VANCOUVER, Jan. 10, 2013 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or
the "Company") (TSX:RDI; JSE:RDI) announces results for the three and
nine months ended November 30, 2012 and the appointment of a
non-executive director. Currency values are presented in Canadian
dollars unless otherwise indicated.
Quarterly diamond production up 12% year-on-year, underpinned by a 6%
increase in volumes of gravel processed despite ongoing challenges at
Quarterly operating margin: $950,293 before amortization, depreciation
and corporate overhead
Revenue from diamond sales before beneficiation up 23% year-on-year to
Production costs up 37% from the second quarter due mainly to increased
maintenance and fuel expenses and higher employment costs resulting
from continuous operations ("contops").
Cash operating cost per unit mined ("per cubic meter" or "/m3") increased 6% to US$10.81 from a year ago.
Improved average sales price of US$1,821 per carat year-on-year,
benefiting from recovery of high quality stones at Saxendrift Complex.
The operations of the Tirisano mine placed on care and maintenance post
quarter end to preserve cash resources.
Decision catalyzed by further unprotected industrial action and the
impact of the operational challenges, including a slower than
anticipated recovery in smaller diamond prices.
Pursuing additional royalty mining contracts to offset care and
Undertaking a mine-wide metallurgical and geological study to design a
fit-for-purpose plant that is specific to local conditions.
Continued good performance of Bulk X-ray plant at Saxendrift with
recovery of 633 carats and sale of 284 carats at an average price of
US$10,704 per carat.
Construction of the Saxendrift Hill Mine1 on track for completion in first quarter of calendar 2013.
Sale of 408 carats from initial production of royalty mining contracts
yielded total revenue of US$352,055 of which 12.5% accrues to Rockwell,
free of any associated production costs.
Third quarter fiscal 2013 loss of $1.5 million after depreciation
(before corporate overhead and tax).
Net cash balance of $3.1 million.
Inventory of 2,704 carats carried forward to take advantage of any
possible restocking trend.
Continued focus on increasing monthly production to 10,000 carats within
five years through diamond value management at existing operations and
re-establishing the resource to secure the pipeline of diamonds for
Gross rough diamond revenues of $7.1 million compared to $7.0 million
for second quarter of 2013.
21% quarter-on-quarter decrease in carats sold to 4,043 offset by
increase of 38% in average carat value to US$1,821.
Beneficiation revenues grew to $1.6 million from US$440,000 in second
The 'beneficiation pipeline' of more than 5,500 carats provides positive
expectations for continued value-added revenue for Rockwell.
Operating margin before amortization, depreciation and corporate
overhead of $950,293, up from $199,852 in the second quarter.
The net loss for the quarter totalled $4.7 million.
The Company's production and sales results for the third quarter of
fiscal 2013 were as follows:
Sales and inventories*
value (US$ /
* Including results from bulk sampling at the Saxendrift Extension
Project and Bulk X-ray project at Saxendrift.
Summary of performance for three months ended November 30, 2012
In the third quarter of fiscal 2013, the Company showed increased
revenues from diamond sales for the fourth consecutive quarter. In
particular, diamond value management initiatives have delivered at the
Saxendrift Complex where volumes processed and carat production are
trending upwards while unit costs remain within the target range
despite upward pressure imposed due to higher fuel costs and more
intensive transport costs associated with the bulk sampling activities
at the nearby Saxendrift Extension Project. At Klipdam, which made a
further loss in the third quarter, an optimization plan was initiated
at the beginning of November with early indications that the targeted
cost reductions are achievable. As in the second quarter, the Company's
overall financial loss is largely attributable to Tirisano where mining
activities resumed in the last six weeks of the third quarter. However,
the mine's recovery was impacted by continued operational challenges,
persistently weak prices for smaller diamonds and industrial action
that led to its operations being put on care and maintenance after
The Saxendrift Complex recorded total diamond sales of US$5.9 million
translating into revenue/m3 of US$12.10, compared to the average mining cash cost/m3 of US$8.43. Klipdam had total diamond sales of US$982,957 or revenue/m3 of US$4.51, compared to the average mining cash cost/m3 of US$11.44 which catalyzed the decision to implement an optimization
plan at the operation in order to achieve higher throughput volumes and
thereby lower the unit costs. These two mines contributed a combined
operating profit of $1.9 million in the third quarter.
