into Acquisition Agreement for Going Private Transaction

ROCKWELL DIAMONDS INCORPORATED
 (A company incorporated in accordance with the laws of British Columbia, Canada)
(Incorporation number BC0354545)
(Formerly Rockwell Ventures Inc.)
(South African Registration number 2007/031582/10)
Share Code on the JSE Limited: RDI ISIN: CA77434W2022
Share code on NEX: RDI.H CUSIP Number: 7743W103
(“Rockwell” or “the Company”)



Rockwell Diamonds Enters Into Acquisition Agreement for Going Private Transaction

January 15, 2021, Toronto - Rockwell Diamonds Inc. (“Rockwell” or the “Company”) (JSE: RDI)
announced today that it has entered into an acquisition agreement (“Acquisition Agreement”)
and an amalgamation agreement (“Amalgamation Agreement”), each dated as of the date of
this news release, with 1274787 B.C. Ltd. (“Bristco”), a corporation existing under the laws of
British Columbia and wholly-owned by Mark Bristow, a director of the Company, pursuant to which
all of the outstanding common shares of Rockwell (“Common Shares”), other than those
Common Shares held by Mark Bristow and any dissenting shareholders, will be exchanged for
redeemable preferred shares (“Redeemable Preferred Shares”) of the amalgamated corporation
resulting from the amalgamation of Rockwell and Bristco (“Amalco”) at a price of CAD$0.005 per
Common Share (the “Transaction”).

About the Transaction

It is intended that the Transaction will be effected by way of an amalgamation of Rockwell and
Bristco under the provisions of the Business Corporations Act (British Columbia) (the
“Amalgamation”). Pursuant to the Amalgamation, all of the issued and outstanding Common
Shares, other than those already held by Mark Bristow and any dissenting shareholders, will be
exchanged, on a one-for-one basis, for Redeemable Preferred Shares of Amalco. The
Redeemable Preferred Shares will then be immediately redeemed by Amalco in exchange for
CAD$0.005 per Redeemable Preferred Share payable in cash.

Rockwell has called an annual and special meeting of shareholders to be held on March 2, 2021
to, amongst other things, seek shareholder approval for the Amalgamation (the “Meeting”). The
Amalgamation must be approved by the affirmative vote of (i) 66.2/3 of the votes cast by holders
of Common Shares represented at the Meeting and (ii) a simple majority of the votes cast by
holders of Common Shares at the Meeting (excluding shareholders whose votes are required to
be excluded, including Mark Bristow, pursuant to Multilateral Instrument 61-101 - Protection of
Minority Security Holders in Special Transactions.

Completion of the Transaction is subject to regulatory approvals and other customary conditions
and is expected to close in early March 2021, subject to satisfaction of all conditions to closing
set out in the Acquisition Agreement. Upon completion of the Transaction, it is expected that
Amalco would be delisted from the JSE Ltd. and will apply to cease to be a reporting issuer under
applicable securities laws in Canada.
                                               

Fairness Opinion and Formal Valuation

The unconflicted board, being the board of directors of Rockwell (the “Board”) excluding Mark
Bristow as a director who has interests that present actual or potential conflicts of interest in
connection with the Amalgamation (the “Unconflicted Board”) determined that the shareholders
of Rockwell (other than Mark Bristow) should be given the opportunity to receive a cash offer in
exchange for their Common Shares so long as the price is fair from a financial point of view. The
Unconflicted Board understood, having received the benefit of legal advice, that any transaction
would require the preparation of an independent valuation of the “affected shares” and a minority
vote. Accordingly, the Unconflicted Board sought to obtain a formal valuation (“Formal
Valuation”) from KPMG LLP as an independent valuator and retained KPMG as financial advisor
to advise with respect to the financial fairness of the Amalgamation. The Unconflicted Board has
received an opinion from KPMG that, subject to the assumptions, limitations and qualifications
set forth in its written opinion, the consideration of C$0.005 per Common Share is fair from a
financial point of view to Rockwell’s shareholders (other than Mark Bristow) (the “Fairness
Opinion”). KPMG also concluded that, subject to the assumptions, qualifications and limitations
provided in the Formal Valuation, the fair market value of the Common Shares is nil as at July 31,
2020. The full text of the Fairness Opinion will be included in the management information circular
prepared in connection with the Meeting. The Fairness Opinion was furnished solely for the use
of the Unconflicted Board in connection with its evaluation of the Transaction and may not be
relied upon by any other person or entity (including, without limitation, security holders, creditors
or other constituencies of Rockwell) or used for any other purpose.

Board Approval and Recommendation

Following its review and in consideration of, amongst other things, the Fairness Opinion, the
Unconflicted Board has unanimously recommended that the Board approve the Transaction. The
Board (with Mr. Bristow declaring his interest in the Transaction), following the receipt and review
of recommendations from the Unconflicted Board, has approved the Acquisition Agreement, the
Amalgamation Agreement and the transactions contemplated thereby, and has determined that
the Amalgamation is fair to shareholders of Rockwell (other than Mark Bristow) and is in the best
interests of Rockwell, and recommends to shareholders (other than Mark Bristow) that they vote
in favour of the Amalgamation.

