Rockwell Announces Fiscal 2009 Results for Three & Nine Months Ending November 30, 2008



    ACHIEVES A NET PROFIT OF $4.5 MILLION OR $0.02 CENTS FOR THE QUARTER

    VANCOUVER, Jan. 14 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX: RDI; JSE: RDI; OTCBB: RDIAF) announces its financial results
for the three month and nine month periods ending November 30, 2008. Financial
information is stated in Canadian currency unless otherwise indicated.
    Rockwell is focused on growth by mining and developing alluvial diamond
deposits. The Company has established a significant footprint on alluvial
deposits which have consistently yielded high value gemstone diamonds. Plus
2-carat stones comprise more than 65% of the Company's production and are of
exceptional quality.

    
    Highlights for three month period ended November 30, 2008 are as follows:

    -   Production of 5,981.25 carats from mining operations; the Company
        elected to hold 5,619.24 carats in inventory due to its strong cash
        position;

    -   1,997.94 carats were sold at an average price of US$6,762.76 per
        carat for revenue of $16.2 million;

    -   Cost of sales and amortization totalled $6.5 million and net general
        and administrative expenses amounted to $1.9 million, offset by a net
        tax recovery of $134,035, resulting in:

        -  An operating profit of $9.5 million.
        -  A net profit of $4.5 million or $0.02 per share.

    In the nine months ending November 30, 2008:

    -   16,558.09 carats were produced, and 11,965.58 carats were sold at an
        average price of US$2,538.43 per carat yielding revenue from sales of
        $33.2 million;

    -   Cost of sales and amortization totalled $24 million and net general
        and administrative expenses amounted to $6.5 million, offset by a net
        tax recovery of $1.2 million, and the loss on the sale of a
        discontinued operation of $203,338, resulting in:

        -  An operating profit of $9.5 million.
        -  A net profit of $1.4 million or $0.01 per share.
    
    The Company achieved excellent profits in the third quarter of fiscal
2009 and was profitable both at an operational and consolidated level for the
nine month period. Equally encouraging was the fact that the cost trend for
the three and nine month periods was downward in spite of spiraling cost
increases in key mining supplies, utilities and equipment which impacted
negatively on local and international mining companies during 2008. The
Company also successfully commissioned its fourth operation at Saxendrift and
this too was achieved within an overall declining cost trend for the Company.

    
    During the nine month period Rockwell experienced:

    -   the hangover of Eskom power outages and spent approximately $1.5
        million of unbudgeted funds purchasing and installing back-up
        generator sets at its operations;

    -   sharp increases in electrical power costs;

    -   steep increases in diesel, oil and lubricant costs;

    -   strong steel price increases which had an impact on all aspects of
        the Company's activities;

    -   a labour dispute which resulted in the loss of 35% of budgeted carat
        production in the second quarter;

    -   wage and other cost increases driven by the strong overall
        inflationary operating environment in the South African through 2008;
        and

    -   an unsolicited offer for the Company.
    

    In spite of these challenges, the Company was able to reduce costs in a
sustainable manner, open its fourth operation at Saxendrift and achieve
overall profitability. To this end, Rockwell's Management and Board of
Directors implemented rigorous and regular reviews of all aspects of the
business through 2008 to reduce costs through sustainable structural
adjustments and increase efficiencies throughout its operations. Among the
procedures implemented are:

    
    -   revision of mining plans and haul road layouts;

    -   a complete review and overhaul of mining methods to substantially
        reduce the number of pieces of earth moving equipment utilized at
        each mine;

    -   increases in plant efficiencies by systematic review and improvement
        of each flow circuit, better repair and maintenance, replacement of
        costly desanding units with degrit screens and cyclones, and improved
        electrical power utilization;

    -   review and changes to all non-core activities and contractor
        arrangements to improve management of such services, outsource
        certain non-core activities, and sensibly cut costs;

    -   improved and quicker data analysis, information gathering and
        reporting of financial data; and

    -   proactive changes and improvements to training, HR management, and
        communication with employees.
    