Tirisano incurred an operating loss of $1.0 million in the third
quarter, prior to the decision to place the operations of the mine on
care and maintenance in early December 2012.
The Company recorded US$ denominated diamond sales of US$7.4 million, up
23% from the third quarter of the previous year. Notable impacts are as
Carats sold from the Saxendrift Complex increased by 10% to 1,931 carats
at a significantly improved average price of US$3,082 per carat versus
US$1,892 per carat a year ago. Of significant benefit was the sale of a
145-carat rough diamond recovered from old Saxendrift recovery tailings
which sale increased the average price per carat from the Bulk X-ray
plant to US$10,704.
Carats sold from Klipdam declined 25% for the quarter to 1,490 carats
with a slightly lower average value of US$660 per carat. The grade was
down 25% quarter-on-quarter as mining migrated out of the high-grade
portion of the channel.
Diamond sales from Tirisano totaled 214 carats, significantly under
Including beneficiation revenues of $1.6 million in the third quarter,
the Company reported total revenue of $8.8 million. These beneficiation
revenues recovered well after a slow second quarter that had been
characterized by particularly slow trading in the northern hemisphere
summer. However, Rockwell has carried over an inventory of 2,704 carats
into the fourth quarter to take advantage of any possible restocking
trend. The beneficiation pipeline, comprising some 5,500 carats
provides further potential for valued added downstream revenues.
Total cash costs increased 37% from the second quarter to $9.6 million.
This increase informed the Company's decisions to optimize Klipdam,
including the introduction of a contract miner at a fixed unit cost and
to place the operations of Tirisano on care and maintenance after the
management team had explored all possible avenues to operate the mine
profitably using the existing infrastructure.
The unit costs/m3 for all three operational mines was as follows:
Temporary impact of contract mining start up
Impact of bulk sampling at the Saxendrift Extension Project
Lower volumes, and ramp up costs from re-sizing
Rockwell recorded a total comprehensive loss of $7.3 million, including
a non-cash $2.6 million foreign currency translation charge on the
conversion of the Rand denominated assets into Canadian dollars,
resulting from a 5.2% depreciation of the South African Rand against
the Canadian dollar.
At November 30, 2012, the Company had net cash and cash equivalents of
$3.1 million. The operations are currently generating sufficient cash
to cover cash operating costs but not corporate overheads or
5,950 carats produced and 4,043 carats sold at average price of US$1,821
Saxendrift produced above average grades with its processing operations
functioning smoothly and at budgeted costs.
Encouraging results from further bulk sample extracted at Saxendrift
Construction of Saxendrift Hill Complex Mine on track to commence in
first quarter of calendar 2013: Rapid pay back projected on $1.2
million capital investment, all funded internally.
Optimization plan initiated at Klipdam to improve performance including
the introduction of a contract miner and minor adjustments to the
The operations of the Tirisano Mine placed on care and maintenance early
in fourth quarter.
After several management interventions at Klipdam led to only sporadic performance improvements, its management team and
operations have been restructured to reduce operating costs and improve
overall performance for the remaining life of mine. Mining activities
were outsourced to CML Operations on a three year fixed cost contract
that also included the sale of Klipdam's earthmoving fleet at book
value over a two-year period. The mine showed a 12% year-on-year
increase in volumes for the quarter, falling short of expectations.
Carat recovery declined by 9% as a result of mining a slightly lower
grade area and the grade was down 19% from a year ago.
Combined quarterly volumes of gravel processed at the Saxendrift Complex (comprising Saxendrift, the Saxendrift Extension Project and the Bulk
X-ray system) achieved a year-on-year increase of 38% for the third
quarter while diamond recoveries were 59% higher.
The Saxendrift Mine and its Extension Project achieved overall budgeted
throughput with respective year-on-year increases of 30% and 26% in
volumes and carats produced. This was despite more intensive
transporting requirements due to moving the bulk sampling volumes from
Saxendrift Extension to the Saxendrift processing plant.
