Wrap Text
Rockwell posts another strong quarter with increased revenues
Rockwell Diamonds Inc.
(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 TSXV: RDI
CUSIP Number: 77434W103
Rockwell posts another strong quarter with increased revenues on the back of improved production and
sales and appoints a new Chief Financial Officer
__________________________________________________________________________________________
June 26, 2014 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 May 31, 2014:
All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified.
Corporate:
- Achievement of two million lost time injury free hours (“LTIFH”) of operation at Saxendrift (June 16, 2014) and
one million LTIFH at Niewejaarskraal (May 29, 2014);
- Revenues from diamond sales (excluding beneficiation) up 15% to $8.8 million;
- Total carat sales were up 34% to 6,677 carats, sold at an average price of US$1,312 per carat (which is down
14% from a year ago);
- Substantial inventory of 5,237 carats (including royalty contract miners inventory of 2,271 carats) carried over
into second quarter of fiscal 2015; and
- MOR focused growth strategy remains on track.
The Company’s own internal operations(1) in the Middle Orange River(2)(“MOR”):
- Carat production increased 89%;
(1) Includes contribution from mines operated and managed by Rockwell. The Company’s own internal operations for the first
quarter of fiscal 2015 comprise gravels mined at Saxendrift, Saxendrift Extension (processed at Saxendrift), Saxendrift Hill
Complex and Niewejaarskraal. The fiscal 2014 comparative included the production of Saxendrift, Saxendrift Extension,
Saxendrift Hill Complex (in production ramp up) and Klipdam (sold at the end of March 2013).
(2) Middle Orange River operations included the production and sales of Saxendrift (incorporating Saxendrift Extension),
Saxendrift Hill Complex and Niewejaarskraal in the first quarter of fiscal 2015 while the prior year comprised of Saxendrift
(including Saxendrift Extension) and Saxendrift Hill Complex (in production ramp up).
- Carat sales grew 30%;
- Average grade increased 59% to 0.62 carats per 100m3; and
- Four +50 carat diamonds recovered including a high quality yellow MOR 103.08-carat stone.
Company’s total properties(3):
- Total volumes of gravel processed and carat production increased by 26% and 90% respectively;
- Total carat sales increased by 34%; and
- Average stone size increased 18% to 4.4 carats from 3.8 carats in the prior year.
Analysis:
Total carat production grew 90%, made up of 4,362 carats from own operations and 4,800 carats from royalty
mining contractors. The Company reported a 26% increase in first quarter volumes of gravel processed to 1,13
million m3, of which 703,837m3 was mined from its own MOR operations and the balance from its royalty mining
contractors operating at Tirisano and the joint venture mining agreement at Kwartelspan.
Rockwell’s MOR operations reported a 30% rise in carat sales and a 5% increase in value of sales to US$6.3
million. The value of sales from royalty mining contractors increased 132%, generating US$2.5 million, of which
12.5% or US$312,576 accrues to the Company.
Rockwell’s MOR volume production increased by 19% while the grade was up 59% from its three producing
mines in the region. Carat production rose 89% as volumes processed at Niewejaarskraal gained momentum,
and provided diversification benefits, mitigating the impact of lower earthmoving availabilities at Saxendrift and
partial screen failure at Saxendrift Hill Complex (“SHC”) which impacted quarterly volumes at these mines but
which have subsequently being addressed.
Commenting on first quarter production and sales James Campbell, CEO and President said:
“Our MOR operations recently reached two significant safety milestones, namely 2 million lost time injury free
hours (“LTIFH”) of operations at Saxendrift on June 16, 2014, the highest ever recorded at Rockwell, and 1 million
LTIFH at Niewejaarskraal on May 29, 2014. These achievements validate our efforts to maintaining fit for purpose
safety practices at all our operations.
“Rockwell’s first quarter performance shows continued growth in total volumes of gravel processed and carat
production from Company properties, with increases of 26% and 90% respectively. These results are
underpinned by our increasingly diversified production profile in the MOR where we now have three producing
(3) Includes contribution from mines operated and managed by Rockwell as well as the royalty mining contractors’ contribution.
MOR mines, all of which have multiple mining faces. MOR carat production increased 89% while carats sold were
up 30% and we entered the second quarter with 2,966 carats of high quality rough MOR diamonds in inventory.
“We saw a progressive improvement in production as a result of sticking to our MOR focused strategy during the
first quarter. These culminated in all time record carat production for the Company during the month of May 2014.
