Wrap Text
Record quarterly carat procudtion and a new BEE partnership
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 DELIVERS RECORD QUARTERLY CARAT PRODUCTION WITH IMPROVED
REVENUE FROM DIAMOND SALES FOR THE SIXTH SUCCESSIVE QUARTER AND
ANNOUNCES A NEW BEE PARTNERSHIP FOR ITS MIDDLE ORANGE RIVER
OPERATIONS
December 9, 2013 Vancouver, BC – Rockwell Diamonds Inc. ("Rockwell"
or the "Company") (TSX: RDI; JSE: RDI) announces its quarterly
production and sales update for the three months ended November 30,
2013:
Middle Orange River (“MOR”) growth strategy makes progress with 111%
increase in carat production along with an all-time record quarterly
carat production for the Company.
Total volumes of gravel processed and carat production from Company
properties(i) increased by 33% and 54% respectively.
Total carat sales from Company properties improved by 50% with carat
sales from MOR operations up by 101%.
Revenues from diamond sales (excluding beneficiation) increased for
the sixth consecutive quarter.
Sales revenues from own operations (excluding royalty mining) up 97%.
The Company reported a 33% increase in third quarter volumes of
gravel processed to 1,034,966m3, of which 763,332m3 was mined from
its own Middle Orange River operations(ii) and the balance from
royalty mining contractors operating at Tirisano. Total carat
production grew 54%, made up of 5,153 carats from own operations and
3,995 carats from contractors.
Total carat sales from Company properties for the quarter increased
50% to 6,066 carats at an average price of US$1,764 per carat,
translating into 45% growth in total revenue to US$10.7 million
compared to the prior year’s third quarter (excluding beneficiation).
Rockwell’s MOR operations delivered a 117% increase in carat sales,
which together with a 24% increase in average carat value to US$2,198
from that region translated into a 169% increase in value of sales to
US$7.8 million. The value of sales from Tirisano mining contractors
amounts to US$2.9 million, of which 12.5% or US$357,500 accrues to
the Company.
Volume production from Rockwell’s three MOR mines, key to Rockwell’s
organic growth focus, increased by 65% due to the commissioning of
new mining infrastructure at Saxendrift Hill Complex and
Niewejaarskraal (currently in ramp up) during the first half of
fiscal 2014. The average grade improved 27%, underpinning the
substantial improvement in MOR carat production from a year ago.
These results confirm Rockwell’s strategic focus on its MOR
operations, as the Company delivers on milestones towards its mid
term target to increase monthly production volumes to 500,000m3 to
smooth its production profile and increase the recovery of large
diamonds. At the same time, the results of the royalty mining
contractor agreements at Tirisano have increased again, with
consistent recoveries at this property and enabling the Company to
continue assessing the future options of some of its non-core assets.
Commenting on third quarter production and sales James Campbell, CEO
and President said:
“We are pleased that our production and sales figures for the third
quarter show that our strategy to focus on the Middle Orange River
region is bearing fruit. We more than doubled our carat production
and sales from these properties while the value of sales increased
almost threefold to US$7.8 million and the average price per carat
increased 24%. Our total value of sales from Company properties
increased 45% to US$10.7 million, showing a sixth consecutive quarter
of US dollar denominated growth. Furthermore, the extra ordinary
recovery of the five rough diamonds exceeding 115 carats since the
end of August 2013, the largest of which was 287 carats, reinforces
the merits of this Middle Orange strategy.”
“In the past year, we have significantly enhanced our optionality at
the greater Saxendrift property (including Saxendrift, Saxendrift
Extension and Saxendrift Hill Complex), with our two processing
plants at Saxendrift and Saxendrift Hill Complex providing the
capacity to process some 240,000m3 per month from multiple mining
faces located on the traditional Saxendrift mining area, Saxendrift
Extension and Saxendrift Hill Complex. These processing plants
achieved a 43% grade uplift in the quarter while carat production and
sales increased 94% and 101% respectively.”
“The production ramp up at Niewejaarskraal is on track. The next
phase of the initial plant commissioning will be completed by the end
of January with the installation of an in field screen and rental
Bulk X-ray system, bringing monthly volumes to 100,000m3. We have
already confirmed the effectiveness of these fit-for-purpose
technologies to handle MOR gravels, underpinning our confidence that
they will enable us to optimise Niewejaarskraal mining activities.
Subsequently we will turn our attention to implementing our Middle
Orange River strategy at our other properties, including Wouterspan.”
