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Rockwell increases carat production and revenue from sales by 46% and 25% respectively in second quarter
ROCKWELL DIAMONDS INCORPORATED
(A company incorporated in accordance with the laws of British
Columbia, Canada)
(Incorporation number BCO354545)
(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 INCREASES CARAT PRODUCTION AND REVENUE FROM SALES BY 46% AND
25% RESPECTIVELY IN SECOND QUARTER ENDING AUGUST 31, 2013
September 25, 2013 Vancouver, BC – Rockwell Diamonds Inc. ("Rockwell"
or the "Company") (TSX: RDI; JSE: RDI) announced second quarter
production and sales update.
The Company reported a 26% increase in second quarter volumes of
gravel processed to 934,975m3, of which 627,746m3 was mined from its
own Middle Orange River (“MOR”) operations(1) and the balance from
royalty mining contractors operating at Tirisano. Total carat
production grew 46%, made up of 3,549 carats from own operations and
3,497 carats from contractors.
Total carat sales from Company properties for the quarter increased
9% to 5,623 carats at an average price of US$1,512 per carat,
translating into 25% growth in total revenue to US$8.5 million
compared to the previous quarter (excluding beneficiation). At
Rockwell’s own operations, an 84% improvement in average carat value
offset the impact of lower carat sales (down 47% to 2,656 carats
largely due to the sale of Klipdam) and accordingly, the Company
reported steady diamond sales revenue from its own operations of
US$6.6 million (excluding beneficiation). The value of sales from
Tirisano mining contractors amounts to US$1.9 million, of which 12.5
% or US$236,600 accrues to the Company.
Production at Saxendrift, comprising traditional Saxendrift and the
recently acquired, higher grade Saxendrift Extension gravels,
achieved a 41% grade improvement and consistent revenue from rough
diamond sales. Sales from the new Saxendrift Hill Complex mine
produced an average value of US$3,636 per carat resulting from the
sale of several high valued diamonds.
The results are a product of the Company’s strategy, of focussing on
its MOR operations, which boast higher diamond values. The second
quarter performance also demonstrates that the royalty mining
contractor initiative, as an interim measure to deliver value whilst
assessing the future options of some of our non-core assets, has been
a good one.
Commenting on second quarter production and sales James Campbell, CEO
and President said:
“We are pleased with our results for the second quarter which reflect
the benefits of our transition to focusing on the MOR region and that
our royalty mining contractor strategy is gaining momentum as an
alternate business initiative when it comes to non-core assets. We
reported a 26% increase in total production volumes and a 46%
improvement in carat production from all Company properties. US
dollar denominated revenue from diamond sales (excluding
beneficiation) is up 25% to US$8.5 million, showing a fifth
consecutive quarterly increase.
“Although production volumes from our own operations (Saxendrift,
Saxendrift Extension and Saxendrift Hill Complex) are down only 16%
to 627,746m3 for the quarter including the loss of volume from the
sale of Klipdam and closure of Tirisano, the grade at Saxendrift
improved 41% after integrating the Saxendrift Extension deposit into
Saxendrift’s mine plan. We produced 3,549 carats, 25% lower than last
year, though with an 84% increase in average price per carat,
compensating for lower carat production. Saxendrift Hill Complex came
on stream, making up for part of the production shortfall. Once
Niewejaarskraal gets to full production, we are positioned to close
the remaining production gap, taking us to a total monthly processing
capacity of 360,000m3 by the end of 2013 an on track towards our mid-
term objective of 500,000m3.”
“The average price per carat from own operations increased 84% to
US$2,488, providing further validation of our MOR focus. This
mitigated the impact of lower carat sales during the production ramp
up of our two new mines in the region. Accordingly, we report steady
revenue from own operations of US$6.6 million for the second
quarter.”
“Our royalty mining contracts continue to gain momentum and are
performing well. These processed 307,229m3 during the quarter and
recovered 3,497 carats. Our 12.5% royalty from these diamond sales
amounted to US$236,600. Production volumes are set to increase
further in the third quarter as a fifth contract comes on stream at
Tirisano and our 50,000m3 per month agreement at Zwemkuil in the MOR
starts operations.”