Contributing to this milestone was the improving performance at Niewejaarskraal where we mined according to
the new mine plan and completed the production ramp up. These significant improvements include a reported
grade of 0.57 carats per 100m3 and a first quarter average carat value of US$2,408, both in line with plan.
Saxendrift’s results were impacted by lower earthmoving availabilities due to its aging fleet, but we are addressing
this through the fleet renewal programme which is now well into the implementation phase. Volumes at SHC were
affected by a mechanical breakdown of our front-end screen. We mitigated this breakdown by processing old
recovery tailings and bypassing the front end for six weeks whilst the equipment underwent repairs.
“Having completed the Niewejaarskraal ramp up, we now have a steady state monthly production throughput
capacity of 340,000m3 and are now turning our attention to delivering the remaining capacity upgrades to reach
our target of 500,000m3 per month. Improving earthmoving availabilities at Saxendrift should provide additional
volumes to increase this mine’s throughput by 20,000m3 per month and we are also considering our options to
increase capacity at Niewejaarskraal. Commencement of operations at Wouterspan is now also on our radar
screen.”
Commenting on the appointment of Rockwell’s new CFO James Campbell, CEO and President explained:
“On behalf of the Board and the Company, I extend our best wishes to Gerhard Jacobs, our outgoing CFO and
thank him for his contribution to the Company during his four year tenure. We also welcome John Shelton, who
will assume the position with effect from July 21, 2014. The high calibre of candidates who applied for this position
were a clear demonstration of the progress made by Rockwell in its turnaround during the last three years. We
welcome John and express our confidence that with his wealth of experience in the diamond sector, he will make
a meaningful contribution to the Company, as we embark on the next phase of our growth trajectory.”
First quarter operational update:
Volume and carat production for the Company’s operational mines for the quarter ended May 31, 2014:
Volumes of gravel processed Average grade (carats per 100
Carats produced
(m3) cubic meters)
Operation
Q1 Q1 Q1 Q1 Q1 Q1
Change Change Change
F2015 F2014 F2015 F2014 F2015 F2014
Klipdam - 65,702 - - 535 - - 0.81 -
Saxendrift 367,375 461,184 -20% 2,345 2,036 15% 0.64 0.44 45%
Saxendrift Hill
113,849 129,427 -12% 748 269 178% 0.66 0.21 214%
Complex
Niewejaarskraal 222,613 - - 1,269 - - 0.57 - -
Total: Own
703,837 656,313 7% 4,362 2,840 54% 0.62 0.43 44%
operations
Contractors’ mining* 425,808 237,520 79% 4,800 1,984 142% 1.13 - -
Total production on
1,129,645 893,833 26% 9,162 4,824 90% 0.81 - -
Company 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.
Diamond sales and revenue for the Company’s operations for the quarter ended May 31, 2014:
Sales (carats) Value of Sales (US$) Average value (US$ per carat)
Operation Q1 Q1 Q1 Q1 Q1
Change Q1 F2015 Change Change
F2015 F2014 F2014 F2015 F2014
Klipdam - 895 - - 569,645 - - 636 -
Saxendrift 1,765 2,148 -18% 3,743,362 5,485,585 -32% 2,120 2,553 -17%
Saxendrift Hill
550 130 323% 950,867 476,818 99% 1,728 3,668 -53%
Complex
Tirisano - 83 - - 41,943 - - 505 -
Niewejaarskraal 652 - - 1,570,000 - - 2,408 - -
Total: Own
2,967 3,257 -9% 6,264,319 6,573,991 -5% 2,111 2,018 5%
operations
Contractors’ carat
3,710 1,730 114% 2,500,613 1,077,982 132% 674 623 8%
sales*
Total sales from
6,677 4,987 34% 8,764,932 7,651,973 15% 1,312 1,534 -14%
Company 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.
Saxendrift Operations:
- Quarterly mining volumes were once again impacted by longer haulage distances from Saxendrift Extension
and earthmoving vehicle availability due to the aging equipment fleet at Saxendrift. However, the fleet
improvement programme was approved and implementation commenced during the quarter comprising fully
managed maintenance leases for the new fleet with no upfront capital investment as well as mid-life
overhauls for the dozer fleet. This will enable Rockwell to focus on its core mining and processing activities at
this mine, including higher and more consistent processing volumes.
