To view the PDF file, sign up for a MySharenet subscription.

ROCKWELL DIAMONDS INCORPORATED - Rockwells First Quarter Performance Reflects Commissioning Activity At WPC

Release Date: 18/07/2017 08:31
Code(s): RDI     PDF:  
Wrap Text
Rockwell’s First Quarter Performance Reflects Commissioning Activity At WPC

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’s first quarter performance reflects commissioning activity at WPC

July 17, 2017, Toronto, ON -- Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI;
JSE: RDI) announces results for the three months ended May 31, 2017.

                                             Salient features
There were no formal results of operations in the first quarter as all mining activity, processing, sales
and costs for sales are accounted for as commissioning costs, and capitalised to property, plant and
equipment. In this respect, during commissioning:

• MOR operating results: Volumes mined from the WPC ramp-up operation during the quarter
   totalled 166,328 m 3. A total of 359 carats were recovered with 8 stones larger than 10 carats, for an
   average price of US$ 2,599 per carat.
• WPC: All phases of the WPC plant have now been commissioned, however some bottlenecks and
   design shortcomings have been identified and work is ongoing to address these. As a result the
   plant can now be run at a throughput rate that varies between 100 and 150 tons per hour depending
   on the type of gravel being treated, but the run time is still low albeit improving.
• Safety: At the end of Q1 F2018, the Company had achieved 466,488 lost time injury free hours
   (“LTIFH”) at its MOR activities. Rockwell’s drive towards zero harm will continue.
• Operating results: Rockwell experienced a total comprehensive loss of $2.7 million for the quarter,
   which was primarily driven by no completed operations being conducted during the period, resulting
   in very few diamonds recovered to cover operational costs and overheads.
• Business rescue: The business rescue process in respect of the three South African subsidiaries
   (Rockwell Resources RSA Pty Limited, HC van Wyk Diamonds Limited and Saxendrift Mine Pty
   Limited) is ongoing, with the objective to return the companies to solvency. During this process all
   claims and liquidation orders are stayed, allowing the ramp-up of the WPC operation on a legally
   protected basis. The appointed business rescue practitioners are actively working alongside the
  Companies’ management to prepare a business rescue plan which will deal with all claims against
  the subsidiaries, to be published on or before September 30, 2017.
• Management and Directors: Mr. Tjaart Willemse, who was brought in to assist in managing the
  crises brought about by the C-Rock attacks and to design and implement a turn-around strategy,
  has resigned and Mr. Stephen Le Roux has been employed to lead Rockwell’s Middle Orange River
  operations, as reported previously. Messrs Le Roux and Oosthuizen (the current CFO) will oversee
  the day-to-day executive management responsibilities of Rockwell and along with the business
  rescue practitioners the underlying subsidiaries.


 First quarter summary

                                                                        Three months ended
                                                                              31 May

          $000’s                                                            2017             2016
          Total Revenue                                                          -          12 466
                      Rough diamond sales                                        -          12 097
                      Beneficiation                                              -             369
          Gross (loss) profit before amortization and depreciation               -           3 293
          Profit (loss) attributable to owners of the parent               (2 289)             570
          Basic earnings (loss) per share – cents                           (4.16)            1.04
          Net Cash and cash equivalents                                      (958)             (88)
 
 Commenting on the third quarter financial performance before his departure, Tjaart
 Willemse said:

 “This past quarter has seen a real effort from the management and operating teams, working in
 conjunction with the BRPs, to deliver against the Wouterspan mining and development plan put
 together last year when I joined.
 Significant effort has gone into getting the mobile fleet up and running in order to feed the plant with
 steady supply of quality gravels. With Stephen joining us, the geology and mining models have been
 re-evaluated and any uneconomic and marginal areas were removed from the ore inventory. Mining
 faces have been re-established and its now about mining to plan and delivering to the processing
 plant.
 The primary focus has moved to short interval controls aimed at making every input count in adding
 value to realize revenue. Initiatives to drive operating costs down further and to increase revenue are
 key to returning the business to profitability”.

 Market update

 The diamond market for the months March to May 2017 was active with a steady demand. The Hong
 Kong Jewellery show at the beginning of March had steady demand and prices remained stable.
 Sellers tried to achieve higher prices, but there was resistance from buyers. The Basel show towards
 the end of March - which is known for high-end watch and jewellery sales - had a slower than usual
demand for larger diamonds. This was also evident in auctions during this period where prices of
larger diamonds were relatively soft compared to the previous year.
De Beers had two sights during this quarter, occurring the end of March and beginning of May, with
sales of US$580M and US$520M respectively. Alrosa had increased sales over this period with no
increases in prices. The demand for rough diamonds during this period was strong, and particularly
in the secondary market, partly due to the reduced supply by DTC. The prices of rough compared to
polished prices remain relatively high with profitability under pressure.
Polished prices fluctuated in the various size fractions but on average prices of polished remained
stable. Demand by retailers who continue to purchase polished for immediate requirements, to avoid
increased inventory, was healthy during the quarter.



For further information on Rockwell and its operations in South Africa, please contact

Stephen Le Roux               Operations Manager MOR            +27 (0)82 300 4184

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 and provide accretive value to the Company.

Rockwell has set a strategic goal to become a mid-tier diamond production company with specific
focus on the Middle Orange River region in South Africa.

As at the date of this report Rockwell’s subsidiary in South Africa (Rockwell Resources RSA Pty
Limited) and its two subsidiaries (HC van Wyk Diamonds Limited and Saxendrift Mine Pty Limited)
were being operated under Business Rescue Management as ordered by the Court, following an
application by creditors of the three South African subsidiaries on May 18, 2017.

Rockwell’s common shares trade on the Toronto Stock Exchange and the JSE Ltd under the symbol
“RDI”. Trading of Rockwell’s shares is currently suspended initially at the request of the Company,
pending clearance of the above uncertainty.


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 the transaction and the ability of each
party to satisfy the conditions precedent in a timely manner or at all, 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 of 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 i n
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: 18/07/2017 08:31:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story