Completion of the six-month pilot phase of the Bulk X-ray plant project
at the end of October 2012 yielded positive results with the set-up
costs being repaid from processing old recovery tailings. This
technology will now become an integral component of future mine
developments. For the third quarter, the Bulk X-ray system recovered
633 carats from 30,383m3 of old recovery tailings that had previously been processed by another
operator using older technologies. This represents a grade of 2.08
carats per 100 m3 and includes, most notably, a 145-carat clean makeable and gem-colour
As announced on December 12, 2012, the operations of the Tirisano Mine were placed on care and maintenance due to persistent industrial
relations issues and ongoing losses incurred by the mine, exacerbated
by operational and metallurgical complexities and a slower than
anticipated recovery in the price of smaller diamonds that comprise
much of its production profile. Because Rockwell remains confident that
the property hosts important diamond resources, a detailed
metallurgical and geological study is planned while the mine is on care
and maintenance to design a fit-for-purpose plant that is specific to
local conditions with a view to improving its performance. A cash
neutral strategy has been taken with regards to care and maintenance
costs at Tirisano which includes pursuing additional royalty mining
contracts for the property.
Initial production from royalty mining contracts commenced in the previous quarter on smaller areas of the
Company's properties that are unsuited to its high volume operating
model, recovering 535 carats in the third quarter. Of these, 408 carats
were sold at an average price of US$863 per carat. Further contracts
are under negotiation for the Tirisano property, the revenue from which
will be used to offset the care and maintenance costs at the mine. The
royalty mining contracts at Klipdam were terminated due to
underperformance and the Company is actively engaging with potential
new royalty mining partners to operate on the property.
The Company is optimistic that with improving diamond prices since the
beginning of November 2012 after prices declined by between 15% and 20%
in the first half of the 2012 calendar year, the market is positioned
to increase by a few percent in 2013. This view is supported by good
interest at the Hong Kong show in November 2012 and increased
attendance at open market tenders. Reflecting this trend, Rockwell also
experienced higher attendance at its closing tenders for 2012
supporting higher prices and providing some evidence of a more stable
market than in previous years.
The Company started the fourth quarter with 2,704 carats in inventory,
positioning it to take advantage of any possible restocking trend. In
addition, inventory in the beneficiation joint venture with Steinmetz
Diamond Group of more than 5,500 carats, creates upside potential for
further value-added revenue for Rockwell.
The Company has developed a blueprint for the construction of new
processing plants at its high potential projects in the Middle Orange
River region, based on the success of the fit-for-purpose technologies,
including the in-field screen, Bulk X-ray and single particle sorter
plant implemented at Saxendrift. Initiatives to increase and extend the
mine life of Rockwell's Middle Orange River properties include the
construction of a new mine at the Saxendrift Hill Complex, utilizing
Bulk X-ray technology with a monthly processing capability of 100,000 m3 and the pre-feasibility study for Wouterspan is progressing on
schedule. Possible developments during calendar 2013 include installing
an in-field screen at the Saxendrift Extension Project and assessing
the development of a mine similar to the Saxendrift Hill Complex at the
Company's Niewejaarskraal Project.
Diamond value management priorities for the fourth quarter are as
Saxendrift Complex: Continuing focus on meeting mining production
targets and extending the life of mine through further bulk sampling at
the Saxendrift Extension Project and commissioning the Saxendrift Hill
Tirisano: Commencing the detailed metallurgical and geological studies
to design a fit-for-purpose plant.
Klipdam: Completing the optimization initiatives and bedding down the
new contract mining arrangement in order to deliver lower unit costs
while maintaining responsibility for mine planning and processing.
Board of directors:
The Company also announced that it has further strengthened its board of
directors with the appointment of Richard Peter Menell as a
non-executive director with effect from January 9, 2013. He has had a
35-year career in the mining industry, heading Anglovaal Mining and
Teal Exploration & Mining up to 2008 as well as serving in a
non-executive capacity on a number of company boards.
