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ROCKWELL DIAMONDS INCORPORATED - Rockwell reports increases in volumes processed and diamonds produced but lower grades for the fourth quarter of fis

Release Date: 20/04/2015 14:30
Code(s): RDI     PDF:  
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Rockwell reports increases in volumes processed and diamonds produced but lower grades for the fourth quarter of fis

Rockwell Diamonds Inc.
(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 TSXV: RDI
CUSIP Number: 77434W103
("Rockwell" or "the Group")

Rockwell reports increases in volumes processed and diamonds
produced but lower grades for the fourth quarter of fiscal 2015

April   20,  2015,   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
February 28, 2015:

Salient features
-   Volumes of gravel processed up 45% at Middle Orange River
    (“MOR”) operations from a year ago to 0.9 million m3;
    Saxendrift volumes up 95% as a result of a revised mining
    fleet, and although Niewejaarskraal volumes increased by 57%
    facilitated by modifications to the in-field screen it
    remained below plan.
-   Carat production in MOR region up 13% due to better
    performance on volumes, but the grade was lower at 0.34 carats
    per 100m3.
-   MOR diamond sales (excluding beneficiation) up 24% year-on-
    year to US$10.6 million underpinned by the sale of two +120
    carat stones recovered from Saxendrift. Total sales (excluding
    beneficiation) up 8% to US$13.1 million including goods from
    royalty contractor miners.
-   Average carat price up 24% from MOR properties, to US$2,461
    per carat driven largely by the sale of the two +120 carat
    stones from Saxendrift.
-   Inventory of 1,196 carats (including royalty contract miners’
    inventory of 693 carats) carried over into first quarter of
    fiscal 2016.

Commenting on fourth quarter production and sales James
Campbell, CEO and President said:
“Our Saxendrift operation performed to plan and delivering
another increase in volumes processed quarter, helping to offset
the impact of the lower grades. Carat production at Saxendrift
increased 9% compared with Q4 2014, and included two high value
+120 carat diamonds. Saxendrift recorded a 43% improvement in
diamond sales to US$8.7 million. Although the volumes of gravel
processed   at  Niewejaarskraal   increased  57%  with   a  141%
improvement in carat production, the grade remained below plan
and sub-economic at current rates of plant throughput. We
addressed this in the short term through transitioning mining to
higher grade Rooikoppie gravels towards the end of the quarter.
We are reviewing our options with the focus on increasing the
throughput rates. This will entail suspension of production
whilst we undertake planning to refine our understanding of the
orebody and, at the same time, expand the processing capacity to
180,000m3 per month. Overall production will be impacted in the
short-term as a consequence, but the financial impact will be
limited as Niewejaarskraal is currently incurring operating
losses.”

“Meanwhile, we continue to work towards building Rockwell’s
longer term value through incorporating the acquisition of the
Remhoogte/Holsloot Project from Bondeo 140 cc. We are working
towards closure of this transaction before the end of H1. The
roll-out of the integration plan will see us applying our
technical skills to deliver positive returns from this early
life project. Our medium term plans include exploration at
Lanyonvale and large scale bulk sampling at Wouterspan, in
advance of a decision to commence operations on this property.”

PRODUCTION REVIEW

Volume and carat production for total Company owned properties
to February 28, 2015 were as follows:

                    Q4 F2015   Q4 F2014   % Change   Q3 F2015   F2015
Volumes processed      1,291        897         44      1,522    5,383
(000m3)
Carats produced         6,932     6,758         3    10,228    35,717
(carats)
Grade                    0.54      0.75      (28)      0.67      0.66
(carats/100m3)
Additional information: Refer to Appendix 1: Detailed production
data

-   Saxendrift: Volumes of gravel mined and processed increased by
    124% and 95% respectively year-on-year, with the monthly
    throughput reaching 200,000m3 towards the end of the fiscal
    year. The performance was primarily due to the improved
    earthmoving fleet availability as the benefits of replacement
    equipment were realized. Saxendrift Hill Complex gravels,
    which were processed at Saxendrift from January 2015, also
    contributed to the increase. The increase in gravel processed
    was offset by lower grades (down 43%) resulting in only a 9%
    increase in carats produced. The average stone size improved
    to 5.6 carats from 4.6 carats a year ago, including five
    stones exceeding 50 carats, with the largest weighing 135.7
    carats and 121.6 carats.
-   Saxendrift Hill Complex (“SHC”): Volumes of gravel mined and
    processed decreased 23% and 41% respectively, as a direct
    result of closing this operation at the end of December 2014.
    Accordingly, carat production was down 52%. Notable stones
    included two diamonds in the 30 to 50-carat range. The
    remaining SHC gravels will be processed at Saxendrift.
-   Niewejaarskraal:   Throughput continued to increase, with
    volumes of gravel mined and processed rising 45% and 57%
    respectively. This was facilitated by further modifications to
    the in-field screen in the third quarter. Carat production
    also increased by 141%. Although the grade improved 52% year-
    on-year, it remains below plan. This was addressed with a
    short-term plan of mining higher grade Rooikoppie gravels but
    to enhance the long-term economic return potential of the
    project, the Company is planning on an expansion of the
    processing capacity of this operation to over 180,000m3 per
    month. In order to complete this safely, the Company will
    suspend activities on the Niewejaarskraal property. During
    this time, the Company will carry out further work to refine
    the geological model, which will inform a new mine plan when
    mining resumes. The temporary closure is not expected to have
    a material impact on the financial results as Niewejaarskraal
    is currently incurring operating losses.
-   Royalty contractor mining: The royalty mining contractors
    operating at Tirisano and in joint venture at Kwartelspan
    delivered another positive quarter, with volumes of gravel
    processed up 41%. However carat production was down by 4% as a
    result of lower grades. On March 30, 2015, the Company
    announced the sale of all its shares in Etruscan Diamonds,
    which holds the Tirisano Property, for a cash consideration of
    $6.3 million, with the buyers immediately taking over
    operations.

