| Wed 28 May 2008, 14:05 | | RDI - Rockwell Announces Fiscal 2008 Results |
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RDI
RDI
RDI - Rockwell Announces Fiscal 2008 Results
ROCKWELL DIAMONDS INCORPORATED
(A company incorporated in accordance with the laws of British
Columbia, Canada)
(Incorporation number BCO354545)
(Formerly Rockwell Ventures Inc.)
(South African registration number: 2007/031582/10)
Share code on the JSE Limited: RDI & ISIN: CA77434W1032
Share code on the TSXV: RDI & CUSIP Number: 77434W103
Share code on the OTCBB: RDIAF
("Rockwell
ROCKWELL ANNOUNCES FISCAL 2008 RESULTS
May 27, 2008, Vancouver, BC - Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX: RDI; JSE: RDI; OTCBB: RDIAF) announces financial
results for the nine months ending February 29, 2008.1 Dollar amounts
are in Canadian currency unless otherwise indicated.
Rockwell is positioned for growth by mining and developing alluvial
diamond deposits. The Company has focused on projects with the
potential for production of high value gemstone diamonds which are
predominantly larger than 2 carats in size. Plus 2-carat stones
comprise more than 70% of the Company`s production and are of
exceptional quality and value. Market forecasters indicate these
gemstones are in short supply and will continue to show strong year on
year price increases.
During fiscal 2008, the Company operated three alluvial diamond mines,
continued its aggressive property assessment and development strategy,
and advanced corporate activity to raise its profile, attract new
shareholders, and pursue new acquisitions.
Overview and Highlights
- Rockwell shows consolidated positive cash of $6.7 million from
operating activities despite the consolidated accounting loss of
$9.4 million.
- Rockwell recorded Revenues from sales of C$36.0 million from the
sale of 17,667.67 carats of diamonds, and Cost of Sales and
amortization totalling $29.3 million;
- The Company achieved an operating profit of $6.9 million;
- At a consolidated level of losses before non-controlling interest
Rockwell showed an improvement of $2.5 million for the nine months
ended February 29, 2008 when compared to 2007;
- Non-controlling interest (49%) increased by $5.5 million resulting
in an overall increase in the total comprehensive loss of $9.4
million when compared to $6.4 million in 2007;
- The average price of diamond sales realized over the year was
US$1,984.68 per carat representing a 97% increase on the average
price achieved during the previous year (US$1,005.53)
- Total diamond production was 17,746.40 carats from 2.4 million
cubic metres of gravel mined and processed at the Company`s three
operating mines (Wouterspan, Holpan and Klipdam), and bulk
sampling at Makoenskloof, including a 212-carat yellow stone;
- Rockwell entered into an agreement to acquire two alluvial diamond
mines and a number of alluvial diamond projects from the Trans Hex
Group on the south bank of the Middle Orange River. The
transaction was completed in early April 2008.
- The Company entered into a beneficiation agreement with the
Steinmetz Diamond Group whereby it will share profits on the added
value realized by cutting, polishing and marketing high value
Rockwell diamonds.
- The Company graduated to the Toronto Stock Exchange ("TSX") in
February 2008 and secured a secondary listing on the Johannesburg
Stock Exchange ("JSE") in November 2007.
At a consolidated level, the Company showed a loss for the nine months
ending February 29, 2008 of $9.4 million or $0.05 per share. This loss
is a consequence of the following:
- The non-controlling interest (49%) of $5.9 million which is
discussed in the results of operations in detail below;
- Stock based compensation of $1.8 million;
- Interest on capital leases, exploration and evaluation of new
alluvial diamond projects, as well as corporate costs including a
listing on the JSE and graduation to the TSX; and
- Lower net foreign exchange conversion gains due to a weakening
Rand against the Canadian Dollar.
Currently, Rockwell has sufficient tax pools together with the
anticipated capital expenditure not to be in a tax paying position for
at least the next fiscal year.