Early Warning Disclosure

Mark Bristow currently holds 1,325,517 Common Shares, representing approximately 2.41% of
the issued and outstanding Common Shares. Following completion of the Amalgamation, Mark
Bristow will beneficially own and control 100% of the issued and outstanding common shares of
Amalco. The head office of Rockwell is located in care of its attorneys, Fasken Martineau
DuMoulin LLP, at Suite 2400, 333 Bay Street, Toronto, Ontario, M5H 2T6.

Counsel and Advisors

KPMG LLP is acting as financial advisors to the Unconflicted Board and Fasken Martineau
DuMoulin LLP is acting as legal counsel to the Company.

Additional Information

Full details of the Transaction are set out in the Acquisition Agreement, which will be filed by
Rockwell under its profile on SEDAR at www.sedar.com. In addition, further information regarding
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the Transaction will be contained in a management information circular to be prepared in
connection with the Meeting and filed on www.sedar.com at the time that it is mailed to
shareholders. All shareholders are urged to read the management information circular once it
becomes available as it will contain additional important information concerning the Transaction.

About Rockwell Diamonds Inc.

Rockwell was engaged in the business of operating and developing alluvial diamond deposits.
The Company’s investments and mineral property interests are located in South Africa and,
although still owned by the Company, have been de-consolidated due to a loss of control and
value stemming from being in liquidation since November 2016, and awaiting final liquidation
proceedings in May 2021.

Rockwell’s common shares are listed on the JSE Ltd. under the symbol “RDI”. Rockwell is
currently subject to a cease trade order by the Ontario Securities Commission and has applied to
have such order revoked.

Forward-Looking Statements

Certain of the information contained in this news release constitutes ‘forward-looking statements’
within the meaning of securities laws. Such forward-looking statements, including but not limited
to statements relating to the Transaction and the proposed Amalgamation under the Acquisition
Agreement; the ability of the parties to satisfy the conditions to closing of the Transaction; the
mailing of the management information circular in connection with the Meeting and anticipated
timing thereof; and the anticipated timing of the completion of the Transaction, involve risks,
uncertainties and other factors which may cause the actual results to be materially different from
those expressed or implied by such forward-looking statements. Such factors include, among
others, obtaining required shareholder and regulatory approvals, exercise of any termination
rights under the Acquisition Agreement, meeting other conditions in the Acquisition Agreement,
material adverse effects on the business, properties and assets of Rockwell, and whether any
superior proposal will be made. Although the Company has attempted to identify important factors
that could cause actual results to differ materially from those contained in forward-looking
statements, there may be other factors that cause results not to be as anticipated, estimated or
intended. There can be no assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking statements. The
Company does not undertake to update any forward-looking statements, except in accordance
with applicable securities laws.

No regulatory authority has approved or disapproved the information contained in this
news release.

Notice to Rockwell Shareholders in the United States

This Transaction involves an agreement to acquire the securities of a foreign company. The
Transaction is subject to disclosure requirements of a foreign country that are different from those
of the United States. Financial statements included in the management information circular for
the Meeting, if any, have been prepared in accordance with foreign accounting standards that
may not be comparable to the financial statements of United States companies.
                                                -4-

It may be difficult for you to enforce your rights and any claim you may have arising under the
United States federal securities laws, since each of the Company and Bristco is incorporated in a
jurisdiction outside the United States, and some or all of their respective officers and directors
may be residents of countries other than the United States. You may not be able to sue either the
Company or Bristco or their respective officers or directors in a foreign court for violations of the
U.S. securities laws. It may be difficult to compel the Company or Bristco or their respective
affiliates to subject themselves to a U.S. court’s judgment.

This announcement is not an offer of securities for sale in the United States. Securities may not
be offered or sold in the United States absent registration under the United States Securities Act
of 1933, as amended (the “U.S. Securities Act”) or compliance with the requirements of an
exemption from such registration requirements. The Redeemable Preferred Shares that may be
issued to Rockwell shareholders will not be registered under the U.S. Securities Act, and will be
issued in the United States in reliance on the exemption from the registration requirements of the
U.S. Securities Act provided by Rule 802 thereunder.

Copies of the management information circular for the Meeting (including any documents to be
incorporated therein) will be made available through the filing of a Form CB with the United States
Securities and Exchange Commission at www.sec.gov.

For further information contact:

Willem Jacobs, President and Chief Executive Officer of Rockwell Diamonds Inc.
Phone: +27 (72) 614 4053
Email: Willem.Jacobs@barrick.com

15 January 2021
Transactional Sponsor: Sasfin Capital (A member of the Sasfin Group)

Legal Advisor: Fasken Martineau DuMoulin LLP

Date: 18-01-2021 07:50:00
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