VANCOUVER, Nov. 24, 2016 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX:RDI; JSE:RDI) announces the following update on its Business Repositioning Plan and latest developments on the mining contract.
Rockwell disclosed in the second quarter Management Discussion and Analysis issued in mid-October that it was undertaking a strategic review of its assets and business options. The Company confirmed today that it has completed the formulation of its turnaround plan, which was unanimously approved during a special Board meeting on November 20, 2016. The plan entails the following:
- Ramp up of Wouterspan to its full production volume of 200,000m3 a month to be accelerated;
- A material reduction in cash operating and off mine costs to be realized;
- Increasing production volumes in Q1 of FY2018 with a further 60,000m3 a month by relocating the Holsloot plant to Wouterspan North, where additional Rooikoppie gravels have been delineated;
- Reducing the overall operations footprint by disposing of any assets that do not fit the business model. A sale process in respect of Remhoogte/Holsloot and Saxendrift mines is now well underway. As previously disclosed, the materiality of the proposed transaction to the remaining assets is not considered to be of such a size as to require shareholder approval;
- Securing adequate and timeous cash investment to facilitate the procurement of capital items and supplement cash flow for the first five months. The Company today confirmed that commitments for US$8M have been secured, by means of additional funding on similar terms to the current loans.
This plan will enable Rockwell to perform the necessary upgrades to equipment and infrastructure to implement its turnaround plan.
In an unrelated matter, and as previously reported, the implementation of the mining agreement between H C Van Wyk Diamonds Limited ("HCVW") and C-Rock Mining Limited ("CML"), and other related agreements between HCVW, Saxendrift Mine (Pty) Ltd (collectively, "the Subsidiaries") and CML, have not proceeded in accordance with the terms of the agreements and as a result the Subsidiaries have given notice to CML that the various agreements have been terminated. The Subsidiaries are now engaged in a dispute over these agreements. In response to the Company's position, CML applied for a spoliation order against the Subsidiaries on November 7, 2016 and followed this up with applications for provisional liquidation of the Subsidiaries on November 22 and 23, 2016. Mine production activities and work to complete the Wouterspan Wet Plant have been suspended.
The Company has set down the spoliation application for final determination on November 25, 2016 in Kimberley. The application for liquidation will be heard in the normal course of business; it is considered to be without foundation and will be vigorously defended.
The applications for liquidation arise from alleged claims pursuant to certain contracts which are in dispute. The Company's position is also founded, in part, on the results of a substantial forensic review recently completed by an independent forensic auditor in Johannesburg, which identified several instances of irregular transactions, unsupported transactions and irregular approvals, involving CML and a former senior Rockwell employee. The Company is pursuing its legal remedies in this regard.
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 profile and provide accretive value to the Company.
Rockwell is known for producing large, high quality gemstones comprising a major portion of its diamond recoveries. This is enhanced through a beneficiation joint venture that enables Rockwell to participate in the profits on the sale of the polished and certain re-traded diamonds, which are not beneficiated.
Rockwell has set a strategic goal to become a mid-tier diamond production company. In pursuit of this goal the Company has embarked on a strategy to grow its Middle Orange River ("MOR") operational base and minimise production and recovery volatility by setting a medium term target to process 500,000m3 of gravels per month from its MOR operations.
Rockwell's common shares trade on the Toronto Stock Exchange and the JSE Limited under the symbol "RDI".
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 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.
SOURCE Rockwell Diamonds Inc.
For further information: For further information on Rockwell and its operations in South Africa, please contact Tjaart Willemse, Executive Officer, +27 (0)83 407 1063; David Tosi, PSG Capital - JSE Sponsor, +27 (0)21 887 9602