Second quarter operational update:
Volume and carat production for the Company’s operational mines for
the quarter ended August 31, 2013 was as follows:
Volumes of gravel Carats produced
processed (m3)
Operation
Q2 Q2 % Q2 Q2 %
2014 2013 change 2014 2013 change
Klipdam - 209,091 - - 2,274 -
Saxendrift* 462,777 476,825 -3% 2,543 1,879 35%
Saxendrift Hill 164,969 - - 831 - -
Complex*
Tirisano - 57,556 - - 550 -
Niewejaarskraal** - - - 175 - -
Total: Own operations 627,746 743,472 -16% 3,549 4,703 -25%
Contractors’ mining*** 307,229 - - 3,497 7 -
Saxendrift tailings - - - - 120 -
Total production on 934,975 743,472 26% 7,046 4,830 46%
Company properties
* Saxendrift and Saxendrift Hill Complex processed Saxendrift
Extension resources during July and August 2013 of 317 301 m3 and 109
839 m3 respectively
** Niewejaarskraal product was recovered during plant commissioning
and is excluded from grade calculations
*** “Contractors’ mining” refer to independent royalty contractors
processing gravel for their own risk and reward. Carats recovered are
then sold through the Company’s tender process. The Company retains
the responsibility for diamond security and sales and receives
royalty income of 12.5% on these diamonds sold with the balance of
the revenue accruing to the contractors. These carats are excluded
from grade calculations.
Diamond sales and revenue for the Company’s operations for the
quarter ended August 31, 2013 is as follows:
Sales (carats) Value of Sales (US$) Average value (US$
per carat)
Operation
Q2 Q2 % Q2 Q2 % Q2 Q2 %
2014 2013 change 2014 2013 change 2014 2013 change
Klipdam 53 2,502 -98% 27,975 2,174,387 -99% 528 869 -39%
Saxendrift 1,937 1,699 14% 4,377,094 4,257,158 3% 2,260 2,506 -10%
Saxendrift Hill 555 - - 2,017,992 - - 3,636 - -
Complex
Tirisano - 776 -100% - 282,808 -100% - 364 -
Niewejaarskraal* 111 - - 184,979 - - 1,666 - -
Total: Own 2,656 4,977 -47% 6,608,040 6,714,353 -2% 2,488 1,349 84%
operations
Contractors’ 2,967 - - 1,892,793 - - - - -
carat sales**
Saxendrift - 170 -100% - 90,207 -100% - 529 -
tailings
Total sales from 5,623 5,147 9% 8,500,833 6,804,560 25% 1,512 1,322 14%
Company properties
* Niewejaarskraal product was recovered during plant commissioning and
the revenue is applied against the Capital Project completed at the
end of August 2013.
** "Contractors’ carat sales” refer to independent royalty
contractors processing gravel for their own risk and reward. Carats
recovered are then sold through the Company’s tender process. The
Company retains the responsibility for diamond security and sales
and receives royalty income of 12.5% on these diamonds sold with the
balance of the revenue accruing to the contractors. These carats are
excluded from average value calculations.
Saxendrift operations:
- Quarterly volumes of gravel processed at the Saxendrift Mine,
including a combination of gravels from the traditional mining area
and the Saxendrift Extension, decreased by 3% to 462,777m3. The
average grade of the material processed increased to 0.55 carats /
100m3 compared to 0.39 carats / 100m3 a year ago due to accessing the
higher grade Saxendrift Extension resource. As a result, carat
production increased 35% to 2,543 carats, compared to 1,879 carats in
the quarter ended August 31, 2012.
- Notable stones recovered at the Saxendrift Mine processing plant
(including Saxendrift and Saxendrift Extension gravels) included 42
stones exceeding 10 carats, with the five largest stones weighing
49.45 carats, 56.85 carats, 57,55 carats, 75.70 carats and 116.30
carats.
- Carats sold from the Saxendrift operation increased 14% to 1,937
carats at an average price of US$2,260 per carat, reporting a 3%
increase in revenue from diamond sales to US$4.4 million. The 10%
decline in average price per carat, was due to the product mix that
was sold during the quarter.
