Rockwell announces fiscal 2009 results for three & six months ending August 31, 2008



    VANCOUVER, Oct. 15 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX: RDI; JSE: RDI; OTCBB: RDIAF) announces financial results for
the three month and six month periods ending August 31, 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 consistently yield high value gemstone diamonds. Plus 2-carat
stones comprise more than 65% of the Company's production and are of
exceptional quality and value.
    Diamond prices remained robust through the six month period ending August
31, 2008 and in September the Company recovered a large white 189.6-carat
gemstone from the Klipdam mining operation. This stone realized a sale price
of approximately US$10.2 million. This exceptional price was achieved against
the background of turbulent conditions in world banking and capital markets
which are likely to have an impact on diamond prices going forward.
    During the six month period ending August 31, 2008, the Company expanded
its operations to four (from an original three operations) with the
re-commissioning of operations at Saxendrift on the south bank of the Middle
Orange River, adjacent to its Wouterspan operation.
    Rockwell is advancing 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 six month period to August 31, 2008, the Company is on target and on
budget with the construction of a new state-of-the-art, low-cost, high-volume
wet Rotary pan plant on the Saxendrift terrace. Full scale pre-commissioning
trials of the refurbished Saxendrift new final recovery facility began three
weeks ahead of schedule in late September 2008. Commissioning of the new
Saxendrift wet plant is scheduled for November 2008. Once commissioned this
plant will add strong growth to the Company's diamond production profile, and
yield further operational costs saving.
    The Company experienced loss of production due to industrial action at
its operations during the quarter ending August 31, 2008. This action was
resolved to the benefit of the Company and its employees in late August and
full scale production resumed on September 3, 2008.
    In spite of industrial action, which resulted in approximately 35% loss
in carat production during the second quarter of fiscal 2009, the Company was
able to contain costs and show an operating loss of $155,476 for the period
ending August 31, 2008. At a consolidated level, the Company showed a loss of
$2.2 million for the period. For the six month period to August 2008 Rockwell
showed an operating loss of $7,344 and at a consolidated level a loss of
$3 million. Good production rates have been achieved since normal operations
resumed on September 3, 2008 and this, combined with cost savings implemented
by the Company, will yield reduced operating costs and positive financial
performance in the third quarter ending November 30, 2008.
    The Company ended the quarter with cash reserves of $10.1 million which
will be allocated to future expansion of existing operations, and development
of brownfields projects already held by the Company.

    
                           Overview and Highlights

    In the three month period ended August 31, 2008:

    -   4,266.25 carats were produced at the Holpan/Klipdam, Wouterspan and
        Saxendrift operations which was about 35% under budget due to
        industrial action;

    -   5,024.34 carats were sold at an excellent average price of
        US$1,951.41 per carat;

    -   Revenues from sales were $9.9 million;

    -   Cost of sales and amortization totalled $10.3 million, resulting in
        an operating loss of $155,476 for the period;

    -   Net general and administrative expenses amounted to $3.2 million,
        offset by a net tax recovery of $703,167, and the loss on the sale of
        a discontinued operation of $203,338 resulted in a net loss of
        $2.2 million or $0.01 per share.

    In the six months ending August 31, 2008:

    -   The Company re-commissioned an existing small Rotary pan plant at
        Saxendrift and implemented the fast track construction of the new
        Saxendrift wet Rotary pan plant

    -   10,576.83 carats were produced from operations at Holpan/Klipdam,
        Wouterspan and Saxendrift;

    -   9,879.61 carats were sold at an average price of US$1,709.31 per
        carat;

    -   Revenues from sales of $17.4 million, inclusive of revenue received
        from contract diamond sales of $160,576;

    -   Cost of sales and amortization totalled $17.5 million, resulting in
        an operating loss of $7,344 for the period;

    -   Net general and administrative expenses amounted to $4.6 million,
        offset by a net tax recovery of $1.1 million, and the loss on the
        sale of a discontinued operation of $203,338 resulted in a net loss
        of $3 million or $0.01 per share;

    -   Diamonds in inventory at August 31, 2008 totalled 1,640.78 carats;

    -   The Company held cash reserves at August 31, 2008 of $10.1 million

                            Results of Operations
    

    In the first half of fiscal 2009, the Company operated three alluvial
diamond mines and re-commissioned operations at its fourth site, Saxendrift.
During the period, the Company also increased its interest in the
Holpan/Klipdam and Wouterspan properties to 74%, with the remaining 26% being
held by a Black Economic Empowerment ("BEE") consortium.
    Industrial action at the Wouterspan mine during the quarter resulted in
operations being curtailed at this operation during late July and the month of
August. Wage negotiations for all South African operations were implemented in
June 2008. These negotiations reached a deadlock in mid August and were
followed by work stoppages and reduced production at the Company's other
operations. Negotiations were successfully concluded in late August and full
operations were resumed on September 3, 2008.