    All of the changes have provided benefit to the Company and these
improvements and other cost savings will continue to be managed and enhanced.
    Diamond prices remained robust through the six month period ending August
31, 2008 and in September 2008 the Company recovered a large white 189.6-carat
gemstone from the Klipdam mining operation. This stone realized an excellent
sale price of approximately US$10.2 million. The Company also benefited
through the sale of three exceptional yellow stones which were manufactured in
terms of its marketing agreement with the Steinmetz Diamond Group and sold in
October 2008.
    Subsequent to September 2008, the rough diamond market experienced a
sharp decrease in trading activity and as a consequence rough diamond prices
have fallen in the latter part of 2008. Rockwell sold a few of its larger
stones for strong prices in early October but subsequent to that has not sold
the greater part of its production from the third quarter, and currently has
diamond inventory of 5,619.24 carats. This inventory has been valued on a
conservative basis in the Company's financial statements.
    As noted above, the Company also expanded its operations to four (from an
original three operations) with the re-commissioning of facilities at
Saxendrift on the south bank of the Middle Orange River, adjacent to its
Wouterspan operation.
    Rockwell rapidly advanced production at the new Middle Orange River
operations acquired from the Trans Hex Group, beginning with Saxendrift. Aside
from the re-commissioning of the existing small scale Saxendrift plant during
the second quarter of fiscal year 2009, in November 2008 the Company also
pre-commissioned a state of the art, low-cost, high-volume wet Rotary pan
plant at Saxendrift. This plant was built and pre-commissioned on budget and
on-time in approximately five months and was operating routinely in production
mode prior to the extended year-end shutdown beginning at the end of November
2008.
    The refurbished Saxendrift, new final recovery facility was commissioned
a month ahead of schedule in late September 2008. The new Saxendrift wet plant
will add strong growth to the Company's diamond production profile, and yield
further operational costs saving.
    Financial results for the third quarter were most encouraging with the
Company producing a total of 5,981.25 carats for the period. Sales yielded
revenues of $16.2 million and the best operating profit produced to date was
achieved in the current quarter at $9.5 million. At a consolidated level, a
comprehensive profit of $4.5 million was achieved for these three months.
    For the nine month period to November 31, 2008, the Company showed an
operating profit of $9.5 million and at a consolidated level a profit of $1.4
million. Excellent production rates were achieved during the last three months
and this, combined with cost savings implemented by the Company, is expected
to again yield reduced operating costs and equivalent positive financial
performance once operations re-commence.
    The Company ended the third quarter of fiscal 2009 with cash reserves of
$6.8 million. These funds are being utilized to provide the Company with
flexibility during the extended shutdown period through December and January.
The extended shutdown is in response to depressed conditions in the diamond
market and to ensure the long term viability of the Company.
    In a continuing response to challenging conditions in the financial and
diamond market, Rockwell has initiated a process to restructure its Middle
Orange River operations so as to save costs and improve efficiencies.
    Upon resumption of operations, the Company will focus on ramping up the
Saxendrift mining operation while it suspends the Wouterspan operation to
reduce costs. The intention in the short to medium term is to fabricate and
re-commission a low cost twin 18-foot wet rotary pan plant and replace the
older and more costly 12 rotary pan plant at Wouterspan.

    President and CEO John Bristow stated

    "Rockwell is encouraged by its strong results, cost reductions, and
profitability achieved for the three and nine month period to November 30 of
fiscal 2009, in spite of the considerable challenges faced by the Company
during the overall period. During this time, the Company demonstrated
flexibility and ability to rapidly adapt to the challenges of power outages,
spiralling electrical, fuel, oil, steel and other costs, industrial action,
and an unsolicited offer for the Company. With the publication of these latest
results the Company has set itself apart from a number of its peers.
    The Company has also taken steps to address depressed conditions in the
international diamond market and is closely monitoring conditions and results
of rough diamond tenders conducted by other producers. We are addressing the
latest challenges, which are driven by turbulence in the banking sector,
capital markets, and diamond trade, and are mindful of their impact on the
Company's activities and financial performance in the short to medium term."

    
                            Results of Operations

    Rockwell's interest in the operations is 74%, with the remaining 26% being
held by a Black Economic Empowerment consortium.

    Production and Sales - Quarter Comparison

    The following is a comparison of the current quarter (ending November 30,
2008) with the quarter ending November 30, 2007.

