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Press release from CNW Group

Rockwell first quarter diamond revenue, excluding royalty mining, up 31% as average carat values increase 109%

Monday, July 08, 2013

Rockwell first quarter diamond revenue, excluding royalty mining, up 31% as average carat values increase 109%

08:30 EDT Monday, July 08, 2013

VANCOUVER, July 8, 2013 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI;) announces a pleasing 31% increase in revenue from diamond sales, excluding Contractors and before any sales from beneficiation, for the first quarter of fiscal 2014 compared to the same period last year. This increase over the same quarter last year occurs even though the Company placed its Tirisano mine onto care and maintenance late in 2012 and sold its Klipdam mine early in the quarter.

As a result of sales of high quality diamonds, Rockwell's flagship Saxendrift mine achieved a 48% year-on-year increase in average price per carat received, with the value of sales up 56% year-on-year in the first quarter. In addition, the first diamond sales from the newly-commissioned Saxendrift Hill Complex were recorded, at an average price per carat of US$3,668 from the sale of 130 carats. Royalties in the first quarter to the Company totalled $134,749 on diamond sales by the three royalty mining contracts at Tirisano on revenue of $1.1 million.

Total revenue of US$6.6 million was recorded for the Company's own operations (excluding royalty mining contracts) from the sale of 3,257 carats at an average price of US$2,018 per carat compared to US$5.0 million at an average value of US$962 for the same period in fiscal 2013. Total carats sold from its own operations declined by 38% from 5,229 carats as the Company transitioned its production focus exclusively to operations in the Middle Orange River region which typically yield gem-quality diamonds. The sale of several large, high-valued diamonds recovered in this region contributed to the 109% increase in average price per carat from a year ago.

Diamond sales and revenue for the Company's operations for the quarter ended May 31, 2013 is as follows:

  Carats Revenue (US$) Price per carat (US$)
  Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013
Saxendrift 2,148 2,037 5,485,585 3,516,185 2,553 1,727
Saxendrift Hill Complex 130 - 476,818 - 3,668 -
Tirisano 83 1,007 41,943 313,712 505 311
Klipdam 895 2,185 569,645 1,200,803 636 550
Total from own operations 3,257 5,229 6,573,991 5,030,700 2,018 962
Saxendrift tailings - 1,005 - 857,090 - 853
Contractors* 1,730 - 1,077,982 - 623 -
Total sales 4,987 6,234 7,651,873 5,887,790 1,534 944

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

The salient features of the first quarter diamond sales are:

  • Carats sold from the Saxendrift operation increased 5% to 2,148 carats at an average price of US$2,553 per carat, resulting in a 56% increase in revenue from diamond sales to US$5.5 million. The average price per carat improved by 48% during the quarter, reflecting the sale of a number of large, high quality diamonds that were recovered during April 2013.
  • Sales from the Saxendrift Hill Complex amounted to 130 carats at an average price of US$3,668 per carat. Revenue from diamond sales from Saxendrift Hill Complex for the period amounted to US$476,818.
  • The remaining 83 carats from Tirisano's inventory were sold at an average value of US$505 per carat, generating total revenues from diamond sales of $41,943 for the first quarter.
  • Sales for the first quarter from Klipdam totalled 895 carats at an average value of US$636 per carat, compared to 2,185 carats at an average value per carat of US$550 in the comparable quarter. The decline in carats sold is the result of the decision to sell the mine at the end of March 2013, subsequent to which operations were suspended. Total inventory of 53 carats was carried over to the second quarter.
  • A total of 1,730 carats derived from the three royalty mining contracts operating at the Tirisano property were sold in the first quarter. The value of these sales is $1.1 million at an average price of $623 per carat. The Company's 12.5% royalty from these sales was applied against the care and maintenance costs at Tirisano. An inventory or 370 carats was carried forward to the second quarter.

Notable Stones

Rockwell continued to produce large stones at all operations, including the recovery of 44 stones exceeding 10 carats during the first quarter as described below:

  • Saxendrift: 30 stones exceeding 10 carats, with the three largest stones weighing 52.91 carats, 59.50 carats and 72.41 carats.
  • Saxendrift Hill Complex: four stones exceeding 10 carats, including a 53.16-carat stone.
  • Klipdam: Four stones exceeding 10 carats.

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

"The high quality of diamond sales for the first quarter provides further justification of our strategy to focus Rockwell's production growth to high potential assets in the Middle Orange River region," commented James Campbell, CEO and President, Rockwell. "We are pleased to produce a 31% increase in revenue from diamond sales from our own operations - before any beneficiation income. This performance is underpinned by a 109% increase in our average diamond values, more than making up for the 38% reduction in total carats sold. It included several high quality diamonds from our flagship Saxendrift operation and the newly commissioned Saxendrift Hill Complex mine. As the operations at Saxendrift Hill Complex and Niewejaarskraal (currently in commissioning) are established and reach their nameplate capacity, we are positioned to make up the sales shortfall from Tirisano and Klipdam."

Campbell added that: "Moreover, the royalty mining contracts are performing well. Our 12.5% royalty from these diamond sales is set to contribute more meaningfully going forward with the addition of two new contracts at Tirisano and a further agreement reached for Zwemkuil, another Rockwell property in the Middle Orange river region."

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:

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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