Results of Operations
During the period, the Company operated three alluvial diamond mines -
Holpan, Klipdam and Wouterspan - and the Makoenskloof bulk sampling
project in the Northern Cape Province of South Africa.
Rockwell acquired an interest in the diamond properties on January 31
2007. In fiscal 2007 and 2008, the Company received 51% of the net
proceeds from production at these properties while the remaining 49% is
allocated to outside shareholders defined as non-controlling interest.
Subsequent to February 29, 2008, the Company acquired an additional 23%
interest in the properties increasing its ownership to 74% and at the
same time reducing the non-controlling interest in the operating
properties to 26%.
Production and Sales
Rockwell`s share of diamond production and sales for fiscal 2008 (the
nine month period ending February 29, 2008) is summarized below:
Operation Volume Production Sales
(cubic (carats) (carats)
meters)
Holpan 676,026 5,385.82 5,425.29
Klipdam 584,643 5,018.88 5,061.47
Wouterspan 890,059 6,398.00 6,237.59
Makoenskloof 217,382 943.70 943.32
Total 2,368,110 17,746.40 17,667.67
Operation Value of Value of Inventory
Sales Sales (carats)
(US$) (Cdn$)
Holpan 7,218,906 7,383,320 366.28
Klipdam 7,264,657 7,430,113 360.01
Wouterspan 16,067,663 16,433,611 309.92
Makoenskloof 4,513,376 4,616,170 0.38
Total 35,064,602 35,863,214 1,036.59
Rockwell`s share of diamond production and sales for fiscal 2007 (the
four month period ending May 31) is summarized below:
Operation Volume Production Sales
(cubic (carats) (carats)
meters)
Holpan 487,535 2,850.57 2,947.27
Klipdam 257,900 1,883.85 1,762.04
Wouterspan 370,888 2,272.86 2,435.99
Total 1,116,323 7,007.28 7,145.30
Operation Value of Value of Inventory
Sales Sales (carats)
(US$) (Cdn$)
Holpan 2,936,597 3,329,223 405.78
Klipdam 1,388,938 1,588,261 402.55
Wouterspan 2,859,328 3,200,163 149.53
Total 7,184,863 8,117,647 957.86
Production Costs
Operating costs for the full reporting period were approximately $4.32
per tonne. These were higher than the projected mining costs due to the
Company`s aggressive program of expansion and optimization of existing
operations, evaluation and development of new projects, and other
factors represented by:
- Makoenskloof bulk sampling added approximately $0.50 per tonne;
- Lost production due to the shutdown of the Klipdam plant for
approximately four weeks in October-November 2007 to modernize and
increase the capacity of this plant via the installation of
additional trommel screens, a high volume front end scrubber
section and upgrade of the rotary-pan plant; and
- Lower production during the December 2007 to February 2008 period
due to the annual shutdown over the Christmas period, and high
rainfall in the Northern Cape area and power outages in January.
The average cost of US$4.66 per tonne for the last quarter of 2008
(December 2007 to February 2008) was notably lower than US$5.48 per
tonne costs in the comparative last quarter of the financial year
ending May 31, 2007.
Costs have shown a further downward trend to about US$3.40 per tonne
for the month of April 2008.
Profit and Loss
At an operating mine level the Company achieved an operating profit of
$6,885,096.
At a consolidated level the Company showed a loss for the nine months
ending February 29, 2008 of $9,403,027 or $0.05 per share compared to a
net loss of $6,365,142 or $0.11 per share for the year ended May 31,
2007. The loss in fiscal 2008 is a consequence of the following:
An increased attributable amount to non-controlling interest (49%) of
$5,955,779 for this year compared to the $415,159 for the year ended
May 31, 2007. Of this amount in fiscal 2008, $4,463,261 is related to
an exchange gain as a result of the non-controlling interest being held
directly at the South African operating subsidiaries rather than at the
consolidated entity level at which the non-controlling parties would
have shared in a net foreign exchange gain of only $751,318, thereby
potentially reducing Rockwell`s loss by $4,095,096 to $5,307,931.