    -------------------------------------------------------------------------
                                 PRODUCTION
    -------------------------------------------------------------------------
    Operation       3 months ending                   3 months ending
                  November 30, 2008                 November 30, 2007
            -----------------------------------------------------------------
              Volume               Average     Volume               Average
              (cubic    Carats     grade       (cubic     Carats    grade
              meters)            (carats per   meters)            (carats per
                                  100 cubic                        100 cubic
                                    meters)                          meters)
    -------------------------------------------------------------------------
    Holpan    155,759    1290.42       0.83    232,930   1,673.29       0.72
    -------------------------------------------------------------------------
    Klipdam   239,245   2,288.88       0.96    142,534   1,256.06       0.88
    -------------------------------------------------------------------------
    Wouter-
     span     189,224   1,568.00       0.83    341,099   2,016.54       0.59
    -------------------------------------------------------------------------
    Makoen-
     skloof         -          -          -    136,154     633.28       0.47
    -------------------------------------------------------------------------
    Saxen-
     drift     83,632     833.95       1.00          -          -          -
    -------------------------------------------------------------------------
    Total     667,860   5,981.25       0.90    852,717   5,579.17       0.65
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                      SALES, REVENUE AND INVENTORY
    -------------------------------------------------------------------------
    Operation                       3 months ending November 30, 2008
            -----------------------------------------------------------------
                             Sales       Value of     Average     Inventory
                            (carats)       Sales       value       (carats)
                                           (US$)     (US$ per
                                                       carat)
    -------------------------------------------------------------------------
    Holpan                     268.43      487,127     1,814.73     1,287.79
    Klipdam                    912.42   11,035,293    12,094.53     2,050.74
    -------------------------------------------------------------------------
    Wouterspan                 313.40      681,760     2,175.37     1,529.26
    -------------------------------------------------------------------------
    Makoenskloof                    -            -            -            -
    -------------------------------------------------------------------------
    Saxendrift                 503.69    1,307,412     2,595.67       751.45
    -------------------------------------------------------------------------
    Total                    1,997.94   13,511,592     6,762.76     5,619.24
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                      SALES, REVENUE AND INVENTORY
    -------------------------------------------------------------------------
    Operation                       3 months ending November 30, 2007
            -----------------------------------------------------------------
                             Sales       Value of     Average     Inventory
                            (carats)       Sales       value       (carats)
                                           (US$)     (US$ per
                                                       carat)
    -------------------------------------------------------------------------
    Holpan                   2,683.94    2,437,250       908.09       372.00
                                                                   ----------
    Klipdam                  2,044.82    1,076,732       526.57       382.94
    -------------------------------------------------------------------------
    Wouterspan               2,511.57    4,975,788     1,981.15       496.53
    -------------------------------------------------------------------------
    Makoenskloof               787.93    3,808,122     4,833.07        82.65
    -------------------------------------------------------------------------
    Saxendrift                      -            -            -            -
    -------------------------------------------------------------------------
    Total                    8,028.26   12,297,892     1,531.83     1,334.12
    -------------------------------------------------------------------------

    Production and Sales - Nine Month Comparison

    The following is a comparison of the nine months of fiscal 2009 (ending
November 30, 2008) with the nine months ending November 30, 2007.