Commenting on the third quarter performance of Rockwell, James Campbell,
CEO and president of Rockwell Diamonds said:
"At an operational level, we have faced down challenges head on to
ensure that we complete the turnaround of our underperforming assets,"
explains James Campbell, CEO, Rockwell Diamonds. "On the positive side,
diamond value management efficiencies have now been entrenched at the
Saxendrift Mine as reflected by the smooth operations at the mine
during the quarter, at budgeted costs and anticipated grades. At the
same time, our understanding of the Saxendrift Extension is improving
through our extended bulk sampling activities while the construction of
the Saxendrift Hill Complex Mine is on track for completion within the
Campbell elaborated, saying that: "One of the main challenges facing the
Company during the quarter was the increase in production costs, which
went up 37% from the second quarter. We were decisive with targeted
action at both Klipdam and Tirisano. We are optimizing Klipdam to
address the high unit mining costs that have affected its performance
over the last two years. This included the appointment of a contract
miner for the remaining life of mine, enabling us to focus our core
competencies: mine planning as well as diamond processing and recovery
to ensure that the mine meets its production targets. Having pursued
all possible avenues to profitably operate Tirisano, using the existing
infrastructure, our board approved our proposal to place its operations
on care and maintenance. We are confident that the diamond bearing
geology of the property holds positive return potential but we could no
longer bear the ongoing cash drain while we get the metallurgy right.
In order to deliver on Tirisano's potential, we have embarked on a
detailed metallurgical and geological study in the medium term to
design a fit-for-purpose plant to improve the mine's performance."
Rockwell will host a telephone conference call on Friday, January 11,
2013 at 10:00 a.m. Eastern Time (5:00 p.m. Johannesburg) to discuss
these results. The conference call may be accessed as follows:
1 866 605 3852
412 858 4600
1 800 860 2442
South Africa (Toll-Free)
0 800 200 648
South Africa - Durban
031 812 7600
South Africa - Johannesburg
011 535 3600
South Africa - Johannesburg Alternate
010 201 6616
0808 162 4061
UK Alternative (Toll-Free)
0 800 917 7042
1 800 350 100
Other Countries (Intl Toll)
+27 11 535 3600
A transcript of the audio webcast will be available on the Company's
website: www.rockwelldiamonds.com. The conference call will be archived for later playback until midnight
(ET) January 16, 2013 and can be accessed by dialling the relevant
number in the table below and using the pass code 22978#.
South Africa (Telkom)
011 305 2030
USA and Canada (Toll)
1 412 317 0088
Other Countries (Intl Toll)
+27 11 305 2030
0 808 234 6771
For further details, see the Rockwell's complete financial results and
Management Discussion and Analysis posted on the website and on the
Company's profile at www.sedar.com. These include additional details on production, sales and revenues for
the quarter, as well as comparative results for fiscal 2012.
About Rockwell Diamonds:
Rockwell is engaged in the business of developing and operating alluvial
diamond mines, with the aim of becoming a mid-tier diamond mining
company. The Company has three existing operations, namely Saxendrift,
Klipdam and Tirisano. It is currently constructing a fourth mine,
Saxendrift Hill, which is an expansion of the Saxendrift mine and will
go into production by March 2013. The recent acquisition of the Jasper
Project has provided further potential to leverage returns from the
Middle Orange River properties.
The Company has two future development projects at Wouterspan and
Niewejaarskraal and a pipeline of other projects with further future
development potential. Rockwell's operations and projects are all
located in the Republic of South Africa.
In addition to its project work, Rockwell continues to evaluate merger
and acquisition opportunities which may have the potential to expand
its mineral resources and provide new opportunities to develop the
additional production that would provide accretive value to the Group.
The Group is establishing a track record of producing large gem quality
diamonds, which comprise a significant proportion of its production
profile. The diamonds recovered from Rockwell's mines are frequently
acquired for investment purposes. The Group has a beneficiation
agreement in place which enables it to sell rough diamonds, receive 90%
of the fair value sales price at sale and receive the remaining 10%
through, and participate in, the retail profit on the sale of its +2.8
carat sized stones after polishing and finishing.
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 as 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.
1 Saxendrift Hill is included in the Technical Report on the Saxendrift
Alluvial Diamond Mine updated on February 29, 2012 that is available on
SOURCE: Rockwell Diamonds Inc.
For further information:
For further information on Rockwell and its operations in South Africa, please contact
CEO and President
+27 (0)83 457 3724
+27 (0)83 307 7587