The increase in net losses during the period is also related to stock
based compensation expenses recognized on stock options granted to
Company management and employees during the nine months ending February
29, 2008, as well as lower foreign exchange gains, interest expense on
the Company`s capital leases, increased accretion of reclamation
obligations, a loss on disposal of assets and future income tax
expenses, which was offset by lower exploration expenses, and
convertible note accretion expenses incurred in the year ending May 31,
2007.
Exploration expenses (excluding stock-based compensation) decreased to
$604,169 for the nine months ended February 29, 2008 compared to
$1,371,351 for the year ending May 31, 2007 because the Company had
completed activities related to the acquisition of the African
properties.
The Company incurred a foreign exchange gain of $751,318 for the nine
months ended February 29, 2008 compared to a foreign exchange gain of
$3,580,364 for the year ended May 31, 2007 due to a higher amount of
South African denominated liabilities and the strengthening of the
Canadian dollar.
Administrative costs for the nine months ended February 29, 2008
amounted to $2,697,077, compared to $2,993,453 incurred in the year
ended May 31, 2007. The difference is primarily related to lower
consulting and salary expenses as the Company had completed its major
corporate financing, acquisition, operational management and property
investigation activities. Travel and conference expenses amounted to
$654,705 for the nine months ended February 29, 2008, compared to
$666,194 for the year ended May 31, 2007, largely due to reduced travel
as acquisition activities were completed.
Legal, accounting and audit expenses for the nine months ended February
29, 2008 amounted to $790,725 compared to $691,759 incurred for the
year ended May 31, 2007. This increase was primarily due to increased
legal and accounting services related to the listing on both the
Johannesburg Stock Exchange and the TSX. These increases were however
partially offset by reduced legal and accounting services as the
Company`s acquisition activities of Durnpike and HC Van Wyk have been
completed.
Stock-based compensation increased to $1,826,317 for the nine months
ended February 29, 2008 in comparison to $79,623 for the year ended May
31, 2007 due to an increase in the number of options granted during
fiscal 2008.
Interest expenses decreased to $270,976 for the nine months ended
February 29, 2008, compared to $2,466,839 for the year ended May 31,
2007, due to the accretion and interest charges relating to the
issuance of the convertible promissory notes incurred during the year
ended May 31, 2007.
At February 29, 2008, the Company had working capital of $26,094,261
compared to working capital of $26,742,798 at May 31, 2007.
Additional details can be found in the Company`s Financial Statements
and Management Discussion and Analysis which are filed on
www.sedar.com.
Mineral Resources
The Company`s Mineral Resources are tabulated below.
Property Category Volume Grade
(cubic (carats per
meters) 100 cubic
meters)
Wouterspan1 Indicated 5,265,000 0.71
Inferred 37,774,000 0.71
Holpan/Klipdam1 Inferred 8,858,000 0.84
Saxendrift Indicated 2,631,539 0.82
Inferred 7,807,000 0.52
Niewejaarskraal Indicated 5,967,567 0.91
Inferred 8,080,000 0.73
Zwemkuil-Mooidraai Inferred 1,640,000 0.95
Remhoogte-Holsloot Inferred 11,503,000 1.15
Kwartelspan Inferred 1,385,000 1.50
1 as at February 29, 2008.
Mineral resources for Holpan/Klipdam are based on an estimate at March
31, 2007 and depleted for mining since that time. Mineral resources
for Wouterspan are based on work to October 31, 2007 and depleted for
mining since that time. The Holpan Klipdam and Wouterspan estimates
were completed by Tania Marshall, PhD., Pr.Sci.Nat., who is an
independent qualified person. Depletions from mining were estimated by
Glenn Norton, Pr.Sci.Nat, who is Rockwell`s Manager, Resources.
Mineral resources for the Saxendrift, Niewejaarskraal, Zwemkuil-
Mooidraai, Remhoogte-Holsloot and Kwartelspan properties (MORO - shaded
in the table above) are as estimated in March 2007 and described more
fully in the Company`s March 12 2007 news release.
