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Press release from CNW Group

Rockwell provides production update for fourth quarter of fiscal 2013 ending February 28, 2013

Monday, May 06, 2013

Rockwell provides production update for fourth quarter of fiscal 2013 ending February 28, 2013

08:30 EDT Monday, May 06, 2013

VANCOUVER, May 6, 2013 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) today presents the market with an operational update which is in line with plan. On a consolidated basis fourth quarter gravel volumes processed declined by 6% to 619,546m3 year on year with a commensurate change in diamond production of 3,854 carats. The reduction in volume is largely the result of placing the Tirisano Mine on care and maintenance in December 2012 and consequently if Tirisano was excluded, the remaining operations showed a 9% improvement, both in gravel volume processed and diamonds produced for the same period.

The Saxendrift operations (comprising Saxendrift, Saxendrift Extension and the Bulk X-ray plant) delivered a 36% increase in carat production although gravel volume processed declined by 5%. Klipdam achieved a 44% increase in gravel processed, demonstrating the benefits of outsourcing the mining operations. However, Klipdam's carat recovery declined by 45%, underscoring management's decision to accept an unsolicited offer to sell the mine in late March 2013. The cessation of operations at Tirisano and the sale of Klipdam represents another step in effecting the strategy of re-alligning Rockwell as a value diamond play with a focus on creating real returns for its shareholders. It also creates a centre of operations focused within the Middle Orange River area.

Fourth quarter operational update:

Volume and carat production for the Company's operational mines for the quarter ended February 28, 2013 was as follows:

Operation Volumes of gravel processed (m3) Carats Produced
  Q4 2013 Q4 2012 % change Q4 2013 Q4 2012 % change
Saxendrift 383,770 409,348 -6% 1,929 1,438 34%
Saxendrift tailings 6,592 - - 26 - -
Tirisano 1,823 94,643 -98% 39 557 -93%
Klipdam 227,361 157,636 44% 1,133 2,048 -45%
Other* 0 - - 727 - -
Total 619,546 661,627 -6% 3,854 4,043 -5%
*Other refers to independent contractor/s processing gravel and sold through the Group's tender. These carats are excluded from grade calculations.

Saxendrift operations and Middle Orange River Prospects:

  • Combined quarterly volumes of gravel processed at the Saxendrift Mine and further bulk sampling at the Saxendrift Extension Project declined 6% year-on-year to 383,770m3 for the fourth quarter, in line with plan. The decline was directly related to the longer haulage distances from the Saxendrift Extension Project bulk-sampling activities. However, the overall grade improved by 43% to 0.5 carats / 100m3, up from 0.35 carats / 100m3 a year ago, as a result of better grades achieved from the Saxendrift Extension site. Accordingly, the combined diamond production from the Saxendrift Mine and the Saxendrift Extension project increased by 34%, and yielded1,929 carats.
  • Included in the Saxendrift total is a further bulk sample of 94,142m3 at the Saxendrift Extension project that was carried out to complete the definition of an additional resource for this section of the property. This will be included in an updated NI 43-101 technical report for Saxendrift to be published by the end of May 2013.
  • Recoveries from the Bulk X-ray system were as expected with the recovery of 26 carats from the remainder of the coarse recovery tailings in the first half of the fourth quarter. In mid-December 2012, the system was permanently relocated to the new Saxendrift Hill Complex mine which is currently in its production ramp-up phase.
  • The Company continues to make good progress with its strategy to extend the mine life of its Middle Orange River properties with the status of projects as follows:
  • The production ramp-up the new Saxendrift Hill Complex mine, based on two Bulk X-ray systems, is proceeding on track.
  • The pre-feasibility study for Wouterspan is nearing completion.
  • A proposal to bring the Niewejaarskraal Mine back into production within six months has been approved by the Board. It will be funded in part from the proceeds of the sale of the Klipdam Mine and will use existing equipment re-located from Klipdam and Tirisano.

Klipdam:

  • Klipdam delivered a 44% increase in volume production, due to mining operations being outsourced to CML Operations, a specialized earthmoving contractor, in November 2012, with total gravel processed of 227,361m3 for the fourth quarter.
  • However, carat production fell 45% from the same period last year with total recovery of 1,133 carats due to metallurgical issues, which were largely resolved by the end of the reporting period.
  • The Company accepted an unsolicited cash offer to sell the mine to a private alluvial diamond miner for a total purchase consideration of R23 million, after quarter-end. The rationale was that with a remaining life of two years, based on current resources, the mine was considered a non-core asset and that the sale proceeds could be better applied to increase production from Rockwell's Middle Orange River properties. These Middle Orange River properties have better grades and have received higher diamond values from gem-quality diamonds than Klipdam.

Tirisano:

  • Volumes processed at Tirisano until it was placed on care and maintenance in December 2012 amounted to 1,823m3, recovering 39 carats.
  • Two royalty mining contracts were also operated by smaller-scale operators on specific areas of the Tirisano property, yielding a total of 727 carats. The royalty miners incur all the operational costs for these activities while Rockwell maintains responsibility for diamond security and sales and earns a 12.5% royalty on all diamond sales which is used to offset the care and maintenance costs. A third royalty mining contract commenced operation subsequent to the financial year end.

"We are pleased that production of diamonds from our core Middle Orange River operations is in line with our budget. Having eliminated the negative impacts of our problematic mines, Tirisano and Klipdam, and expanding our Middle Orange properties, we are on a sounder footing," explains James Campbell, CEO, Rockwell Diamonds. "We will increasingly focus our efforts and capital resources towards delivery of our Middle Orange River properties and their potential to produce large, high-quality diamonds. We are confident that our innovative approach will enable us to unlock the value of these properties chiefly by recycling our portfolio of assets. For example, we relocated the Bulk X-ray system to the new Saxendrift Hill Complex mine and have Board approval to apply the cash generated from the sale of Klipdam, that was nearing the end of its mine life, to bring Niewejaarskraal into production within six months."

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 Middle Orange River and the Saxendrift Hill Complex, which will come into production in the first quarter of fiscal 2014. Rockwell also has two development projects 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 merger and acquisition 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 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:

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

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