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Quarterly Production And Sales Update For The Three Months Ended May 31, 2016
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 reports improved productivity and increased sales; good progress on the Wouterspan
construction project.
June 14, 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 May 31, 2016:
Currency values are presented in Canadian dollars, unless otherwise indicated.
Salient features
- Strategy - Rockwell continues to pursue its medium term target to process 500,000m3 of gravel per month in
the Middle Orange River (“MOR”). Immediate focus is on:
o the construction and commissioning of the plant at Wouterspan (“WPC”) by August 2016,
o continuous improvement of mining throughput at Remhoogte (“RHC”),
o the cost effective wind down of Saxendrift by August 2016, and
o the transition to an outsourced mining contract to externalize mining volumes and equipment risk.
- Volumes - were up 32% on Q1 2016 and 7% on Q4 2016, chiefly due to substantially higher volumes mined
and processed at RHC.
- Grades - MOR grades were up 12% on Q4 2016 owing to better recoveries from the middlings material at
Saxendrift (which was up 21%) mitigating a drop in grades at RHC (down 11%).
- Carat sales - 4,880 carats, up 3% on Q4 2016 and 59% Q1 2016.
- Value of sales - increased 31% from Q4 2016 and 67% on Q1 2016, to US$9.1 million (excluding beneficiation).
Total sales (including royalty contractors’ production but excluding beneficiation) were also up by 31% on Q4
2016 and 40% on Q1 2016.
- Average price per carat - improved by 27% on Q4 2016 to US$1,864.
- Notable recoveries - thirty +20-carat stones recovered at Saxendrift and RHC, with the three largest stones
being +96, +90 and +60.
- Rough diamond inventory - 997 carats were carried over into the second quarter of fiscal 2017 (including
royalty contract goods).
- Safety - at May 31, 2016, the Company had achieved 1,500,000 lost time injury free hours (“LTIFH”) at its MOR
operations.
- Construction - progress continues on the Wouterspan project, with construction almost completed, and
commissioning scheduled from August.
Commenting on first quarter production and sales James Campbell, CEO and President said:
“Our performance in the first quarter of fiscal 2017 is reflecting the effects of the improvements that we have been
implementing, following the strategic interventions of late FY 2016. Productivity has been enhanced on our
operations with the result of improved diamond recoveries and diamond values.
While operations are continuing to wind down at Saxendrift, production at Remhoogte is now stabilising after a
challenging third and fourth quarter, previously reported. The positive impact of the new in-field screening capability
installed at RHC late in FY 2016 and improving EMV availability is reflected in the notable increase in volumes
mined and processed at RHC (up 30% and 42% respectively compared to Q4 2016). Average per carat values at
RHC increased by 32% to $1,944 per carat, owing to the recovery and incidence of larger stones which normally
follows in turn to increased processing volumes. Our MOR sales are up 31% on the previous quarter and 67% on
the same period last year. However, the demand for 10+ stones remained softer throughout the quarter, due to
lower demand.
In May we took a decision to outsource our mining processes on a fixed, pay-per-volume delivered basis.
Accordingly, we have initiated negotiations on a new contractual arrangement, which will transfer the maintenance,
availability and volume risks related to earth moving fleet availability to the mining service provider. This new
arrangement represents a fundamental change to our business and operating model, which we expect will bring
about further improvement.
We are pleased with the progress on the Wouterspan project. Early stage mining has so far produced a 100,000m3
stockpile, with which we can commence early commissioning of the wet processing plant, whilst construction of the
Phase II In-Field Screening plant is being completed.
We remain focused on rebuilding our MOR production profile, and our exploration efforts to identify new value
opportunities with potential to add to the Company’s resources will continue on the properties surrounding
Wouterspan. We will also continue to evaluate new projects and value accretive consolidation opportunities.”
PRODUCTION REVIEW
Volume and carat production for total Company owned properties to May 31, 2016 were as follows:
Q1 F2017 Q1 F2016 % Change Q4 F2016 % Change F2016
Volumes processed (000m3) 865 788 10 789 10 3,214
Carats produced (carats) 5,688 3,025 88 4,726 20 18,984
Grade (carats/100m3) 0.66 0.38 74 0.60 10 0.59
Figure above include royalty mining contractors. Refer to Appendix 1 for additional information
- RHC: First quarter volumes processed were up 42% from Q4 2016 and carats recovered increased by 25%,
while grade declined by 11% to 0.67 cphm3. A total of 3,596 carats were recovered from this property in the
quarter, including 18 plus 20-carat stones (with the largest stones being a 96+ from the Remhoogte plant and
a 92+ from the Holsloot plant). An average stone size of 4.80 ct/stn was achieved at a bottom cut-off of 5 mm.
- Saxendrift: The volume of gravel processed was down 12% from Q4 2016, as the operation approaches its
end of economic life, while the reported grade of 0.40 cphm3 was up 21% (from 0.33 cphm3). Quarterly carat
production improved by 8% to 1,705 carats. Notable recoveries included 12 plus 20-carat stones, with the
largest being a 60+. An average stone size of 4.39 ct/stn was achieved at 5mm bottom cut-off, with additional
114 incidental stones recovered.
- Royalty contractor mining: A total of 386 carats were recovered in the first quarter by royalty mining
contractors processing tailings at Saxendrift and Saxendrift Hill Complex. Contractor recoveries featured 2
stones above 20 carats.