Drilling programs are underway at Holpan/Klipdam and Wouterspan. When
completed, new resource estimates are planned.
Plans for the 2009 Financial Year
The Company will aggressively pursue its strategy of growth by
production and development, acquisition, and beneficiation during
fiscal 2009. Its activities will include the following:
- On-going expansion and optimization of its existing three mining
operations;
- Completion of re-commissioning the diamond recovery and processing
plants at the Saxendrift mine located across the river from its
Wouterspan operation on the Middle Orange River;
- Construction and commissioning of a high volume wet rotary-pan
plant capable of processing about 380,000 tonnes of diamond
bearing gravel per month at Saxendrift;
- Re-commissioning mine and processing infrastructure at the
Niewejaarskraal mine, located on the south-bank of the Middle
Orange River, once the necessary permitting is granted;
- Further evaluation, including drilling and sampling, of existing
mineral properties and new projects to increase its diamond
resources;
- Consideration of new acquisitions to add to the Company`s existing
production profile;
- Development of further beneficiation opportunities to add value to
Company`s revenue line; and
- Investigation of the early adoption of International Financial
Reporting Standards (IFRS) for Rockwell as from January 2009.
Rockwell Diamonds Inc. will release the results for the nine months
ending February 29, 2008 (Fiscal 2008) after market close on Tuesday,
May 27, 2008 and will host a telephone conference call on Wednesday,
May 28 at 10:00 AM Eastern Time (7:00 AM Pacific; 16:00 Johannesburg)
to discuss these results. The conference call may be accessed by
dialing (877) 440-5803, or (719) 325-4879 internationally. A live and
archived audio webcast will also be available at
www.rockwelldiamonds.com.
The conference call will be archived for later playback until
Wednesday, June 4, 2008 and can be accessed by dialing (888) 203-1112
in Canada and the United States, or (719) 457-0820 and using the
passcode 9145049.
For further information on the Company, please visit
www.rockwelldiamonds.com or contact Investor Services at (604) 684-6365
or within North America at 1-800-667-2114.
John Bristow
President and CEO
No regulatory authority has approved or disapproved the information
contained in this news release.
Forward Looking Statement
This release includes certain statements that may be deemed "forward-
looking statements". Other than statements of historical fact all
statements in this release that address future production, reserve or
resource potential, exploration drilling, exploitation activities and
events or developments that Rockwell expects are forward-looking
statements. Although Rockwell 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 market
prices, exploitation and exploration successes, changes in and the
effect of government policies regarding mining and natural resource
exploration and exploitation, availability of capital and financing,
and general economic, market or business conditions. Investors are
cautioned that any such statements are not guarantees of future
performance and those actual results or developments may differ
materially from those projected in the forward-looking statements. For
more information on Rockwell, Investors should review Rockwell`s annual
Form 20-F filing with the United States Securities and Exchange
Commission www.sec.com and Rockwell`s home jurisdiction filings that
are available at www.sedar.com.
Information Concerning Estimates of Indicated and Inferred Resources
This news release also uses the terms "indicated resources" and
"inferred resources". Rockwell Diamonds Inc advises investors that
although these terms are recognized and required by Canadian
regulations (under National Instrument 43-101 Standards of Disclosure
for Mineral Projects), the U.S. Securities and Exchange Commission does
not recognize them. Investors are cautioned not to assume that any part
or all of the mineral deposits in these categories will ever be
converted into reserves. In addition, "inferred resources" have a great
amount of uncertainty as to their existence, and economic and legal
feasibility. It cannot be assumed that all or any part of an Inferred
Mineral Resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of Inferred Mineral Resources may not form
the basis of feasibility or pre-feasibility studies, or economic
studies except for Preliminary Assessment as defined under 43-101.
Investors are cautioned not to assume that part or all of an inferred
resource exists, or is economically or legally mineable.
_______________________________
1During the year, the Company changed its fiscal year end from the end
of May to the end of February. As a result the 2008 fiscal period is
nine months.
Date: 28/05/2008 14:05:05 Produced by the JSE SENS Department.
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