Wrap Text
Quarterly Production And Sales Update
ROCKWELL DIAMONDS INCORPORATED
(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: 7743W103
Rockwell streamlines its corporate structure, returns to Wouterspan, bolsters processing capacity at
Holsloot and Remhoogte and looks to future value opportunities
__________________________________________________________________________________________
April 26, 2016, 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 29, 2016:
Currency values are presented in Canadian dollars, unless otherwise indicated.
Salient features
- Strategy - Rockwell continues to pursue its medium term target to process 500,000m 3 of gravel per month in
the Middle Orange River (“MOR”). The imminent end of Company directed mining at Saxendrift has
necessitated that an official restructuring process be initiated in terms of Section 189 of the South African Labour
Relations Act. The approved recommissioning of operations at Wouterspan is expected to absorb a large
proportion of the Saxendrift workforce and equipment. The construction and commissioning of additional in-
field screening capacity at the Remhoogte - Holsloot Complex (“RHC”) is on track and are designed to increase
processing capacity at RHC up to 180,000m3 of gravel per month.
- Volumes – MOR gravel processed was 1% down quarter-on-quarter due to lower production volumes at RHC
and Saxendrift during the rainy season and over the December closure. These were chiefly offset by higher
contractor production volumes. Gravels processed were 40% down year-on-year owing to the changed
operational profile, with new production from RHC only partly compensating for the drop in volumes following
the sale of Tirisano, the suspension of activities at Niewejaarskraal and the depletion of resources at Saxendrift.
- Grade – overall, grades were up both quarter-on-quarter and year-on-year. RHC recorded significantly higher
grades of 1.12 cphm3, compared to 0.64 cphm3 in the previous quarter, but on slightly lower volumes.
- MOR carat sales were up 22% quarter-on-quarter to 4,925 carats, and the value of these goods increased 34%
to US$7.1 million (excluding beneficiation).
- Average carat price realized from the Company’s MOR projects improved by 9% quarter-on-quarter, to
US$1,448 per carat.
- Rough diamond inventory - 490 carats (including royalty contract miners’ inventory) were carried over into the
first quarter of fiscal year 2017.
- Operational focus remains on addressing throughput bottlenecks and a review of mining efficiencies, costs and
reliability of the fleet.
- Safety – Rockwell continues to strive for zero harm on all of its operations. At the end of the fourth quarter the
Company had achieved 379,162 lost time injury free hours (“LTIFH”) at its MOR operations.
STRATEGIC REVIEW
During the fourth quarter of fiscal year 2016 the Company implemented a number of the decisions that had arisen
from the strategic and operational review of the business conducted in late 2015. Specifically, the following steps
have been taken:
- Saxendrift operations – Company directed operations continue to wind down; a change in the operational
parameters has allowed closure to be postponed beyond the planned end of February to May 2016.
- Saxendrift royalty mining contracts - the second of the three-year royalty mining contracts entered into by the
Company commenced post February 2016. The Company is assessing further royalty proposals to continue to
extract further value from the Saxendrift property. All diamonds recovered by royalty miners at Saxendrift will
be sold by the Company through its sales system and 10% of gross sales will be retained by the Company as
a royalty.
- Start-up of Wouterspan - the recommissioning of Wouterspan and redeployment of existing processing and
mining equipment from other operations began early in 2017FY Q1 as planned. Work on the construction of
the processing plant is on schedule to deliver a plant and IFS capable of processing 200,000m 3 per month by
September 2016, with ramp-up commencing late May 2016. A second phase, to further increase the plant
throughput to 400,000 m3, is under consideration.
- Exploration is advancing on the neighbouring properties surrounding Wouterspan, where 4,300 hectares have
been mapped, 1,700 pits have been dug and a further potential 2,200 pits will be dug.
- Detailed pitting and drilling to outline the gravel extent on Remhoogte and Holsloot continues.
- Closure of Head Office - Rockwell’s Johannesburg corporate office has been closed, staffing reduced and key
senior Company executives have relocated to the MOR on a full-time basis.
- Corporate structure - operational reporting structures have been streamlined; mine management is now directly
accountable for all mine operations, reporting to the CEO who is based full-time in the MOR.