SALES REVIEW
Diamond sales for total Company-owned properties to May 31, 2016 were as follows:
Q1 F2017 Q1 F2016 % Change Q4 F2016 % Change F2016
Sales value (US$000’s) 9,347 6,687 40 7,131 31 28,713
Carats sold 5,191 4,671 11 4,925 5 18,976
Average price (US$ per carat) 1,801 1,432 26 1,448 24 1,513
Figures above include royalty mining contractors’ goods. Refer to Appendix 2 for additional information
- Saxendrift: Diamond sales remained stable compared to Q4 2016 at US$2.6 million, but declined 39%
compared to Q1 2016. A total of 1,557 carats were sold, down 14% on Q4 2016, at an average value per carat
of US$1,694 (which was up 16% from Q4 2016). The value increase can be attributed to the change in
composition of the middlings, with better quality gravels being mined and a higher incidence of larger stones.
- RHC: Diamond sales were up 50% on Q4 2016, at US$6.5 million, from the sale of 3,323 carats (up 14% on
Q4 2016). The recorded average value of RHC goods increased by 32% on Q4 2016 to US$1,944 per carat.
The improvement in value is a consequence of the increased volumes of gravel processed.
Appendix 1: Volumes and carat production for the Company’s owned mines and its royalty mining contractors for
the three months ended May 31, 2016 were as follows:
Volume Mined
Q1 F2017 Q1 F2016 % Change Q4 F2016 % Change F2016
(000m3)
536 749 (28) 490 9 2,249
Saxendrift Complex
NJK - 104 (100) - - 104
RHC 399 - 100 307 30 943
Total 935 853 10 797 17 3,296
Volume processed
Q1 F2017 Q1 F2016 % Change Q4 F2016 % Change F2016
(000m3)
Saxendrift Complex 430 536 (20) 486 (12) 1,980
NJK - 63 (100) - - 63
RHC 361 1 100 255 42 908
Total 791 599 32 741 7 2,951
Contractors’ mining* 74 188 (61) 48 54 263
Grand total 865 787 10 789 10 3,214
Carats produced
Q1 F2017 Q1 F2016 % Change Q4 F2016 % Change F2016
(carats)
Saxendrift Complex 1,705 2,556 (33) 1,584 8 8,335
NJK - 431 (100) - - 431
RHC 3,596 41 100 2,866 25 8,056
Total 5,301 1,398 279 4,450 19 16,822
Contractors’ mining* 386 1,627 (76) 276 40 2,162
Grand total 5,688 3,025 88 4,726 20 18,984
Grade
Q1 F2017 Q1 F2016 % Change Q4 F2016 % Change F2016
(carats/100m3)
Saxendrift Complex 0.40 0.48 (17) 0.33 21 0.42
NJK - 0.69 - - - 0.69
RHC 1.00 3.75 (73) 1.12 (11) 0.89
Total 0.67 0.23 191 0.60 12 0.57
Contractors’ mining* 0.52 0.87 (40) 0.58 (10) 0.82
Grand total 0.66 0.38 74 0.60 10 0.59
Appendix 2: Sales for each of the Company’s own mines and its royalty mining contractors for the three months
ended May 31, 2016 were as follows:
Carats sold Q1 F2017 Q1 F2016 % Change Q4 F2016 % Change F2016
(carats)
Saxendrift Complex 1,557 2,383 (35) 1,820 (14) 8,478
NJK - 685 (100) - 685
RHC 3,323 - 100 2,912 14 7,791
Total 4,880 3,068 59 4,732 3 16,954
Contractors’ carats** 311 1,603 (81) 193 61 2,022
Grand total 5,191 4,671 11 4,925 5 18,976
Value of Sales
Q1 F2017 Q1 F2016 % Change Q4 F2016 % Change F2016
(US$ 000’s)
Saxendrift Complex 2,637 4,326 (39) 2,651 (1) 14,435
NJK - 1,109 (100) - 1,109
RHC 6,459 - 100 4,297 50 11,339
Total 9,096 5,435 67 6,948 31 26,883
Contractors’ carats** 251 1,252 (80) 183 37 1,830
Grand total 9,347 6,687 40 7,131 31 28,713
Average Price
Q1 F2017 Q1 F2016 % Change Q4 F2016 % Change F2016
(US$/carat)
Saxendrift Complex 1,694 1,816 (7) 1,456 16 1,703
NJK - 1,619 100 - - 1,619
RHC 1,944 - 100 1,475 32 1,455
Total 1,864 1,772 5 1,468 27 1,586
Contractors’ carats** 806 781 3 949 (15) 905
Grand total 1,801 1,432 26 1,448 24 1,513
* “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. The Company also
evaluates consolidation opportunities that have the potential to expand its mineral resources and production profile
and provide accretive value to the Company.
Rockwell is known for producing large, high quality gemstones comprising a major portion of its diamond recoveries.
This is enhanced through a beneficiation joint venture that enables Rockwell to participate in the profits on the sale
of the polished and certain re-traded diamonds, which are not beneficiated.
Rockwell has set a strategic goal to become a mid-tier rough diamond production company. In pursuit of this goal
the Company has embarked on a strategy to grow its Middle Orange River (MOR) operational base and minimise
production and recovery volatility by setting a medium term target to process 500,000m3 of gravels per month from
its MOR operations.
Rockwell’s common shares trade on the Toronto Stock Exchange and the JSE Limited under the symbol “RDI”.
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: 15/06/2016 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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