VANCOUVER, March 30, 2015 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) announced today that it has reached an agreement to sell its non-core Tirisano Project ("Tirisano") in the North West Province of South Africa for a cash consideration of $6.3 million1. The Company is also pleased to provide an exploration update for the Middle Orange River ("MOR") region.
Disposal of Tirisano Project
Tirisano, located in the North West province some 500 kilometres from the Company's Middle Orange River operations, was identified some time ago as a non-core asset and a sale process was initiated. Tirisano was placed on care and maintenance in December 2012 and subsequently royalty contract miners were brought in to continue mining operations on the property. During the subsequent period the contract mining operations processed an average of 160,000m3 per month producing between 1,500 and 2,000 carats per month. Rockwell's 12.5% royalty on the sale of the diamonds was applied to the care and maintenance costs of the property and a portion of the overheads.
After evaluating a number of proposals as part of the sale process, the Company reached an agreement with a consortium made up of the royalty miners ("the Consortium"), who have operated at Tirisano for the past two years. The Consortium will acquire the entire issued share capital, together with claims on loan account in Rockwell's 100% owned subsidiary, Etruscan Diamonds Pty (Ltd) including the Tirisano mining right and its associated infrastructure, for a cash consideration of $6.3 million (ZAR 60 million) ("the Transaction"). The Consortium will therefore assume debt owed by Etruscan amounting to $3.5 million (R34 million) and the related environmental liabilities. The cash consideration will be settled by way of two initial payments totaling $2.1 million (ZAR 20 million), one in March and the second in April 2015, followed by 20 equal monthly instalments of $0.21 million (ZAR 2 million). The proceeds will be used to fund Rockwell's general working capital and investments related to acquisitions, additional exploration and ongoing development of the portfolio of mining and mineral rights.
The Transaction is subject to conditions precedent, including customary regulatory approvals.
1In addition, the buyer will assume $3.5m in debt and related environmental liabilities.
MOR exploration update
As reported on March 9, 2015, Rockwell is expanding its exploration activities in the MOR, initially focusing on the Lanyonvale and contiguous Wouterspan properties. Both are considered to have significant potential to add to the Company's resources.
- At Lanyonvale, initial work will focus on the evaluation of the Rooikoppie Exploration Targets with potential resources of 3 to 4 million m3 of gravel, followed by fluvial alluvial Exploration Targets with potential for 1 to 2 million m3 of gravel. Completion is targeted for the end of October 2015.
- At Wouterspan, further pitting of the Rooikoppie gravels at a tighter grid spacing is planned with the intention of converting the initial estimates to Indicated Resources by February 2016.
Commenting on the Tirisano disposal and exploration update James Campbell, CEO and President said:
"The sale of Tirisano, which has been identified as non-core for some time, will allow us to focus entirely on our growth objectives in the MOR and our stated intention of exceeding our 500,000m3 per month processing target. Our short-term priority is the completion of the acquisition and integration of the Remhoogte/Holsloot Project into our current business. We are also progressing with our exploration programme to increase Rockwell's resources and mining flexibility. We intend developing 3 to 4 million m3 of Rooikoppie Exploration Targets at Lanyonvale and will be carrying out further pitting of the Rooikoppie gravels at Wouterspan with the goal of growing Rockwell's profitable operational base for the future."
All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified.
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's flagship mine is the Saxendrift Mine, in the MOR. It has recently built two new internally funded operations in the MOR region, namely Saxendrift Hill Complex and Niewejaarskraal. Rockwell also has a development project and a pipeline of earlier stage properties with future development potential. The operations are based on high throughput processing capability and Saxendrift 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 gemstone comprising a major portion of its diamond recoveries that is enhanced through a beneficiation joint venture that enables it to participate in the profits on the sale of the polished diamonds.
Rockwell also evaluates consolidation opportunities which have the potential to expand its mineral resources and production profile and to 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 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 if 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 James Campbell, CEO, +27 (0)83 457 3724; Stéphanie Leclercq, Investor Relations, +27 (0)83 307 7587; David Tosi, PSG Capital - JSE Sponsor, +27 (0)21 887 9602