Wrap Text
Rockwell reports tenth successive quarterly improvement and record diamond production and sales revenue
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")
Rockwell reports tenth successive quarterly improvement and record diamond production and sales
revenue
__________________________________________________________________________________________
December 15, 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 November 30, 2014:
Salient features
- Middle Orange River operations (“MOR”), as of December 5, 2014, achieved a record 4.7 million lost time
injury free hours (“LTIFH”) of operation.
- The successful implementation of the earthmoving vehicle (“EMV”) renewal plan at Saxendrift and Saxendrift
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Hill Complex (“SHC”) helped the Complex process a record 1.5 million m of gravel up 47% from the same
quarter last year.
- Increased processing volumes compensated for lower grades at Saxendrift.
- Carat production up 15% compared to the same period last year.
- Record diamond sales revenue of US$15.8 million driven by 127% increase in carats sold.
- Average carat price down 35% from Company owned properties due to lower incidence of large diamonds in
third quarter.
- Inventory of 2,624 carats (including royalty contract miners’ inventory of 815 carats) carried over into fourth
quarter of fiscal 2015.
Commenting on third quarter production and sales James Campbell, CEO and President said:
“Our production and sales performance continues to improve with record volumes of both gravel mined and
processed and carat sales from the MOR in the third quarter. A highlight for the quarter was bedding down of the
earthmoving vehicle renewal plan and ongoing optimization of our in-field screens that helped us post a 60%
increase in mining volumes and 47% increase in gravel processed. The increase in volumes processed offset the
lower grades and lower prices achieved for the rough product.”
“Also our new mine, Niewejaarskraal, made good progress in ramping up its production with a commensurate
improvement in diamond value and the royalty mining contractors continued to make a positive contribution to the
company’s performance.”
PRODUCTION REVIEW
Volume and carat production for total Company owned properties to November 30, 2014 were as follows:
Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
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Volumes processed (000m ) 1,522 1,035 47 1,467 4,131
Carats produced (carats) 10,228 8,913 15 9,581 28,786
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Grade (carats/100m ) 0.67 0.86 -22 0.65 0.70
Additional information: Refer to Appendix 1: Detailed production data
- Saxendrift: Volumes of gravel mined increased 62% from the previous year, facilitated by the implementation
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of the new mining fleet, enabled the average monthly plant throughput to exceed 180,000m . Lower grades
were processed from the traditional Saxendrift mining area, now in the second half of its Life of Mine (“LOM”).
The remaining mining areas require higher stripping ratios and accordingly, gravel volumes processed
increased 21%. Carat production declined 29%, but included eight stones larger than 20 carats.
- Saxendrift Hill Complex: Volumes of gravel mined and processed increased 46% and 3% respectively. As a
result of ongoing exploration, SHC’s mine life has been extended into 2015. Year-on-year carat production,
whilst on plan, declined 63% due to the exceptional recoveries in the prior year. SHC’s bulk X-ray processing
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plant operated at its nameplate capacity of 80,000m per month throughout the third quarter. Notable stones
included a 68-carat rough diamond.
- Niewejaarskraal: Volumes showed strong increases of 68% and 92% in gravels mined and processed
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respectively. Towards the end of the quarter, the monthly capacity of the plant was increased to 120,000m
with modifications to the front end in-field-screen. Carat production increased almost threefold, underpinned
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by higher volumes and grades, which increased to 0.54 carats per 100m , in line with the average grade for
the mine. Notable stones recovered in the period included five stones exceeding 20 carats, the largest of
which weighed 68.6 carats.
- Royalty contractor mining: The royalty mining contractors operating at Tirisano and in joint venture at
Kwartelspan continue to deliver positive results, with volumes of gravel processed up 98% and carat
production up 59% for the third quarter.
SALES REVIEW
Diamond sales for total Company owned-properties to November 30, 2014 were as follows:
Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Sales value (US$000’s) 15,763 10,699 47 13,197 37,725
Carats sold 13,759 6,066 127 8,864 29,302
Average price 1,146 1,764 -35 1,489 1,287
Additional information: Refer to Appendix 1: Detailed sales data
- Saxendrift: Diamond sales rose 5% to US$4.2 million from the sale of 2,442 carats (up 10%) at a stable
average price per carat of US$1,707 compared to the prior year. The average carat value was lower than in
the preceding quarter due to the lack of recovery of exceptional diamonds experienced in the current period.
- SHC: The number of carats sold was in line with the prior year, and although the value of diamonds sold was
down 24%, this was on plan. The decline was due to the lack of recovery of high valued stones experienced
in the current quarter.
- Niewejaarskraal: Diamond sales increased to US$2.9 million, in line with the ramp up of operations at
Niewejaarskraal. Carat sales increased more than six-fold and the average value per carat more than
doubled.
- Royalty mining contractors: The contractors at Tirisano delivered a solid performance. The value of sales
rose 107% in line with the increased number of contractors compared to a year ago and operations at the
Kwartelspan joint venture gained momentum.