The Company-wide Section 189 consultation process has come to an end early in Q1 FY2017, with formal notices
soon to be served to affected employees. Every effort has been made to redeploy employees wherever possible
and mitigate the impact of retrenchments.
Commenting on third quarter production and sales James Campbell, CEO and President said:
“After a very difficult operating period the fourth quarter performance showed positive signs of recovery in spite of
the continued overall weakness in global diamond pricing. MOR carat sales were down 42% year-on-year, but
encouragingly 22% higher than in the third quarter at 4,925 carats. The value of MOR sales was up 34% on the
previous quarter at US$7.1 million but down 45% on the equivalent quarter last year. The team at Saxendrift have
done well to extend the operations there.
“The improvement in operating performance comes on the back of a period of lower than expected grades and
overall sales values from Holsloot and Remhoogte. Following the acquisition of the two operations and in spite of
the constraints that continue to limit our ability to invest, we were able to construct and commission two in-field
screening facilities at Holsloot and Remhoogte, which along with the implementation of our revised EMV strategy
should increase throughput capability to a sustainable 180,000m3 per month. The recommissioning of a 200,000m3
operation at Wouterspan, which is making good progress, is another significant achievement which in time will more
than replace Saxendrift and absorb many of the skills and equipment from there as well.
As we strive for a safe and sustainable monthly processing target of 500,000m3, our search for new value
opportunities continues, with exploration activities gaining momentum during the quarter. The recent streamlining
of corporate structures is expected to deliver tangible cost saving benefits in the short term. Albeit challenging, the
restructuring decision was one which we felt compelled to take in order to deliver greater value to our stakeholders.”
PRODUCTION REVIEW
Volume and carat production for total Company owned properties to February 29, 2016 were as follows:
Q4 F2016 Q4 F2015 % Change Q3 F2016 % Change F2015
Volumes processed (000m 3) 789 1,315 (40) 797 (1) 5,463
Carats produced (carats) 4,714 7,063 (33) 3,990 22 36,168
Grade (carats/100m3) 0.60 0.54 11 0.5 19 0.66
Refer to Appendix 1 for additional information
- RHC: This recently acquired operation contributed to a 25% grade improvement in the MOR. Fourth quarter
volumes processed were down 7% from the third quarter, while grade improved by 75% to 1.12 cphm3. A total
of 2,854 carats were recovered in the quarter (including 12 plus 20-carat stones). An average stone size of 4.17
ct/stn was achieved at a bottom cut-off of 5 mm.
- Saxendrift: The volume of gravel processed was down 5% from the third quarter, whilst the reported grade of
0.33 cphm3 was down 18% from 0.40 cphm3 in the third quarter. Quarterly carat production dropped by 22% to
1,584 carats. Notable recoveries included 9 plus 20-carat stones. An average stone size of 4.69ct/stn was
achieved at 5mm bottom cut-off.
- Royalty contractor mining: A total of 276 carats were recovered in Q4 by royalty mining contractors
processing Wouterspan recovery tailings and Saxendrift BHC tailings. Recoveries featured 3 stones above 20
carats, including a 73-carat stone.
SALES REVIEW
Diamond sales for total Company-owned properties to February 29, 2016 were as follows:
Q4 F2016 Q4 F2015 % Change Q3 F2016 % Change F2015
Sales value (US$000’s) 7,131 13,073 (45) 5,339 34 50,795
Carats sold 4,925 8,467 (42) 4,021 22 37,769
Average price 1,448 1,544 (6) 1,328 9 1,345
Refer to Appendix 2 for additional information
- Saxendrift: Diamond sales declined 71% year-on-year to US$2.6 million. A total of 1,820 carats were sold,
down 9% quarter-on-quarter, and corresponding to an average value per carat of US$1,456, up 39% from the
third quarter. The substantial value increase can be ascribed to the change in composition of the middlings,
with better quality gravels being mined.
RHC: Diamond sales amounted to US$4.3 million for the quarter from the sale of 2,912 carats. The recorded
average value per carat was US$1,475 per carat, down 6% from the third quarter. This remains below historical
values due to a combination of the processing of sub-threshold volumes for the recovery of larger diamonds,
as well as lower global diamond prices.