“Our royalty mining contracts delivered another consistent
performance in the third quarter, processing 271,634m3 to yield 3,995
carats. Our 12.5% royalty from these diamond sales amounted to
US$357,500. Although our operator at Zwemkuil terminated their
contract to pursue other opportunities, another operator will
commence at the Kwartelspan property in the fourth quarter as well as
a sixth royalty miner who will imminently commence operations at
Tirisano.”
Third quarter operational update:
Volume and carat production for the Company’s operational mines for
the quarter ended November 30, 2013:
Volumes of gravel processed Average grade (carats
Operation Carats produced
(m3) / 100 m3)
% Q3 Q3 % Q3 Q3 %
Q3 2014 Q3 2013
change 2014 2013 change 2014 2013 change
Klipdam - 217,910 - - - - 0.89 -
1,957
Saxendrift 400,610 -13% 29% 0.79 0.53 49%
461,331 3,164 2,444
Saxendrift Hills
223,827 - - - - 0.71 - -
Complex 1,579
Tirisano - 37,780 - - 381 - - 1.01 -
Niewejaarskraal 138,895 - - 410 - - 0.30 - -
Total: Own 763,332 717,021 6% 8% 0.68 0.67 1%
operations 5,153 4,782
Contractors’
271,634 29,581 818% 535 647% 1.47 1.81 -19%
mining* 3,995
Saxendrift
- 30,383 - - 633 - - 2.08 -
tailings
Total production
on Company 776,985 33% 54% 0.88 0.77 15%
1,034,966 9,148 5,950
properties
* “Contractors’ mining” refer to independent royalty contractors
processing gravel for their own risk and reward. Carats recovered are
then sold through the Company’s tender process. The Company retains
the responsibility for diamond security and sales and receives
royalty income of 12.5% on these diamonds sold with the balance of
the revenue accruing to the contractors. These carats are excluded
from grade calculations.
Diamond sales and revenue for the Company’s operations for the
quarter ended November 30, 2013:
Average value (US$ per
Operation Sales (carats) Value of Sales (US$)
carat)
Q3 Q3 % Q3 Q3 %
% change Q3 2014 Q3 2013
2014 2013 change 2014 2013 change
Klipdam - 1,490 - - 982,957 - - 660 -
Saxendrift 2,210 1,647 34% 36% 1,797 1,768 2%
3,971,197 2,912,196
Saxendrift
1,106 - - - - 3,354 - -
Hills Complex 3,709,485
Tirisano - 214 - - 74,383 - - 348 -
Niewejaarskraal
250 - - 158,070 - - 632 - -
*
Total: Own
3,566 3,351 6% 97% 2,198 1,185 85%
operations 7,838,752 3,969,536
Contractors’
2,500 408 513% 352,053 - 863 33%
carat sales* 2,860,187 1,144
Saxendrift
- 284 - - - - -
tailings 3,039,812 10,704
Total sales
10,698,93
from Company 6,066 4,043 50% 45% 1,764 1,821 -3%
9 7,361,401
properties
* "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,
comprising wholly of gravels from the higher-grade Saxendrift
Extension, decreased by 13% to 400,610m3. Mining rates were impacted
by lower earthmoving availabilities: these are currently being
addressed through a detailed earthmoving vehicle (‘EMV’) fleet
optimization assessment. In addition, the processing rate was
deliberately kept slightly lower in order to optimise plant
efficiencies as a result of the abundance of heavy minerals in this
current mining area.
However, lower volumes were offset by a higher average grade of 0.79
carats / 100m3 compared to 0.53 carats / 100m3 in the prior year and
carat production increased 29% to 3,164 carats, compared to 2,444
carats in the quarter ended November 30, 2012.
Notable stones recovered at the Saxendrift Mine processing plant
included 51 stones exceeding 10 carats, with the two largest stones a
287.38-carat commercial (white tinted) and a lower quality 138.20-
carat rough diamond.
Carats sold from the Saxendrift operation increased 34% to 2,210
carats at an average price of US$1,797 per carat, which led to a 36%
increase in revenue from diamond sales to US$4.0 million (excluding
beneficiation).
Saxendrift Hill Complex:
The Saxendrift Hill Complex (“SHC”) mine, now in full production at a
rate of 80,000m3 per month (at a +5mm bottom cut off), delivered a
strong third quarter performance with 1,579 carats recovered from
223,827m3 of SHC gravels processed through its Bulk X-ray plant.
Sales from the Saxendrift Hill Complex amounted to 1,106 carats at an
average price of US$3,354 per carat. Revenue from diamond sales from
Saxendrift Hill Complex for the period totalled US$3.7 million.
