Wrap Text
Market update on disposal of mine
ROCKWELL DIAMONDS INCORPORATED
(A company incorporated in accordance with the laws of British
Columbia, Canada)
(Incorporation number BCO354545)
(Formerly Rockwell Ventures Inc.)
(South African registration number: 2007/031582/10)
Share code on the JSE Limited: RDI ISIN: CA77434W2022
Share code on the TSX: RDI CUSIP Number: 77434W103
Share code on the OTCBB: RDIAF
SALE OF KLIPDAM MINE RELEASES CAPITAL FOR REINVESTMENT IN HIGHER
VALUE MIDDLE ORANGE RIVER OPERATIONS
April 15, 2013 Vancouver, BC – Rockwell Diamonds Inc. ("Rockwell" or
the "Company") (TSX: RDI; JSE: RDI) is pleased to announce that it
has reached an agreement to sell the Klipdam Mine and associated
propertiesi for a total cash consideration R23 million (C$2.5
million). This brings the total proceeds from the sale of this asset
to R48 million, including the sale of the earth moving equipment in
October 2012. The proceeds will be reinvested in bringing the
Niewejaarskraal Mine into production and progressing its strategy of
growing its operating footprint in the Middle Orange River region of
South Africa. The Company has a strong track record in operating
successful mines in this region which typically yields large, high
valued diamonds.
The right sizing project that was initiated at Klipdam in October
2012 led to the expected unit cost reductions and increased volume
throughputs, however the operation is not considered to be a core
asset. Consequently the Company has accepted an unsolicited cash
offer to sell the mine to a private alluvial diamond miner. The
purchase consideration of R23 million is payable in three tranches.
The first payment of R10 million was received upon signature of the
sale agreement. The rest of the purchase price will be paid in eight
monthly instalments of R1 million each with R5 million to be paid
upon receipt of Section 11 approval from the Department of Minerals
Resources (“DMR”). Under the terms of the agreement, Rockwell will
retain ownership of certain items of plant and machinery that will be
redeployed, chiefly to Niewejaarskraal Mine.
Elaborating on the rationale for the transaction, James Campbell, CEO
of Rockwell stated: “Klipdam Mine has a remaining life of two years,
based on current resources. We accepted the offer for this mine, as
opposed to investing further resources to extend its projected mine
life through additional exploration, because our analyses projected
higher long-term returns from Rockwell’s Middle Orange River
properties which have better grades and diamond values than Klipdam
and yield high-value, gem-quality diamonds.”
At the same time, a proposal to take the Niewejaarskraal Mineii out of
care and maintenance has been approved by the Board of Directors,
with a total capital budget of R20.1 million (C$2.2 million) that is
comprised chiefly of labour and earthworks. The project entails
bringing the Dense Media Separation (“DMS”) plant at Niewejaarskraal
Mine back into operation. The DMS production will be supplemented
through the addition of four 16-ft Rotary pans from the Tirisano mine
in addition to using equipment from Klipdam that was not part of the
sale. Trial mining operations are expected to come on stream after a
six-month implementation phase with a six-month ramp up to a monthly
processing capacity of 115,000 m3.
During the design phase, management considered deploying the same
Bulk X-ray technology that has been installed at other Rockwell
operations but this would have taken one year to implement at
Niewejaarskraal. The Company opted to re-commission the existing DMS
plant and install the 16-ft Rotary pans - a lower cost option which
has the added advantage of a shorter implementation period. The
production team from Klipdam has the requisite expertise and
experience to efficiently run a pan and DMS plant, and will be
relocated to Niewejaarskraal as will the contract miner CML
Operations from Klipdam. As part of the design phase, the Company
evaluated the potential for a second phase of commissioning to
increase the capacity of Niewejaarskraal to 200,000 m3; this option
will be revisited once the initial phase has been bedded down.