    
    Production and Sales - Quarter Comparison

    The following is a comparison of the current quarter (ending August 31,
2008) with the quarter ending August 31, 2007.

    -------------------------------------------------------------------------
                                PRODUCTION
    -------------------------------------------------------------------------
                    3 months ending                   3 months ending
                    August 31, 2008                   August 31, 2007
            -----------------------------------------------------------------
    Opera-    Volume               Average     Volume               Average
     tion     (cubic    Carats     grade       (cubic     Carats    grade
              meters)            (carats per   meters)            (carats per
                                  100 cubic                        100 cubic
                                    meters)                          meters)
    -------------------------------------------------------------------------
    Holpan    150,285     774.01       0.52    275,758   2,446.07       0.89
    -------------------------------------------------------------------------
    Klipdam   210,759   1,622.13       0.77    259,527   2,528.02       0.97
    -------------------------------------------------------------------------
    Wouter-
     span     120,829     708.12       0.59    354,492   2,594.59       0.73
    -------------------------------------------------------------------------
    Makoens-
     kloof          -          -          -     63,199     237.30       0.38
    -------------------------------------------------------------------------
    Saxen-
     drift     84,883   1,161.99       1.37          -          -          -
    -------------------------------------------------------------------------
    Total     566,756   4,266.25       0.75    952,976   7,805.98       0.82
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                     SALES, REVENUE AND INVENTORY
    -------------------------------------------------------------------------
                                    3 months ending August 31, 2008
            -----------------------------------------------------------------
    Opera-                   Sales       Value of     Average     Inventory
     tion                   (carats)       Sales       value       (carats)
                                           (US$)     (US$ per
                                                       carat)
    -------------------------------------------------------------------------
    Holpan                   1,015.39      842,285       829.52       267.65
    -------------------------------------------------------------------------
    Klipdam                  1,898.91    5,294,781     2,788.33       679.31
    -------------------------------------------------------------------------
    Wouterspan               1,093.56    1,700,432     1,554.95       272.88
    -------------------------------------------------------------------------
    Makoenskloof                    -            -            -            -
    -------------------------------------------------------------------------
    Saxendrift               1,016.48    1,967,072     1,935.18       420.94
    -------------------------------------------------------------------------
    Total                    5,024.34    9,804,570     1,951.41     1,640.78
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                     SALES, REVENUE AND INVENTORY
    -------------------------------------------------------------------------
                                    3 months ending August 31, 2007
            -----------------------------------------------------------------
    Opera-                   Sales       Value of     Average     Inventory
     tion                   (carats)       Sales       value       (carats)
                                           (US$)     (US$ per
                                                       carat)
    -------------------------------------------------------------------------
    Holpan                   1,469.20    3,149,370     2,143.59     1,382.65
    -------------------------------------------------------------------------
    Klipdam                  1,758.87    5,218,220     2,966.80     1,171.70
    -------------------------------------------------------------------------
    Wouterspan               1,752.56    4,879,342     2,784.12       991.56
    -------------------------------------------------------------------------
    Makoenskloof                    -            -            -       237.30
    -------------------------------------------------------------------------
    Saxendrift                      -            -            -            -
    -------------------------------------------------------------------------
    Total                    4,980.63   13,246,932     2,659.69     3,783.21
    -------------------------------------------------------------------------

    Production and Sales -Six Month Comparison

    The following is a comparison of the first six months of fiscal 2009
(ending August 31, 2008) with the six months ending August 31, 2007.

