Please note that the headline of c7141 sent at 8:30 ET has been revised.
Correct copy follows:
Rockwell announces positive Preliminary Economic Assessment for
VANCOUVER, May 15, 2013 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or
the "Company") (TSX: RDI; JSE: RDI) is pleased to announce that it has
updated a Preliminary Economic Assessment ("PEA") on its Wouterspan
alluvial diamond property that is located on the opposite side of the
Orange River from the Saxendrift diamond mine. The PEA was carried out
by a team led by Dr Kurt Petersen, an expert diamond metallurgist and
Walter Bold Pr. Eng. Rockwell's Group Engineer. There was also
significant input from Paradigm Project Management ("PPM") a company
with a strong track record in the innovative development of new diamond
mines. All currency values are stated in Canadian dollars unless
The study indicated positive economics, sufficient to take the project
to the detailed design stage. The economic model yielded an internal
rate of return of between 45% and 70% for a range of scenarios based on
the key inputs. The net present value ("NPV") for the base case is
$91.71 million at a 15% discount rate, yielding a project payback
period of 2.3 years from the start of construction or approximately 1.3
years from commencement of production. The project is most sensitive to
revenue with a 5% variance in the total revenue over the 10 year life
of mine, impacting the NPV by 15%. The operation is expected to employ
Key assumptions of the study
A plant with a capacity of 1,200 tonnes per hour ('tph') (or 354,000m3 per month), a rate that lowers the sensitivity of diamond production to
the nature of the resource being mined.
A plant design comprising of three processing streams: two Bourevestnik
Bulk X-ray systems such as those that have been successfully
implemented by the Company at its Middle Orange River operations to
handle the coarse and mid-sized gravels; and the third stream being a
dense media separation (DMS) stream to process fine material.
A reduced water consumption rate that is suited to the environmental
conditions in the Middle Orange River region.
The use of contract mining at a fixed unit cost that reduces the capital
requirements and enables Rockwell to focus on mine planning and
Summary of financial model and results
Proposed mining rate
Project life of mine
Grade (at 5mm bottom cut off)
0.622 carats / 100m3
Average carat value*
$2,300 / carat
Capital cost (including 25% contingency)
Unit cost (using contract mining)
Net present value (at 10.0%)
Net present value (at 15.0%)
* The NI 43-101 diamond value at a bottom cut off of +2mm is $2,029/ct.
The equivalent value at a bottom cut off of +5mm is $2,300/ct.
The net present values in the table above are shown pre tax and were
calculated in ZAR before conversion into C$ at an exchange rate of
ZAR8.50 / C$. These are also net of the mining royalty that has been
applied according to the Mineral and Petroleum Resources Royalty Act No
28 of 2008 (the "Royalty Act").
A Preliminary Economic Assessment ('PEA') is preliminary in nature, and
includes Inferred mineral resources that are considered too speculative
geologically to have economic considerations applied to them that would
enable them to be categorized as mineral reserves. However, the mine
design aspects of the PEA were completed at a pre-feasibility study
level as per standard industry practice. There is no assurance that the
PEA will be realized.
Estimated mineral resources for the Wouterspan property are:
5 911 000
31 863 000
4 311 100
37 774 000
5 025 500
The effective date of the resource statement for Wouterspan is 30
November 2010. Further details of the estimate are provided in the
Company's May 31, 2011 news release.
"Completion of this study on Wouterspan is a critical milestone in
Rockwell's strategy to unlock the growth potential of its Middle Orange
River projects. The property was successfully mined in the past using
pan plants. We now have access to more efficient fit for purpose
technologies such as the Bulk X-ray system that we have incorporated
into the new plant design," explains James Campbell, CEO, Rockwell
Diamonds. "The study's results are based on what we are achieving in
other areas of our operations. The project capital is expected to be
some $42 million, including a 25% contingency, with the potential to
come in substantially lower. The team that conducted the Wouterspan
study was instrumental in more than halving the eventual capital budget
required to recently bringing on stream a new kimberlite mine in
Botswana, compared to initial estimates."
"A key element of Rockwell's strategy is to process 500,000m3 per month of high quality gravels from the Middle Orange River region.
Our Saxendrift and Saxendrift Hill Complex will collectively process
250,000m3 per month," elaborates Campbell. "We recently announced our plans to
bring the Niewejaarskraal mine into production at a processing capacity
of 115,000m3. We are now considering taking the Wouterspan property to the next
step. This will enable us to achieve our full strategy in the Middle
Commenting on the potential socio-economic benefits of the project,
Campbell added that: "While the construction of a new mine at
Wouterspan would add significant positive impacts to the local economy,
we also project the creation of some 300 new jobs in this region which
is troubled by high levels of unemployment. The plant design is based
on continuous operations, running four shifts per day. This means that
Wouterspan's job creation potential is over and above the 93 jobs that
were recently created at our Saxendrift Hill Complex mine, which is
currently being commissioned."
Mr Glenn A Norton (Pr. Sci. Nat.), Group Technical Manager and Walter
Bold (Pr. Eng (Mech)), Group Engineer, who are both employees of
Rockwell supervised the PEA and have reviewed and approved the contents
of this release. Further details will be provided in a technical report
that will be filed on the Company's profile at www.sedar.com.
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 has two operational mines, which it is
progressively optimizing, as well as a third mine which will come into
production in the first quarter of 2013. Rockwell also has two
development projects and a pipeline of earlier stage properties with
future development potential. The operations are based on high
throughput processing capability and Saxendrift, the flagship mine 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 gem stone
diamonds comprising a major portion of its diamond recoveries and has a
beneficiation joint venture that enables it to participate in the
profits on the sale of the polished diamonds.
Rockwell also evaluates merger and acquisition opportunities which have
the potential to expand its mineral resources and production profile
and would 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 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 and 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.
Information Concerning Estimates of Indicated and Inferred Resources
This news release also uses the terms 'indicated resources' and
'inferred resources'. Rockwell Diamonds Inc advises investors that
although these terms are recognized and required by Canadian
regulations (under National Instrument 43-101 Standards of Disclosure
for Mineral Projects), the U.S. Securities and Exchange Commission does
not recognize them. Investors are cautioned not to assume that any part
or all of the mineral deposits in these categories will ever be
converted into reserves. In addition, 'inferred resources' have a great
amount of uncertainty as to their existence, and economic and legal
feasibility. It cannot be assumed that all or any part of an Inferred
Mineral Resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of Inferred Mineral Resources may not form
the basis of feasibility or pre-feasibility studies, or economic
studies except for Preliminary Assessment as defined under 43-101.
Investors are cautioned not to assume that part or all of an inferred
resource exists, or is economically or legally mineable.
SOURCE: Rockwell Diamonds Inc.
For further information:
For further information on Rockwell and its operations in South Africa, please contact
+27 (0)83 457 3724
+27 (0)83 307 7587