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Rockwell Diamonds Incorporated - Rockwell Provides Further Interim Update

Release Date: 25/11/2016 07:05
Code(s): RDI
 
Wrap Text
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 provides further interim update
November 24, 2016, Vancouver, BC - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX:RDI; JSE:RDI) announces the following update on its Business Repositioning Plan and latest developments on the mining contract. Business Repositioning
Rockwell disclosed in the second quarter Management Discussion and Analysis issued in mid-October that it was undertaking a strategic review of its assets and business options. The Company confirmed today that it has completed the formulation of its turnaround plan, which was unanimously approved during a special Board meeting on November 20, 2016. The plan entails the following:
- Ramp up of Wouterspan to its full production volume of 200,000m3 a month to be accelerated; - A material reduction in cash operating and off mine costs to be realized; - Increasing production volumes in Q1 of FY2018 with a further 60,000m3 a month by relocating the Holsloot plant to Wouterspan North, where additional Rooikoppie gravels have been delineated; - Reducing the overall operations footprint by disposing of any assets that do not fit the business model. A sale process in respect of Remhoogte/Holsloot and Saxendrift mines is now well underway. As previously disclosed, the materiality of the proposed transaction to the remaining assets is not considered to be of such a size as to require shareholder approval;
- Securing adequate and timeous cash investment to facilitate the procurement of capital items and supplement cash flow for the first five months. The Company today confirmed that commitments for US$8M have been secured, by means of additional funding on similar terms to the current loans.
This plan will enable Rockwell to perform the necessary upgrades to equipment and infrastructure to implement its turnaround plan.
In an unrelated matter, and as previously reported, the implementation of the mining agreement between H C Van Wyk Diamonds Limited (?HCVW?) and C-Rock Mining Limited (?CML?), and other related agreements between HCVW, Saxendrift Mine (Pty) Ltd (collectively, ?the Subsidiaries?) and CML, have not proceeded in accordance with the terms of the agreements and as a result the Subsidiaries have given notice to CML that the various agreements have been terminated. The Subsidiaries are now engaged in a dispute over these agreements. In response to the Company?s position, CML applied for a spoliation order against the Subsidiaries on November 7, 2016 and followed this up with applications for provisional liquidation of the Subsidiaries on November 22 and 23, 2016. Mine production activities and work to complete the Wouterspan Wet Plant have been suspended.
The Company has set down the spoliation application for final determination on November 25, 2016 in Kimberley. The application for liquidation will be heard in the normal course of business; it is considered to be without foundation and will be vigorously defended.
The applications for liquidation arise from alleged claims pursuant to certain contracts which are in dispute. The Company?s position is also founded, in part, on the results of a substantial forensic review recently completed by an independent forensic auditor in Johannesburg, which identified several instances of irregular transactions, unsupported transactions and irregular approvals, involving CML and a former senior Rockwell employee. The Company is
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