Rockwell Reports Tenth Successive Quarterly Improvement and Record Diamond Production and Sales Revenue
VANCOUVER, British Columbia, December 15, 2014 /PRNewswire/ --
Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) announces its quarterly production and sales update for the three months ended November 30, 2014:
Salient features
- Middle Orange River operations ("MOR"), as of December 5, 2014, achieved a record 4.7 million lost time injury free hours ("LTIFH") of operation.
- The successful implementation of the earthmoving vehicle ("EMV") renewal plan at Saxendrift and Saxendrift Hill Complex ("SHC") helped the Complex process a record 1.5 million m[3]of gravel up 47% from the same quarter last year.
- Increased processing volumes compensated for lower grades at Saxendrift.
- Carat production up 15% compared to the same period last year.
- Record diamond sales revenue of US$15.8 million driven by 127% increase in carats sold.
- Average carat price down 35% from Company owned properties due to lower incidence of large diamonds in third quarter.
- Inventory of 2,624 carats (including royalty contract miners' inventory of 815 carats) carried over into fourth quarter of fiscal 2015.
Commenting on third quarter production and sales, James Campbell, CEO and President said:
"Our production and sales performance continues to improve with record volumes of both gravel mined and processed and carat sales from the MOR in the third quarter. A highlight for the quarter was bedding down of the earthmoving vehicle renewal plan and ongoing optimization of our in-field screens that helped us post a 60% increase in mining volumes and 47% increase in gravel processed. The increase in volumes processed offset the lower grades and lower prices achieved for the rough product."
"Also our new mine, Niewejaarskraal, made good progress in ramping up its production with a commensurate improvement in diamond value and the royalty mining contractors continued to make a positive contribution to the company's performance."
PRODUCTION REVIEW
Volume and carat production for total Company owned properties to November 30, 2014 were as follows:
Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Volumes processed (000m[3]) 1,522 1,035 47 1,467 4,131
Carats produced (carats) 10,228 8,913 15 9,581 28,786
Grade (carats/100m[3]) 0.67 0.86 -22 0.65 0.70
Additional information: Refer to Appendix 1: Detailed production data
- Saxendrift: Volumes of gravel mined increased 62% from the previous year, facilitated by the implementation of the new mining fleet, enabled the average monthly plant throughput to exceed 180,000m[3]. Lower grades were processed from the traditional Saxendrift mining area, now in the second half of its Life of Mine ("LOM"). The remaining mining areas require higher stripping ratios and accordingly, gravel volumes processed increased 21%. Carat production declined 29%, but included eight stones larger than 20 carats.
- Saxendrift Hill Complex: Volumes of gravel mined and processed increased 46% and 3% respectively. As a result of ongoing exploration, SHC's mine life has been extended into 2015. Year-on-year carat production, whilst on plan, declined 63% due to the exceptional recoveries in the prior year. SHC's bulk X-ray processing plant operated at its nameplate capacity of 80,000m[3] per month throughout the third quarter. Notable stones included a 68-carat rough diamond.
- Niewejaarskraal: Volumes showed strong increases of 68% and 92% in gravels mined and processed respectively. Towards the end of the quarter, the monthly capacity of the plant was increased to 120,000m[3] with modifications to the front end in-field-screen. Carat production increased almost threefold, underpinned by higher volumes and grades, which increased to 0.54 carats per 100m[3], in line with the average grade for the mine. Notable stones recovered in the period included five stones exceeding 20 carats, the largest of which weighed 68.6 carats.
- Royalty contractor mining: The royalty mining contractors operating at Tirisano and in joint venture at Kwartelspan continue to deliver positive results, with volumes of gravel processed up 98% and carat production up 59% for the third quarter.
SALES REVIEW
Diamond sales for total Company owned-properties to November 30, 2014 were as follows:
Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Sales value (US$000's) 15,763 10,699 47 13,197 37,725
Carats sold 13,759 6,066 127 8,864 29,302
Average price 1,146 1,764 -35 1,489 1,287
Additional information: Refer to Appendix 1: Detailed sales data
- Saxendrift: Diamond sales rose 5% to US$4.2 million from the sale of 2,442 carats (up 10%) at a stable average price per carat of US$1,707 compared to the prior year. The average carat value was lower than in the preceding quarter due to the lack of recovery of exceptional diamonds experienced in the current period.
- SHC: The number of carats sold was in line with the prior year, and although the value of diamonds sold was down 24%, this was on plan. The decline was due to the lack of recovery of high valued stones experienced in the current quarter.
- Niewejaarskraal: Diamond sales increased to US$2.9 million, in line with the ramp up of operations at Niewejaarskraal. Carat sales increased more than six-fold and the average value per carat more than doubled.
- Royalty mining contractors: The contractors at Tirisano delivered a solid performance. The value of sales rose 107% in line with the increased number of contractors compared to a year ago and operations at the Kwartelspan joint venture gained momentum.