    -------------------------------------------------------------------------
                                 PRODUCTION
    -------------------------------------------------------------------------
    Operation       9 months ending                   9 months ending
                  November 30, 2008                 November 30, 2007
            -----------------------------------------------------------------
              Volume               Average     Volume               Average
              (cubic    Carats     grade       (cubic     Carats    grade
              meters)            (carats per   meters)            (carats per
                                  100 cubic                        100 cubic
                                    meters)                          meters)
    -------------------------------------------------------------------------
    Holpan    512,510   3,869.78       0.76    904,862   6,272.18       0.69
    -------------------------------------------------------------------------
    Klipdam   668,674   6,520.90       0.98    599,001   5,256.51       0.88
    -------------------------------------------------------------------------
    Wouter-
     span     552,293   3,896.42       0.71    980,387   6,228.27       0.64
    -------------------------------------------------------------------------
    Makoen-
     skloof         -          -          -    199,263     857.81       0.43
    -------------------------------------------------------------------------
    Saxen-
     drift    175,441   2,270.99       1.23          -          -          -
    -------------------------------------------------------------------------
    Total   1,908,918  16,558.09       0.87  2,683,513  18,614.77       0.69
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                      SALES, REVENUE AND INVENTORY
    -------------------------------------------------------------------------
    Operation                       9 months ending November 30, 2008
            -----------------------------------------------------------------
                             Sales       Value of     Average     Inventory
                            (carats)       Sales       value       (carats)
                                           (US$)     (US$ per
                                                       carat)
    -------------------------------------------------------------------------
    Holpan                   2,946.42    3,958,748     1,343.58     1,287.79
    -------------------------------------------------------------------------
    Klipdam                  4,825.13   18,779,616     3,892.04     2,050.74
    -------------------------------------------------------------------------
    Wouterspan               2,673.86    4,360,884     1,630.93     1,529.26
    -------------------------------------------------------------------------
    Makoenskloof                    -            -            -            -
    -------------------------------------------------------------------------
    Saxendrift               1,520.17    3,274,483     2.154.02       751.45
    -------------------------------------------------------------------------
    Total                   11,965.58   30,373,731     2,538.43     5,619.24
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                      SALES, REVENUE AND INVENTORY
    -------------------------------------------------------------------------
    Operation                       9 months ending November 30, 2007
            -----------------------------------------------------------------
                             Sales       Value of     Average     Inventory
                            (carats)       Sales       value       (carats)
                                           (US$)     (US$ per
                                                       carat)
    -------------------------------------------------------------------------
    Holpan                   6,331.00    7,590,633     1,199.96       372.00
    -------------------------------------------------------------------------
    Klipdam                  5,134.22    7,402,845     1,442.86       382.94
    -------------------------------------------------------------------------
    Wouterspan               5,978.55   12,121,715     2,027.53       496.53
    -------------------------------------------------------------------------
    Makoenskloof               894.85    5,577,090     6,232.62        82.65
    -------------------------------------------------------------------------
    Saxendrift                      -            -            -            -
    -------------------------------------------------------------------------
    Total                   18,338.62   32,692,283     1,782.70     1,334.12
    -------------------------------------------------------------------------
    

    Production Costs

    The average operating cost during the quarter was US$4.09 per tonne
(excluding Saxendrift, which is currently in a ramp-up phase, it is US$8.80),
an increase from US$3.80 per tonne in the quarter ending November 30, 2007.
    The average operating cost over nine months was US$4.41 per tonne
(excluding Saxendrift, which is currently in a ramp-up phase, it is US$9.15),
an increase from US$3.69 per tonne in the nine months ending November 30,
2007.
    Additional details can be found in the Company's Financial Statements and
Management's Discussion and Analysis which are filed on www.sedar.com.

    
    ------------------------------------------------------------------------
    The Company will host a telephone conference call on Thursday, January 15
    at 10:00 a.m. Eastern Time (7:00 a.m. Pacific; 5:00 p.m. Johannesburg) to
    discuss these results. The conference call may be accessed by dialing
    (877) 857-6173, or (719) 325-4788 internationally. A live and archived
    audio webcast will also be available on the Company's website at
    www.rockwelldiamonds.com. The conference call will be archived for later
    playback until midnight, Thursday January 22, 2009 and can be accessed by
    dialing (888) 203-1112 in Canada and the United States, or (719) 457-0820
    and using the passcode 7449151.
    -------------------------------------------------------------------------

    John Bristow
    President and CEO

     No regulatory authority has approved or disapproved the information
                       contained in this news release.

                         Forward Looking Statements
    
    This release includes certain statements that may be deemed
"forward-looking statements". Other than statements of historical fact all
statements in this release that address future production, reserve or resource
potential, exploration drilling, exploitation activities and events or
developments that Rockwell expects are forward-looking statements. Although
Rockwell 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 market prices, exploitation and exploration successes,
changes in and the effect of government policies regarding mining and natural
resource exploration and exploitation, availability of capital and financing,
and general economic, market or business conditions. Investors are cautioned
that any such statements are not guarantees of future performance and those
actual results or developments may differ materially from those projected in
the forward-looking statements. For more information, investors should review
Rockwell's annual Form 20-F filing with the United States Securities and
Exchange Commission www.sec.com and Rockwell's home jurisdiction filings that
are available at www.sedar.com.





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