Saxendrift Hill Complex:
- The Saxendrift Hill Complex (“SHC”) reached its nameplate capacity
of 100,000m3 per month in August 2013. During the quarter, 831 carats
were recovered from 164,969m3 of gravel processed. These included
gravels from the Saxendrift Extension project that were processed at
SHC, in parallel with Saxendrift’s traditional pan plant to confirm
the effectiveness of the Bulk X-ray technology compared to
traditional Dense Media Separation (“DMS”) and pan plants. The grade
achieved at the Bulk X-ray plant was at least 40% higher than the
conventional plant, including two rough diamonds exceeding 30 carats.
- Sales from the Saxendrift Hill Complex amounted to 555 carats at an
average price of US$3,636 per carat. Revenue from diamond sales from
Saxendrift Hill Complex for the period totalled US$2.0 million,
exceeding the capital investment cost.
- Notable stones recovered at the Saxendrift Mine processing plant
(including Saxendrift Hill Complex and Saxendrift Extension gravels)
during the second quarter included 16 stones exceeding 10 carats,
including two in the 30 to 40 carat range.
Niewejaarskraal:
- Production commissioning of the first phase of the new plant
started during July 2013, some ten weeks after the project was
approved. The new plant incorporates elements of the existing DMS
plant that had been on care and maintenance at Niewejaarskraal since
2007. Total commissioning volumes in July and August 2013 amounted to
48,512m3, which was behind plan as a result of commissioning processes
that were subsequently resolved. The plant did, however, achieve
instantaneous nameplate capacity of 200 tph. A total of 175 carats
were recovered during this period.
- During this production ramp up phase, reported grades were lower
than anticipated due to a greater variability in the Rooikoppie
particle size distribution than was outlined in the previous
operators’ sampling reports. However, the plant efficiency was
confirmed by reprocessing plant tailings through the Bulk X-ray
system. The next phase of commissioning, entailing a mix of Palaeo
and Rooikoppie gravels, commenced in the third week of August when
the first blast was carried out to access the main Palaeo deposit
that is expected to be the mainstay of operations at Niewejaarskraal.
- The plant was handed over to the operational team on September 1,
2013 and is on track to be operating at nameplate production by the
end of 2013.
- Sales of the first diamonds produced at Niewejaarskraal amounted to
111 carats with total revenue of $184,979 at an average price of
US$1,666 per carat.
- Notable stones recovered at Niewejaarskraal during the second
quarter included three stones exceeding 10 carats.
Royalty Mining Contractors
- The royalty mining strategy continued to show validating results
during the quarter with four royalty mining contractors operating on
the Tirisano property, and a fifth contract on track to commence
operations during September 2013. In addition, a contract with
projected monthly volumes of 50,000m3 started at Rockwell’s Zwemkuil
property in the Middle Orange River region in the second quarter.
- A total of 3,497 carats were recovered from 307,229m3 of gravel
processed from all contacts. Of these, 2,967 carats were sold,
generating total proceeds of $1.9 million of which 12.5% or
US$236,600 accrues to Rockwell.
Subsequent event:
On September 17, 2013, the Company announced that it had recovered
four rough diamonds each exceeding 100 carats in weight from its
operations in the MOR region in the previous three weeks, of which
two are typical MOR yellow stones and the others of a poorer quality.
Two stones weighing 116 carats (as included in section on Saxendrift
operations above) and 138 carats were recovered at the Saxendrift
processing plant from gravels originating from the Saxendrift
Extension pit. In addition, a 126-carat stone and a 169-carat stone
were recovered from a mining area that has recently been opened up at
the Saxendrift Hill Complex (“SHC”). The recently commissioned SHC
plant utilizes Bourevestnik X-ray technology in both the
concentration and recovery areas.
These stones will be sold into the beneficiation joint venture with
Steinmetz Diamonds at market value. Rockwell will also participate
equally in the value uplift once these stones have been polished and
sold.
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
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. It has recently built two new
internally funded mines in the Middle Orange river region, namely the
Saxendrift Hill Complex, which came into production in the first
quarter of fiscal 2014 and the Niewejaarskraal Mine which is being
commissioned. Rockwell also has a development project 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 if 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 as 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.
(1) The Company’s own operations for the second quarter comprise
gravels mined at Saxendrift, Saxendrift Extension and Saxendrift Hill
Complex and processed at Saxendrift and Saxendrift Hill Complex.
Going forward these will include Niewejaarskraal that is currently in
production ramp up.
25 September 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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