Notable stones recovered at the Saxendrift Mine processing plant
during the third quarter included 22 stones exceeding 10 carats,
including a typical Middle Orange yellow rough diamond weighing 169
carats and a lower quality 126.51-carat stone.
Niewejaarskraal:
The first phase newly commissioned processing plant was handed over
to operations on September 1, 2013 and production ramp up continued
throughout the quarter. The throughput for the third quarter amounted
to 138,895m3, in line with the current plan for ramp up of the
current phase of commissioning.
Achieved grade for the quarter of 0.30 carats / 100m3 was
disappointing and the result of mining an adjacent property while
renegotiating the surface rental agreement on the main property, with
the recovery of 410 carats for the quarter.
The second phase of the 100,000m3 per month plant is on track for
completion by the end of January 2014 and comprises the installation
of an in field screen and Bulk X-ray system.
Sales from Niewejaarskraal amounted to 250 carats with total revenue
of US$158,070 at an average price of US$632 per carat. Carat values
are expected to improve and reflect the higher carat values that
characterise the MOR as the volumes processed at the mine increase.
Notable stones recovered at Niewejaarskraal during the third quarter
included four stones exceeding 10 carats.
Royalty Mining Contractors
The royalty mining contractors operating on the Tirisano property
delivered another consistent performance in the third quarter with
total volumes of gravel processed amounting to 271,634m3 yielding
3,995 carats. Of these, 2,500 carats were sold, with total proceeds
of US$2.9 million at an average price per carat of US$1,144.
The royalty mining contractor agreement at Zwemkuil ceased during the
quarter as the operator opted to pursue another opportunity
elsewhere. However a new agreement was signed at Kwartelspan to
commence in the fourth quarter of fiscal 2014 while a sixth operator
commenced mining at Tirisano.
ROCKWELL CONCLUDES NEW BEE PARTNERSHIP FOR ITS MIDDLE ORANGE
OPERATIONS
Rockwell Diamonds Inc. also announces that it has concluded an
agreement with a well established black investment company (“new BEE
partner”), to acquire a 30% equity stake in the Company’s Middle
Orange operations(iii), replacing Africa Vanguard Resources (“AVR”)
as its BEE partner in the region, as required by South African law,
under the Black Economic Empowerment (‘BEE’) legislative provisions,
subject to some conditions precedent.
As announced in March 2012, the Company agreed to unwind its
agreement with AVR and subsequently entered into discussions with
other groupings that indicated their interest to partner with
Rockwell in a value creating transaction. These discussions
culminated in the agreement with its new BEE partner, which was
established in the early 1990's and has a successful investment track
record in both listed and unlisted entities in sectors including
mining, diamonds and related services whose investment approach is to
engage with its investee companies at a strategic level to unlock
value. The identity of the new BEE partner will be communicated to
the market once the conditions precedent, including the Section 102
transfer, have been finalized.
Under the terms of the agreements and subject to the fulfillment of
the suspensive conditions, Rockwell’s new BEE partner will acquire
30% of Rockwell’s Middle Orange River operations. The total
acquisition consideration of ZAR72.6 million (US$7.3 million) will be
paid in two tranches with an initial payment of R17.3 million ($1.7
million) which will be settled once the various regulatory approvals
have been achieved. A vendor loan has been raised for the balance of
the purchase price, to be settled on or before February 28, 2018 at a
fixed interest rate of 9.0% per annum.
Commenting on the new BEE partnership James Campbell, CEO and
President said:
“We are delighted to have concluded an agreement with new BEE
partners who share our vision and strategic objectives. We are
confident that we will forge a partnership that will add value to our
business going forward and therefore generate positive returns for
our shareholders,” said James Campbell, CEO, Rockwell. “The key
criteria for Rockwell were to find partners with experience in the
South African mining sector, which could also fund their share of
future developments in the Middle Orange River region, which is our
current organic growth focus. The 24% up-front payment for the 30%
stake will strengthen our balance sheet and be deployed in
consolidating our operations in the Middle Orange River region.”
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 in
production ramp up. 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.
(i) Includes contribution from own operations (mines operated and
managed by Rockwell) and royalty mining contractors operating on
Company properties.
(ii )The Company’s own operations for the third quarter comprise
gravels mined at Saxendrift Extension (processed at Saxendrift),
Saxendrift Hill Complex and Niewejaarskraal which is still in
production ramp up.
(iii) Northern Cape operations comprise the Saxendrift, Saxendrift
Hill Complex, Saxendrift Extension and Niewejaarskraal mines as well
as the Wouterspan project, among others.
9 December 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
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