Financing Revision and Update
Further to the news release of November 19, 2014 the Company has now received $2.33 million of the $4.1 million committed by the two related parties with the balance to be in-hand by January 23, 2015. The structure of the financing was also slightly revised to comply with the requirements of certain securities laws exemptions in Canada. The revised transaction is that $3.775 (92%) will be raised by issuance of the previously announced debentures, and $0.325 million (8%) as demand loans bearing interest at 5% (2nd year 8%) and without any optional or mandatory conversion aspects. The structure revision was necessary in order to rely on the exemption from the requirements of Canadian Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") where the Company is relying upon exemptions from the formal valuation requirements and minority shareholder approval requirements of MI 61-101 in Sections 5.5(a) and 5.7(a), which requires that the value of the Debenture portion of the transaction must not exceed 25% of the Company's 20 day average market capitalization on the date of announcement. Therefore the Company and the related parties agreed that the aggregate amount of Debentures will be limited to $3.775 million and the balance of the $4.1 million will be advanced by way of separate loans from Emerald Holdings Ltd (Mark Bristow) ($89,000) and Daboll Consultants Limited (Diacore) ($236,000). The loans are exempt from the minority shareholder approval requirements set out in Section 5.7(f) of MI 61-101 - Loan to Issuer, No Equity or Voting Component. The exemptions are only in connection with the issuance of the Debentures, actual conversion of the Debentures into common shares on either an option or mandatory basis as described in the November 19, 2014 news release will still require the approval of Rockwell's minority shareholders.
Appendix 1: Volumes and carat production for the Company's owned mines and its royalty mining contractors to November 30, 2014 were as follows:
Gravel mined (000m[3]) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 655 404 62 547 1,597
SHC 332 227 46 287 799
NJK 427 255 68 340 1,164
Total 1,414 886 60 1,174 3,560
Gravel processed
(000m[3]) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 487 400 21 498 1,351
SHC 230 224 3 227 571
NJK 266 139 92 239 728
Total MOR 983 763 29 964 2,650
Contractors' mining* 539 272 98 503 1,481
Grand Total 1,522 1,035 47 1,467 4,131
Carats produced
(carats) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 2,240 3,164 -29 1,531 6,116
SHC 579 1,579 -63 938 2,267
NJK 1,444 410 252 1,295 4,010
Total MOR 4,263 5,153 -17 3,764 12,393
Contractors' mining* 5,965 3,760 59 5,817 16,393
Grand total 10,228 8,913 15 9,581 28,786
Average grade (cts/100m[3]) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 0.46 0.79 -42 0.31 0.45
SHC 0.25 0.71 -65 0.41 0.40
NJK 0.54 0.29 86 0.54 0.55
Total MOR 0.43 0.68 -37 0.39 0.47
Contractors' mining* 1.11 1.38 -20 1.16 1.11
Grand total 0.67 0.86 -22 0.65 0.70
Appendix 2: Sales for each of the Company's own mines and its royalty mining contractors to November 30, 2014 were as follows:
Sales value (US$000s) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 4,169 3,971 5 5,089 13,001
SHC 2,806 3,709 -24 1,177 4,935
NJK 2,873 158 1717 2,745 7,188
Total MOR 9,848 7,839 26 9,011 25,124
Contractors' carats** 5,915 2,860 107 4,186 12,601
Grand total 15,763 10,699 47 13,197 37,725
Carats sold (carats) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 2,442 2,210 10 1,861 6,068
SHC 1,166 1,106 5 743 2,458
NJK 1,805 250 624 1,206 3,665
Total MOR 5,413 3,566 52 3,810 12,191
Contractors' carats** 8,346 2,500 234 5,054 17,111
Grand total 13,759 6,066 127 8,864 29,302
Average price (US$ per carat) Q3 F2015 Q3 F2014 % Change Q2 F2015 YTD F2015
Saxendrift 1,707 1,797 -5 2,734 2,143
SHC 2,408 3,354 -28 1,585 2,008
NJK 1,592 632 151 2,276 1,961
Total MOR 1,820 2,198 -17 2,365 2,061
Contractors' carats** 709 1,144 -38 828 736
Grand total 1,146 1,764 -35 1,489 1,287
* Contractors' mining" refers to independent royalty contractors processing gravel for their own risk and reward on Rockwell owned mineral properties. Carats recovered are then sold through the Company's tender process. The Company retains the responsibility for diamond security and sales and recognize 100% of the revenue on sale. The contractual 87.5% of the sales value, payable to the contractor, is recognized as production costs in the statement of profit and loss.
** Contractors' carats" refers to independent royalty contractors processing gravel for their own risk and reward on Rockwell owned mineral properties. Carats recovered are then sold through the Company's tender process. The Company retains the responsibility for diamond security and sales and recognizes 100% of the revenue on sale. The contractual 87.5% of the sales value, payable to the contractor, is recognized as production costs in the statement of profit and loss.
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. It has recently built two new internally funded mines in the Middle Orange river region, namely the Saxendrift Hill Complex and the Niewejaarskraal Mine which are both in production. Rockwell also has a development project 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 consolidation 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 http://www.sedar.com.
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; David Tosi, PSG Capital - JSE Sponsor, +27-(0)21-887-9602
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