Appendix 1: Volumes and carat production for the Company’s owned mines and its royalty mining contractors for
the three months ended February 29, 2016 were as follows:
Volume Mined (000m3) Q4 F2016 Q4 F2015 % Change Q3 F2016 % Change F2015
Saxendrift Complex 485 832 (72) 536 (11) 3,228
NJK - 335 - - - 1,499
RHC 307 - 100 281 8 -
Total 792 1,167 (47) 818 (3) 4,727
Contractors -
Grand total 792 1,167 (47) 818 (3) 4,727
Volume processed (000m3) Q4 F2016 Q4 F2015 % Change Q3 F2016 % Change F2015
Saxendrift Complex 486 636 (23) 512 (5) 2,559
NJK - 256 - - - 984
RHC 255 - 273 (7) -
Total 742 892 (17) 785 (6) 3,543
Contractors 48 424 (89) 12 284 1,920
Grand total 789 1,315 (40) 797 (1) 5,463
Carats produced Q4 F2016 Q4 F2015 % Change Q3 F2016 % Change F2015
Saxendrift Complex 1,584 2,060 (23) 2,027 (22) 10,442
NJK - 967 - - - 4,978
RHC 2,854 - 1,744 64 -
Total 4,438 3,027 47 3,771 18 15,420
Contractors 276 4,036 (93) 219 26 20,748
Grand total 4,714 7,063 (33) 3,990 18 36,168
Grade Q4 F2016 Q4 F2015 % Change Q3 F2016 % Change F2015
Saxendrift Complex 0.33 0.32 3 0.40 (18) 0.41
NJK 0.38 - -
RHC 1.12 0.64 75
Total 0.60 0.34 76 0.48 25 0.44
Contractors 0.58 0.95 (39) 1.77 (67) 1.08
Grand total 0.60 0.54 11 0.50 20 0.66
Appendix 2: Sales for each of the Company’s own mines and its royalty mining contractors for the three months
ended February 29, 2016 were as follows:
Carats sold Q4 F2016 Q4 F2015 % Change Q3 F2016 % Change F2015
Saxendrift Complex 1,820 3,000 (39) 1,996 (9) 11,526
NJK - 1,294 - 4,958
RHC 2,912 1,827 59 -
Total 4,732 4,294 10 3,823 24 16,484
Contractors 193 4,173 (95) 198 (3) 21,285
Grand total 4,925 8,467 (42) 4,021 22 37,769
Value Per Sale Q4 F2016 Q4 F2015 % Change Q3 F2016 % Change F2015
Saxendrift Complex 2,651 9,300 (71) 2,093 27 27,233
NJK - 1,269 - 8,457
RHC 4,297 2,859 50 -
Total 6,948 10,569 (34) 4,952 40 35,690
Contractors 183 2,504 (93) 387 (53) 15,105
Grand total 7,131 13,073 (45) 5,339 34 50,795
Average Price Q4 F2016 Q4 F2015 % Change Q3 F2016 % Change F2015
Saxendrift Complex 1,456 3,100 (53) 1,048 39 2,363
NJK 981 100 1,706
RHC 1,475 1,565 (6) -
Total 1,468 2,461 (40) 1,295 13 2,165
Contractors 949 600 58 1,956 (51) 710
Grand total 1,448 1,544 (6) 1,328 9 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 recognises 100% of the revenue on sale.
The contractual 89.5% of the sales value, payable to the contractor, is recognised 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 recognises 100% of the revenue on sale.
The contractual 89.5% of the sales value, payable to the contractor, is recognised 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
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. Rockwell has a development project and a pipeline of earlier stage
properties with future development potential. The Company’s operations are based on high throughput processing
capability and the lowest unit costs in the industry as a result of implementing state-of-the-art technologies.
The Company has a reputation for producing large, high quality gemstones comprising a major portion of its
diamond recoveries, which are enhanced through a beneficiation joint venture enabling it to participate in the profits
in the downstream sale of the polished diamonds.
Rockwell also evaluates consolidation opportunities that 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: 26/04/2016 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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