Rockwell Diamonds Inc. Receives Ruling That Pala Offer in Breach of South African Securities Legislation

    VANCOUVER, Oct. 15 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX: RDI; JSE: RDI; OTCBB: RDIAF) announced today that the
Executive Director of the South African Securities Regulation Panel ("the
SRP") in response to objections lodged by Rockwell issued a ruling on October
14, 2008 with respect to the unsolicited offer by Pala Investments Holdings
Ltd ("Pala") to acquire all of the outstanding shares of Rockwell for $0.36
per share ("the Offer").
    The Executive Director has ruled that the Offer is in breach of certain
of the provisions of the Securities Regulation Code on Takeovers and Mergers
and the Rules of the Securities Regulation Panel of South Africa
(collectively, "the SRP Code") and has ordered Pala to amend the Offer.
    The guiding principle of the SRP Code is to ensure the fair and equal
treatment of all security holders. The Executive Director has ruled that the
Offer fails to properly consider the rights of option holders and warrant
holders and ruled that appropriate offers must be made to the holders of
outstanding Rockwell warrants and Rockwell options pursuant to Rule 12 of the
SRP Code in instances where the warrants or options have a positive monetary
    The Executive Director also ruled that the Offer fails to comply with the
SRP Code because it is subject to several conditions which depend solely on
the subjective judgment of Pala. Accordingly, Pala is obliged to issue a
supplemental offer circular in which it amends the conditions set out in
paragraphs 4(c), 4(l) and 4(o) of Pala's takeover bid circular by removing the
elements of those conditions that are within Pala's subjective discretion to
determine fulfilment.
    The Executive Director specifically noted that he did not receive a copy
of the Offer document until the day it was filed and that the Panel had not
given its approval of the Offer document.
    "Pala's failure to comply with certain of the requirements of the SRP
Code is consistent with its opportunistic conduct in making the Offer," said
John Bristow, President, Chief Executive Officer and director of Rockwell.
"Pala has sought to circumvent the principles of fair and equal treatment of
all security holders reflected in the SRP Code. In addition to undervaluing
the Company and seeking to deprive security holders of the opportunity to
share in the Company's significant upside potential, Pala seeks to
intentionally deprive security holders of the rights afforded to them under
the SRP Code. Our Special Committee and Board of Directors reiterate their
unanimous recommendation that the Offer is inadequate and unfair, and
shareholders should REJECT the Offer and NOT TENDER their shares."
    The directors of Rockwell accept responsibility for the information
contained in this announcement and confirm that to the best of their knowledge
and belief (having taken all reasonable care to ensure that such is the case)
the information contained in this announcement is in accordance with the facts
and, where appropriate, does not omit anything likely to affect the import of
such information.

    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 may be
forward-looking statements, including, but not limited to, statements in this
release about the expected upside potential of holding Rockwell shares,
anticipated increases in the Company's level of production, decreases in
operating costs and increases in the price of diamonds, the upward trend in
the value of diamonds produced by Rockwell, and the likelihood of a better
transaction emerging. Although the Company believes the expectations expressed
in such forward-looking statements are based on reasonable assumptions,
including, but not limited to assumptions regarding the success of the
Company's brownfields expansion efforts, the Company's cost structure, and
matters that would affect a third party's decision to enter into an
alternative transaction with the Company, 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,
geopolitical uncertainty and political and economic instability, and general
economic, and market or business conditions. The Company undertakes no
obligation to update forward-looking statements except to the extent required
by law. For more information on Rockwell, investors should review Rockwell's
annual Form 20-F filing with the United States Securities and Exchange
Commission and its home jurisdiction filings that are available at

For further information:

For further information: For further details on Rockwell Diamonds Inc.,
please visit the Company's website at or contact
Investor Services at (604) 684-6365 or within North America at

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