- The mine’s average grade improved 45% to 0.64 carats per 100m3, offsetting the lower volumes of gravel
processed and underpinning a 15% increase in carat production from the prior year, to 2,345 carats.
- Carats sold from the Saxendrift operation declined 18% to 1,765 carats at an average price of US$2,120;
down 17% from last year as a result of product mix. For the first quarter the mine showed a 32% decrease in
revenue from diamond sales to US$3.7 million (excluding beneficiation).
- Notable stones recovered at the Saxendrift Mine processing plant included 42 rough diamonds exceeding 10
carats, of which 22 exceeded 20 carats. The three largest stones weighed 65.13 carats, 53.61 carats and
most notably a 103.08 carat yellow diamond.
Saxendrift Hill Complex:
- At SHC, quarterly volumes of gravel processed were 12% lower than in the prior year. Gravel throughput was
impacted for a six-week period during the quarter due to mechanical failure of the de-sanding screen. In spite
of the mechanical failure, the Bulk X-ray recovery system continued to perform on plan.
- While the equipment was undergoing repairs, old recovery tailings were processed. SHC reported a grade of
0.66 carats per 100m3 and accordingly carat production increased 178% to 748 carats. This improvement in
grade and carat recovery is chiefly due to the over recovery of additional small diamonds from the old
recovery tailings.
- SHC delivered a threefold increase in carat sales to 550 carats from the prior year when the mine was still in
its ramp up phase. These were sold at an average price of US$1,728 per carat, generating revenue from
diamond sales for the period of US$950,867.
- Notable stones recovered at SHC during the first quarter included 11 rough diamonds exceeding 10 carats
including, most notably one 57.26 carat diamond.
Niewejaarskraal:
- Operations at the 100,000m3 per month Niewejaarskraal processing plant were bedded down, including the
newly installed In-Field Screen (‘IFS’) and Bulk X-ray system. The total volume of gravel processed in the first
quarter amounted to 222,613m3 (up 37% from previous quarter during which ramp up was still in process).
- Mining according to the new 18-month mine plan which was implemented in mid-February 2014 delivered the
expected results. The mine produced 1,269 carats during the first quarter, representing a grade of 0.57 carats
/ 100m3 which is within the long term average grade expectation for the mine.
- Sales from Niewejaarskraal amounted to 652 carats with total revenue of US$1.5 million at an average price
of US$2,408 per carat. The Company is pleased that carat values continued to improve in the first quarter and
reflected the higher carat values that characterise the MOR.
- Notable stones recovered at Niewejaarskraal during the first quarter included 24 plus 10-carat rough
diamonds with three stones exceeding 30 carats.
Royalty Mining Contractors
- The royalty mining contractors operating on the Tirisano property continued to perform consistently in the first
quarter while the recently implemented joint venture mining arrangement at Kwartelspan also commenced
operations. Total volumes of gravel processed amounted to 425,808m3 from which 4,800 carats were
recovered.
- Total revenue generated by the contractors from diamond sales amounted to $2.5 million ($312,576 royalty
income accruing to Rockwell) from the sale of 3,710 carats at an average price of $674 per carat.
- Contractors recovered four stones exceeding 10 carats in the first quarter.
Subsequent event: Appointment of new Chief Financial Officer
The Company announces that Gerhard Jacobs has elected to take an early retirement from the Company with
effect from July 20, 2014. He had previously communicated his decision to step down due to close family health
issues, but agreed to stay indefinitely until a suitable replacement was found. During his four-year tenure, Gerhard
played a positive role in Rockwell’s corporate turnaround and significantly improved the standard of the
Company’s financial reporting and regulatory compliance. The Company expresses its gratitude to Gerhard for his
contribution at Rockwell and wishes him well in the future.
Rockwell is pleased to announce the appointment of John Shelton (50) as the new CFO with effect from July 21,
2014. John is a Chartered Accountant with 25 years experience in the diamond sector with De Beers. His career
at De Beers culminated in his role as Group Accountant (from 1998 to 2014) during which time he contributed to
De Beers' corporate activities. He has served on various boards during his tenure with De Beers. John is married
to Bridget; they have two teenage sons who are schooling in Johannesburg.
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
David Tosi PSG Capital – JSE Sponsor +27 (0)21 887 9602
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 and the Niewejaarskraal Mine which are both in production. 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.
Date: 26/06/2014 02:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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