Rockwell provides update regarding three subsidiaries with interim liquidation order issued by court in Kimberley, South Africa
Apr 17, 2017, 12:26 ET
VANCOUVER, April 17, 2017 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX:RDI; JSE:RDI) provides an update to the interim liquidation order against three subsidiaries of the Company issued by a judge in Kimberley, South Africa, on March 23, 2017. The interim orders, which have yet to be confirmed in a final hearing, include Rockwell Resources RSA (Pty) Ltd (Rockwell RSA), HC van Wyk Diamonds Ltd (HC van Wyk) and Saxendrift Mine (Pty) Ltd (Saxendrift). Interim liquidators have been appointed by the Master of the High Court, in accordance with requisitions by the major creditors. However, in view of further filings by the Company, the interim liquidators will not take control of the three companies, which remain in operation by Company personnel. The Wouterspan plant is nearing completion, with ore being processed through lines 1 and 2 and commissioning of line 3 now complete, to be followed by the ramp-up in processing rate.
On March 31, 2017 the Company filed a motion with the court in Kimberley, South Africa, on an urgent basis to bring the date forward to consider the merits of the liquidation case brought by C-Rock Mining on which an interim liquidation order was issued on 23 March 2017. The interim order was issued after a short hearing where none of the Company's rebuttal evidence was considered by the court. The date for the final hearing was originally scheduled for June 22, 2017, however based on an application for the matter to be brought forward on an urgent basis, a motion was set down for a hearing on April 12, 2017. The hearing, however, was postponed to April 19, 2017 due to the fact that the Kimberley High Court is currently in recess and the Acting Judge on duty on April 12, 2017 was conflicted and therefore recused herself.
The Company has subsequently filed for business rescue. The effect of a business rescue filing is that any liquidation order is automatically stayed. If successful in its application for business rescue, a business rescue practitioner will be appointed to work with Company management to restructure the affairs of the Company, seeking input and consent from creditors and well as considering strategic alternatives. The business rescue regime does not have a directly analogous structure in Canadian restructuring practice, and is primarily aimed at enabling a company to continue trading on a solvent basis after conclusion of the business rescue process.
In view of the fact that 96% of the dollar value of Company creditors support the Company's plans, the Company now believes that this support should be a significant factor in likely restructuring options. In particular, the business plan comprised the provision of a USD $8M in loan capital, completing the Wouterspan plant with such proceeds, a focus on cost reduction, efficiency improvements, the sale of certain redundant assets, the pay down of all creditors under ZAR50,000, and the purchase of all recent plant and mine supplies on a cash only basis. The implementation of this business plan is well advanced despite the frustrating intervention by C-Rock Mining.
The remaining task is to complete the commissioning and ramp-up the production rate of the processing plant at Wouterspan and relocate the Holsloot plant to Stofdraai (the northern edge of Wouterspan).
The Company remains persuaded that its case for dismissal of the liquidation application is sound, and after a full hearing it believes it should prevail and C-Rock Mining's actions will be shown to be spurious and without foundation.
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: on Rockwell and its operations in South Africa, please contact: Tjaart Willemse, Chief Executive Officer, +27 (0)83 407 1063; David Tosi, PSG Capital - JSE Sponsor, +27 (0)21 887 9602
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