SALES REVIEW

Diamond sales for total Company owned-properties to February 28,
2015 were as follows:

                      Q4 F2015   Q4 F2014   % Change   Q3 F2015   F2015
Sales value             13,070     12,128          8     15,763   50,795
(US$000’s)
Carats sold              8,467      9,596       (12)     13,759   37,769
Average price            1,544      1,264         22      1,146    1,345
Additional information: Refer to Appendix 1: Detailed sales data

-   Saxendrift: Diamond sales rose 43% to US$8.7 million from the
    sale of 2,445 carats. Although the number of carats sold was
    12% lower than the comparative period last year, this was
    offset by the sale of two high quality +120-carat diamonds,
    resulting in a 62% year-on-year increase in the average price
    per carat to US$3,538.
-   SHC: The number of carats sold was down 52%, in line with the
    decision to halt operations at the end of December 2014.
    Similarly, the value of sales declined 67% to $0.6 million
    from last year, while the average carat value was down 34% to
    US$1,163 per carat, due to the declining nature of the
    production profile.
-   Niewejaarskraal: Diamond sales increased to US$1.3 million for
    the quarter (up 163%). The number of carats sold rose 236%,
    but this was offset by a reduction in the average price per
    carat realized, which was 22% down at US$981 per carat.
-   Royalty mining contractors:      Tirisano Contractors’ sales
    declined 21% in carat terms whilst the average price realized
    per carat was down 12% to US$600. As a result, the value of
    sales was down 31% to US$2.5 million, of which US$0.3 million
    in royalties accrued to Rockwell.

Appendix 1: Volumes and carat production for the Company’s owned
mines and its royalty mining contractors to February 28, 2015
were as follows:

    Gravel mined      Q4 F2015   Q4 F2014   % Change   Q3 F2015   F2015
       (000m3)
Saxendrift                 673        301        124        655    2,270
SHC                        159        207       (23)        332      958
NJK                        335        231         45        427     1499
Total                    1,167        739         58      1,414    4,727

  Gravel processed    Q4 F2015   Q4 F2014   % Change   Q3 F2015   F2015
      (000m3)
Saxendrift                 531        273         95        487    1,882
SHC                        105        179       (41)        230      676
NJK                        256        163         57        266      984
Total MOR                  892        615         45        983    3,543
Contractors’
mining*                    399        282         41        539    1,840
Grand Total              1,291        897         44      1,522    5,383

  Carats produced     Q4 F2015   Q4 F2014   % Change   Q3 F2015   F2015
      (carats)
Saxendrift               1,734      1,594          9      2,240    7,849
SHC                        326        683       (52)        579    2,593
NJK                        967        401        141      1,444    4,978
Total MOR                3,027      2,678         13      4,263   15,420
Contractors’
mining*                  3,905      4,080        (4)      5,965   20,297
Grand total              6,932      6,758          3     10,228   35,717

      Average grade   Q4 F2015   Q4 F2014   % Change   Q3 F2015   F2015
      (cts/100m3)
Saxendrift                0.33       0.58       (43)       0.46     0.42
SHC                       0.31       0.38       (18)       0.25     0.38
NJK                       0.38       0.25         52       0.54     0.51
Total MOR                 0.34       0.44       (23)       0.43     0.44
Contractors’
mining*                   0.98       1.45       (32)       1.11     1.08
Grand total               0.54       0.75       (28)       0.67     0.66

Appendix 2: Sales for each of the Company’s own mines and its
royalty mining contractors to February 28, 2015 were as follows:

    Sales value       Q4 F2015   Q4 F2014   % Change   Q3 F2015   F2015
     (US$000s)
Saxendrift               8,652      6,040         43      4,169   21,653
SHC                        645      1,987       (67)      2,806    5,580
NJK                      1,269        483        163      2,873    8,457
Total MOR               10,566      8,510         24      9,848   35,690
Contractors’
carats**                 2,504      3,618       (31)      5,915   15,105
Grand total             13,070     12,128          8     15,763   50,795

    Carats sold       Q4 F2015   Q4 F2014   % Change   Q3 F2015   F2015
      (carats)
Saxendrift               2,445      2,764       (12)      2,442    8,513
SHC                        555      1,153       (52)      1,166    3,013
NJK                      1,294        385        236      1,805    4,958
Total MOR                4,294      4,302          0      5,413   16,484
Contractors’
carats**                 4,173      5,294       (21)      8,346   21,285
Grand total              8,467      9,596       (12)     13,759   37,769

 Average price (US$   Q4 F2015   Q4 F2014   % Change   Q3 F2015   F2015
     per carat)
Saxendrift               3,538      2,185         62      1,707    2,543
SHC                      1,163      1,722       (34)      2,408    1,852
NJK                        981      1,254       (22)      1,592    1,706
Total MOR                2,461      1,978         24      1,820    2,165
Contractors’
carats**                  600       684     (12)       709         710
Grand total              1,544     1,264        22    1,146    1,345
* 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. 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.

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