    -------------------------------------------------------------------------
                                PRODUCTION
    -------------------------------------------------------------------------
                     6 months ending                 6 months ending
                     August 31, 2008                 August 31, 2007
            -----------------------------------------------------------------
    Opera-    Volume               Average     Volume               Average
     tion     (cubic    Carats     grade       (cubic     Carats    grade
              meters)            (carats per   meters)            (carats per
                                  100 cubic                        100 cubic
                                    meters)                          meters)
    -------------------------------------------------------------------------
    Holpan    356,751   2,579.36       0.72    671,933   4,651.83       0.70
    -------------------------------------------------------------------------
    Klipdam   429,429   4,232.01       0.99    456,468   3,996.34       0.88
    -------------------------------------------------------------------------
    Wouter-
     span     363,069   2,328.42       0.64    639,288   4,216.18       0.66
    -------------------------------------------------------------------------
    Makoens-
     kloof          -          -          -     63,199      237.3       0.38
    -------------------------------------------------------------------------
    Saxen-
     drift     89,484   1,437.04       1.58          -          -          -
    -------------------------------------------------------------------------
    Total   1,238,733  10,576.83       0.85  1,830,888  13,101.65       0.65
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                     SALES, REVENUE AND INVENTORY
    -------------------------------------------------------------------------
                                    6 months ending August 31, 2008
            -----------------------------------------------------------------
    Opera-                   Sales       Value of     Average     Inventory
     tion                   (carats)       Sales       value       (carats)
                                           (US$)     (US$ per
                                                       carat)
    -------------------------------------------------------------------------
    Holpan                   2,589.96    3,471,620     1,340.41       267.65
    -------------------------------------------------------------------------
    Klipdam                  3,912.71    7,744,322     1,979.27       679.31
    -------------------------------------------------------------------------
    Wouterspan               2,360.46    3,704,334     1,569.33       272.88
    -------------------------------------------------------------------------
    Makoenskloof                    -            -            -            -
    -------------------------------------------------------------------------
    Saxendrift               1,016.48    1,967,072     1,935.18       420.94
    -------------------------------------------------------------------------
    Total                    9,879.61   16,887,348     1,709.31     1,640.78
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                     SALES, REVENUE AND INVENTORY
    -------------------------------------------------------------------------
                                    6 months ending August 31, 2007
            -----------------------------------------------------------------
    Opera-                   Sales       Value of     Average     Inventory
     tion                   (carats)       Sales       value       (carats)
                                           (US$)     (US$ per
                                                       carat)
    -------------------------------------------------------------------------
    Holpan                   3,647.06    5,064,324     1,388.60     1,382.65
    -------------------------------------------------------------------------
    Klipdam                  3,089.40    6,261,066     2,026.63     1,171.70
    -------------------------------------------------------------------------
    Wouterspan               3,466.98    7,024,589     2,026.14       991.56
    -------------------------------------------------------------------------
    Makoenskloof                    -            -            -        237.3
    -------------------------------------------------------------------------
    Saxendrift                      -            -            -            -
    -------------------------------------------------------------------------
    Total                   10,203.44   18,349,979     1,544.12     3,783.21
    -------------------------------------------------------------------------
    

    Production Costs

    The average operating cost during the quarter ending August 31, 2008 was
US$5.62 per tonne which is inclusive of the Saxendrift start-up operation (by
excluding Saxendrift, which is currently in a ramp-up phase, it is US$4.65 per
tonne), an increase from US$2.96 per tonne in the quarter ending August 31,
2007. The increased cost per tonne is largely due to the loss of production
and throughput related to industrial action experienced during this period.
    The average operating cost over six months was US$4.77 per tonne which
includes Saxendrift. Excluding Saxendrift, which is currently in a ramp-up
phase, the operating cost decreases to US$4.16 per tonne, an increase from
US$3.48 per tonne in the six months ending August 31, 2007.
    During the first six months of fiscal 2009, the Company focused on
implementing costs savings throughout the business, and most particularly in
its mining and processing operations. Sustainable costs savings have been
achieved through the revision of mine plans, optimization of mining methods
and earth moving fleet, the modernization of processing plant, training, and
enhancement of productivity. As a consequence of its optimization programs,
the Company was able to re-commission operations at Saxendrift during this six
month period without having to resort to additional staff recruitment and the
purchase of new earth moving fleet.
    Cost savings have been reflected in quarterly operating cash costs which
have been relatively flat for the past six quarters, in spite of considerable
price increases in steel, fuel and oil, electricity, and labour. The benefits
of costs savings implemented by the Company will be apparent in forthcoming
quarters.

    Profit and Loss

    The Company had a loss of $2,249,847 for the three month period ended
August 31, 2008 compared to a net profit of $431,209 for the comparable period
in the prior year. The net losses during the period was primarily the
consequence of industrial action and resultant loss of production experienced
by the Company during late July and through August 2008.
    At August 31, 2008, the Company had working capital of $4,388,435
compared to working capital of $11,837,132 at May 31, 2008 and held total cash
reserves of $10.1 million which will be allocated to future expansion of
existing operations, and development of brownfields projects already held by
the Company.
    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, October 16
    at 10:00 a.m. Eastern Time (7:00 a.m. Pacific; 4:00 p.m. Johannesburg) to
    discuss these results. The conference call may be accessed by dialing
    (877) 591-4959, or (719) 325-4891 internationally. A live and archived
    audio webcast will also be available at on the Company's website at
    www.rockwelldiamonds.com.

    The conference call will be archived for later playback until Friday,
    October 24, 2008 and can be accessed by dialing (888) 203-1112 in Canada
    and the United States, or (719) 457-0820 and using the passcode 5716430.
    -------------------------------------------------------------------------

    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.

    %CIK: 0001095847




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