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CANCELLATION OF S331738 News release- Rockwell announces positive Pre-Feasibility Study for Wouterspan property
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
Rockwell announces positive Pre-Feasibility Study for Wouterspan
property
May 15, 2013 Vancouver, BC – Rockwell Diamonds Inc. ("Rockwell" or
the "Company") (TSX: RDI; JSE: RDI) is pleased to announce that it
has updated a Preliminary Economic Assessment(“PEA”)on its
Wouterspan alluvial diamond property that is located on the opposite
side of the Orange River from the Saxendrift diamond mine. The PEA
was carried out by a team led by Dr Kurt Petersen, an expert diamond
metallurgist and Walter Bold Pr. Eng. Rockwell’s Group Engineer.
There was also significant input from Paradigm Project Management
(“PPM”) a company with a strong track record in the innovative
development of new diamond mines. All currency values are stated in
Canadian dollars unless otherwise indicated.
The study indicated positive economics,sufficient to take the
project to the detailed design stage. The economic model yielded an
internal rate of return of between 45% and 70% for a range of
scenarios based on the key inputs. The net present value (“NPV”) for
the base case is $91.71 million at a 15% discount rate, yielding a
project payback period of 2.3 years from the start of construction or
approximately 1.3 years from commencement of production. The project
is most sensitive to revenue with a 5% variance in the total revenue
over the 10 year life of mine,impacting the NPV by 15%. The
operation is expected to employ 300 people.
Key assumptions of the study
- A plant with a capacity of 1,200 tonnes per hour (‘tph’) (or
354,000m3 per month),a rate that lowers the sensitivity of
diamond production to the nature of the resource being mined.
- A plant design comprising of three processing streams:two
Bourevestnik Bulk X-ray systems such as those that have been
successfully implemented by the Company at its Middle Orange
River operations to handle the coarse and mid-sized gravels; and
the third stream being a dense media separation (DMS) stream to
process fine material.
- A reduced water consumption rate that is suited to the
environmental conditions in the Middle Orange River region.
- The use of contract mining at a fixed unit cost that reduces the
capital requirements and enables Rockwell to focus on mine
planning and processing.
Summary of financial model and results
Proposed mining rate 1,200 tph
Project life of mine 10 years
Grade (at 5mm bottom cut off) 0.622 carats / 100m3
Average carat value* $2,300 / carat
Capital cost(including 25% $42 million
contingency)
Unit cost(using contract US$8.88/m3
mining)
Net present value (at 10.0%) $122.93 million
Net present value (at 15.0%) $91.71 million
* The NI 43-101 diamond value at a bottom cut off of +2mm is
$2,029/ct. The equivalent value at a bottom cut off of +5mm is
$2,300/ct.
The net present values in the table above are shown pre tax and were
calculated in ZAR before conversion into C$ at an exchange rate of
ZAR8.50 / C$. These are also net of the mining royalty that has been
applied according to the Mineral and Petroleum Resources Royalty Act
No 28 of 2008 (the “Royalty Act”).
A Preliminary Economic Assessment (‘PEA’) is preliminary in nature,
and includes Inferred mineral resources that are considered too
speculative geologically to have economic considerations applied to
them that would enable them to be categorized as mineral reserves.
However, the mine design aspects of the PEA were completed at a pre-
feasibility study level as per standard industry practice. There is
no assurance that the PEA will be realized.
Resource summary
Estimated mineral resources for the Wouterspan property are:
Resource area Inferred (m3) Indicate(m3) Grade (carats/100m3)*
Rooikoppie 5 911 000 714 400 0.84
Primary Gravels 31 863 000 4 311 100 0.84
Totals 37 774 000 5 025 500 0.84
* 2mm bottom cut off.
The effective date of the resource statement for Wouterspan is 30
November 2010. Further details of the estimate are provided in the
Company’s May 31, 2011 news release.
“Completion of this study on Wouterspan is a critical milestone in
Rockwell’s strategy to unlock the growth potential of its Middle
Orange River projects. The property was successfully mined in the
past using pan plants. We now have access to more efficient fit for
purpose technologies such as the Bulk X-ray system that we have
incorporated into the new plant design,” explains James Campbell,
CEO, Rockwell Diamonds. “The study’s results are based on what we are
achieving in other areas of our operations. The project capital is
expected to be some $42 million, including a 25% contingency, with
the potential to come in substantially lower. The team that conducted
the Wouterspan study was instrumental in more than halving the
eventual capital budget required to recently bringing on stream a new
kimberlite mine in Botswana, compared to initial estimates.”
“A key element of Rockwell’s strategy is to process 500,000m3 per
month of high quality gravels from the Middle Orange River region.
Our Saxendrift and Saxendrift Hill Complex will collectively process
250,000m3 per month,” elaborates Campbell. “We recently announced our
plans to bring the Niewejaarskraal mine into production at a
processing capacity of 115,000m3. We are now considering taking the
Wouterspan property to the next step. This will enable us to achieve
our full strategy in the Middle Orange.”
Commenting on the potential socio-economic benefits of the project,
Campbell added that:“While the construction of a new mine at
Wouterspan would add significant positive impacts to the local
economy, we also project the creation of some 300 new jobs in this
region which is troubled by high levels of unemployment. The plant
design is based on continuous operations, running four shifts per
day. This means that Wouterspan’s job creation potential is over and
above the 93 jobs that were recently created at our Saxendrift Hill
Complex mine, which is currently being commissioned.”
Mr Glenn A Norton (Pr. Sci. Nat.), Group Technical Manager and Walter
Bold (Pr. Eng (Mech)), Group Engineer, who are both employees of
Rockwell supervised the PEA and have reviewed and approved the
contents of this release.Further details will be provided in a
technical report that will be filed on the Company's profile at
www.sedar.com.
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)083 307 7587
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 has two operational mines, which it
is progressively optimizing, as well as a third mine which will come
into production in the first quarter of 2013. 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, the flagship mine
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 gem stone
diamonds comprising a major portion of its diamond recoveries and has
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 would 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.
Information Concerning Estimates of Indicated and Inferred Resources
This news release also uses the terms'indicated resources' and
'inferred resources'. Rockwell Diamonds Inc advises investors that
although these terms are recognized and required by Canadian
regulations (under National Instrument 43-101 Standards of Disclosure
for Mineral Projects), the U.S. Securities and Exchange Commission
does not recognize them. Investors are cautioned not to assume that
any part or all of the mineral deposits in these categories will ever
be converted into reserves. In addition, 'inferred resources' have a
great amount of uncertainty as to their existence, and economic and
legal feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of Inferred Mineral Resources may not
form the basis of feasibility or pre-feasibility studies, or economic
studies except for Preliminary Assessment as defined under 43-101.
Investors are cautioned not to assume that part or all of an inferred
resource exists, or is economically or legally mineable.
Sponsor
Sasfin Capital
(a division of Sasfin bank Limited)
Date: 16/05/2013 07:12:08 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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