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Press release from CNW Group

Rockwell achieves 19% growth in diamond sales as average price per carat increases 30% in fourth quarter

Wednesday, May 08, 2013

Rockwell achieves 19% growth in diamond sales as average price per carat increases 30% in fourth quarter

08:30 EDT Wednesday, May 08, 2013

VANCOUVER, May 8, 2013 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI;) is pleased to announce a 19% increase in revenue from diamond sales, before any sales from beneficiation, for the fourth quarter of fiscal 2013 compared to the same period last year. The Company extended the positive growth trend in carat sales from its operations in South Africa's Middle Orange River region that are central to its production growth strategy.

Total proceeds of US$7.2 million were recorded from the sale of 5,308 carats at an average price of US$1,355 per carat compared to US$6.0 million for the same period in fiscal 2012. Total sales declined by 8% to 5,308 carats; however, a better overall product mix led to a 30% increase in average price per carat compared to a year ago.

Diamond sales and revenue for the Company's operations for the quarter ended February 28, 2013 is as follows:

  Carats Revenue (US$) Price per carat (US$)
  Q4 2013 Q4 2012 Q4 2013 Q4 2012 Q4 2013 Q4 2012
Saxendrift 2,440 1,847 4,239,923 3 758 504 1,738 2,035
Saxendrift tailings 422 0 436,882 0 1,035 0
Tirisano 291 975 196,590 591,559 676 607
Klipdam 1,574 2,973 1,915,053 1,680,313 1,217 565
Other* 581 0 403,818 0 695 0
Total sales 5,308 5,795 7,192,266 6,030,376 1,355 1,041

*Other refers to gravel processed by independent contractors and sold through the Company's tender process.

The salient features of the fourth quarter diamond sales are as follows:

  • Carats sold from the Saxendrift operation, inclusive of tailings processed, increased 55% to 2,862 carats at an average price of US$1,634 per carat, resulting in a 24% increase in revenue from diamond sales to US$4.7 million.
  • The value of sales from Saxendrift amounted to US$4.2 million, underpinned by better diamond production during the quarter and resulting in a 32% increase in carats sold to 2,440 carats. The average price per carat at US$1,738 was 15% lower than the same period last year, but largely in-line with industry-wide diamond pricing trends.
  • Sales of diamonds recovered from Saxendrift tailings by the Bulk X-ray plant generated total proceeds of $436,882 through the sale of 422 carats recovered mainly from the coarse recovery tailings of previous operator that mined using older technologies. In December 2012, this plant was relocated to the Saxendrift Hill Complex that is currently in production ramp up.
  • Diamond sales from Tirisano totalled 291 carats at an average value of US$676 per carat, in-line with budgeted diamond values for this property. With its operations having been placed on care and maintenance in the first week of December 2012, a total inventory of 83 carats from Tirisano remains to be sold. Diamonds recovered on the Tirisano property from royalty mining contracts generated total proceeds of US$403,818 during the fourth quarter, at an average price per carat of US$695 from the sale of 581 carats. A 12.5% royalty from these revenues accrues to Rockwell, and was used to offset the cost of care and maintenance at the operation.
  • Although the number of carats sold from Klipdam declined for the quarter to 1,574 carats, the value of sales increased by 14% as a result of a material rise in the average price per carat to US$1,217, due to the combination of the sale of an exceptional 73.52-carat fancy yellow diamond and a number of stones exceeding 10 carats. Subsequent to year end, the Company accepted an unsolicited offer to sell the mine and intends to reinvest the US$2.5 million cash proceeds from this sale to bring Niewejaarskraal into production with the expectation of generating higher returns.

Notable Stones

The Company continued to produce large stones at all its operations, including the recovery of 41 stones exceeding 10 carats during the fourth quarter as described below:

  • 34 stones exceeding 10 carats recovered at Saxendrift. Most notable are:
  • 36.81-carat makeable D-color, no spots
  • 28.83-carat sawable round fancy yellow
  • 17.85-carat flat makeable, D color and clean
  • One stone exceeding 10 carats recovered from the Saxendrift tailings
  • Six stones exceeding 10 carats recovered at Klipdam

All of the diamonds recovered in the plus 30-carat category are gem stones of commercial quality that are in high demand in the current market. There were no industrial-quality diamonds recovered in this range.

These diamonds were channelled into the Company's beneficiation joint venture with Steinmetz Diamond Group (SDG), which delivers value-added future revenues to Rockwell for stones larger than 2.8 carats, once they have been polished and sold by SDG.

"We are pleased that our Middle Orange River operations continued to deliver good results for the fourth quarter with a 55% increase in carat sales and a 24% improvement in revenues from diamond sales. This area represents the future growth of the Company," explained James Campbell, President and CEO, Rockwell. "We are making tangible progress towards developing other properties in the region, in order to deliver on our medium term strategic objective of producing 10,000 carats per month. Having eliminated our loss-making operations, namely Tirisano and Klipdam, we are better placed to start delivering positive returns."

Commenting on the diamond market, Campbell said: "We are optimistic that in the 2013 calendar year, rough diamond prices will show single digit price increases for smaller diamonds as the market continues to recover. Rockwell is seeing indications of improving sentiment among buyers, as evidenced by attendance at our monthly tenders, which continues to increase. Of particular relevance to Rockwell is the continued interest by higher net worth individuals in high-valued diamonds, both for their investment and fashion appeal. With the majority of our diamond production profile falling into the high-valued gem category, where demand outstrips supply, we are particularly well positioned to benefit."

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 has two operational mines, which it is progressively optimizing, as well as a third mine which will come into production in the first quarter of 2013. 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, the flagship mine 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 gem stone diamonds comprising a major portion of its diamond recoveries and has 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 would 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 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 and 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

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