Financing Revision and Update
Further to the news release of November 19, 2014 the Company has now received $2.33 million of the $4.1
million committed by the two related parties with the balance to be in-hand by January 23, 2015. The structure of
the financing was also slightly revised to comply with the requirements of certain securities laws exemptions in
Canada. The revised transaction is that $3.775 (92%) will be raised by issuance of the previously announced
debentures, and $0.325 million (8%) as demand loans bearing interest at 5% (2nd year 8%) and without any
optional or mandatory conversion aspects. The structure revision was necessary in order to rely on the exemption
from the requirements of Canadian Multilateral Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions (“MI 61-101”) where the Company is relying upon exemptions from the formal valuation
requirements and minority shareholder approval requirements of MI 61-101 in Sections 5.5(a) and 5.7(a), which
requires that the value of the Debenture portion of the transaction must not exceed 25% of the Company’s 20 day
average market capitalization on the date of announcement. Therefore the Company and the related parties
agreed that the aggregate amount of Debentures will be limited to $3.775 million and the balance of the $4.1
million will be advanced by way of separate loans from Emerald Holdings Ltd (Mark Bristow) ($89,000) and Daboll
Consultants Limited (Diacore) ($236,000). The loans are exempt from the minority shareholder approval
requirements set out in Section 5.7(f) of MI 61-101 – Loan to Issuer, No Equity or Voting Component. The
exemptions are only in connection with the issuance of the Debentures, actual conversion of the Debentures into
common shares on either an option or mandatory basis as described in the November 19, 2014 news release will
still require the approval of Rockwell’s minority shareholders.
Appendix 1: Volumes and carat production for the Company’s owned mines and its royalty mining contractors to
November 30, 2014 were as follows:
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Gravel mined (000m ) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 655 404 62 547 1,597
SHC 332 227 46 287 799
NJK 427 255 68 340 1,164
Total 1,414 886 60 1,174 3,560
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Gravel processed (000m ) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 487 400 21 498 1,351
SHC 230 224 3 227 571
NJK 266 139 92 239 728
Total MOR 983 763 29 964 2,650
Contractors’ mining* 539 272 98 503 1,481
Grand Total 1,522 1,035 47 1,467 4,131
Carats produced (carats) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 2,240 3,164 -29 1,531 6,116
SHC 579 1,579 -63 938 2,267
NJK 1,444 410 252 1,295 4,010
Total MOR 4,263 5,153 -17 3,764 12,393
Contractors’ mining* 5,965 3,760 59 5,817 16,393
Grand total 10,228 8,913 15 9,581 28,786
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Average grade (cts/100m ) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 0.46 0.79 -42 0.31 0.45
SHC 0.25 0.71 -65 0.41 0.40
NJK 0.54 0.29 86 0.54 0.55
Total MOR 0.43 0.68 -37 0.39 0.47
Contractors’ mining* 1.11 1.38 -20 1.16 1.11
Grand total 0.67 0.86 -22 0.65 0.70
Appendix 2: Sales for each of the Company’s own mines and its royalty mining contractors to November 30,
2014 were as follows:
Sales value (US$000s) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 4,169 3,971 5 5,089 13,001
SHC 2,806 3,709 -24 1,177 4,935
NJK 2,873 158 1717 2,745 7,188
Total MOR 9,848 7,839 26 9,011 25,124
Contractors’ carats** 5,915 2,860 107 4,186 12,601
Grand total 15,763 10,699 47 13,197 37,725
Carats sold (carats) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 2,442 2,210 10 1,861 6,068
SHC 1,166 1,106 5 743 2,458
NJK 1,805 250 624 1,206 3,665
Total MOR 5,413 3,566 52 3,810 12,191
Contractors’ carats** 8,346 2,500 234 5,054 17,111
Grand total 13,759 6,066 127 8,864 29,302
Average price (US$ per Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
carat)
Saxendrift 1,707 1,797 -5 2,734 2,143
SHC 2,408 3,354 -28 1,585 2,008
NJK 1,592 632 151 2,276 1,961
Total MOR 1,820 2,198 -17 2,365 2,061
Contractors’ carats** 709 1,144 -38 828 736
Grand total 1,146 1,764 -35 1,489 1,287
* Contractors’ mining” refers to independent royalty contractors processing gravel for their own risk and reward on Rockwell
owned mineral properties. Carats recovered are then sold through the Company’s tender process. The Company retains the
responsibility for diamond security and sales and recognize 100% of the revenue on sale. The contractual 87.5% of the sales
value, payable to the contractor, is recognized as production costs in the statement of profit and loss.
** Contractors’ carats” refers to independent royalty contractors processing gravel for their own risk and reward on Rockwell
owned mineral properties. Carats recovered are then sold through the Company’s tender process. The Company retains the
responsibility for diamond security and sales and recognize 100% of the revenue on sale. The contractual 87.5% of the sales
value, payable to the contractor, is recognized as production costs in the statement of profit and loss.
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 consolidation 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: 15/12/2014 03:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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