“The Niewejaarskraal development is another important milestone
towards delivering on our stated objective of growing monthly
production volumes to 500,000 m3 from our existing inventory of
properties in the Middle Orange River region. With three productive
mines, namely Saxendrift, the Saxendrift Hill Complex which is in the
production ramp-up phase, to be followed by Niewejaarskraal, we
expect to reach three quarters of this target,” commented CEO
Campbell. “The Niewejaarskraal deposit average grade is 0.74 carats /
100 m3, and so has the potential to produce higher recovery grades
than Saxendrift, with the added benefit of slightly better projected
average carat values. Our plans for Niewejaarskraal also make use of
the existing production plant and equipment without placing undue
pressure on our capital resources. We believe our track record in the
Middle Orange River region positions us to start delivering positive
net returns by the end of fiscal 2014.”
About Rockwell Diamonds:
Rockwell is engaged in the business of operating and developing
alluvial diamond deposits, with a goal to become a mid-tier diamond
production company. The Company’s flagship mine is the Saxendrift
Mine, in the Middle Orange River and the Saxendrift Hill Complex,
which will come into production in the first quarter of fiscal 2014.
Rockwell also has two development projects and a pipeline of earlier
stage properties with future development potential. The operations
are based on high throughput processing capability and Saxendrift has
among the lowest unit costs in the industry as a result of
implementing fit for purpose technologies.
The Company is known for producing large, high quality gemstone
comprising a major portion of its diamond recoveries that is enhanced
through a beneficiation joint venture that enables it to participate
in the profits on the sale of the polished diamonds.
Rockwell also evaluates merger and acquisition opportunities which
have the potential to expand its mineral resources and production
profile and to provide accretive value to the Company.
No regulatory authority has approved or disapproved the information
contained in this news release.
Forward Looking Statements
Except for statements of historical fact, this news release contains
certain "forward-looking information" within the meaning of
applicable securities law. Forward-looking information is frequently
characterized by words such as "plan", "expect", "project", "intend",
"believe", "anticipate", "estimate" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
Although the Company believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions, such
statements are not guarantees of future performance and actual
results or developments may differ materially from those in the
forward-looking statements.
Factors that could cause actual results to differ materially from
those in forward-looking statements include uncertainties and costs
related to exploration and development activities, such as those
related to determining whether mineral resources exist on a property;
uncertainties related to expected production rates, timing of
production and cash and total costs of production and milling;
uncertainties related to the ability to obtain necessary licenses,
permits, electricity, surface rights and title for development
projects; operating and technical difficulties in connection with
mining development activities; uncertainties related to the accuracy
of our mineral resource estimates and our estimates of future
production and future cash and total costs of production and
diminishing quantities or grades of mineral resources; uncertainties
related to unexpected judicial or regulatory procedures or changes
in, and the effects of, the laws, regulations and government policies
affecting our mining operations; changes in general economic
conditions, the financial markets and the demand and market price for
mineral commodities such and diesel fuel, steel, concrete,
electricity, and other forms of energy, mining equipment, and
fluctuations in exchange rates, particularly with respect to the
value of the US dollar, Canadian dollar and South African Rand;
changes in accounting policies and methods that we use to report our
financial condition, including uncertainties associated with critical
accounting assumptions and estimates; environmental issues and
liabilities associated with mining and processing; geopolitical
uncertainty and political and economic instability in countries in
which we operate; and labour strikes, work stoppages, or other
interruptions to, or difficulties in, the employment of labour in
markets in which we operate our mines, or environmental hazards,
industrial accidents or other events or occurrences, including third
party interference that interrupt operation of our mines or
development projects.
For further information on Rockwell, Investors should review
Rockwell's home jurisdiction filings that are available at
www.sedar.com.
i The Klipdam Mine and associated properties consists of the
contiguous Holpan 161 and Klipdam 157 farms, covering an area of
3,836 hectares as well as prospecting properties, Erf 1 and Erf 2004,
Windsorton. Mining operations at Holpan were placed on care and
maintenance in May 2011.
ii The Niewejaarskraal Mine project is a past producer that was
acquired by Rockwell in 2009. The Company announced results from a
Preliminary Assessment of Niewejaarskraal in May 2011.
For further information on Rockwell and its operations in South
Africa, please contact
James Campbell
CEO
+27 (0)83 457 3724
Stéphanie Leclercq
Investor Relations
+27 (0)83 307 7587
15 April 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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