| Fri 16 Oct 2009, 8:29 | | RDI - Rockwell - Announces results for first half of fiscal 2010 |
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RDI
RDI
RDI - Rockwell - Announces results for first half of fiscal 2010
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 TSX: RDI CUSIP Number: 77434W103
Share code on the OTCBB: RDIAF
("Rockwell")
ROCKWELL ANNOUNCES RESULTS FOR FIRST HALF OF FISCAL 2010
October 15, 2009, Vancouver, BC - Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX:RDI; JSE:RDI, OTCBB:RDIAF) announces financial results for the
six months ending August 31, 2009. Currency values are presented in Canadian
dollars unless otherwise indicated.
Rockwell is engaged in alluvial diamond production with focus on the mining and
development of alluvial diamond deposits that yield high value gemstones. The
Company is currently active at three alluvial operations: Holpan, Klipdam, and
Saxendrift. A fourth operation, Wouterspan, is currently on care and
maintenance.
The Company has implemented initiatives that have resulted in better mining and
processing plant efficiency, increased production, higher diamond recoveries,
lower operating costs, and improved overall operating efficiencies throughout
the business. As a consequence of these initiatives the Company has:
* Exceeded its target of 2,500 carats per month from its three operating
mines during the period June to September 2009, including a production
record of 3,016 carats in September 2009; and
* Achieved an average operating cost of US$2.72 per tonne over the six
months. The average cost for all the operations including rehabilitation,
hire purchase payments and royalties was US$4 per tonne.
Although trading conditions in the rough diamond business remain challenging,
the Company is encouraged with the recent improvement in its sales prices which
reflects a combination of improved market conditions and a better diamond mix
from increased production levels.
* Average diamond price received by Rockwell increased by 54% to US$855 per
carat during the quarter ending August 31, 2009, up from US$555 per carat
obtained in the first quarter.
* Average price per carat received was US$531.43 in March, US$584.69 in May,
US$699.75 in June, US$807.20 in early July, US$1,090.55 in late July and
US$862.36 in August/September tender (the latter sales price was related to
a lower grade mix of stones offered on tender in August).
Rockwell operations continue to produce exceptional stones. The Saxendrift
operation has yielded:
* A 40-carat clean white stone in July 2009; and
* More recently (in late September/early October 2009), a 122-carat rounded
octahedra stone of light yellow Cape colour with a number of inclusions; a
120-carat irregular rounded and frosted stone which appears to be of good
white colour and clarity, and a 105-carat high quality rounded, white stone
of excellent clarity.
In corporate developments, the Company has recently strengthened its Board of
Directors and audit committee with the appointment of Willem Jacobs and Richard
Linnell.
Operations Overview
In the six months ending August 31, 2009:
* 11,957.16 carats were produced from operations at Holpan/Klipdam,
Wouterspan and Saxendrift.
* 11,235.99 carats were sold at an average price of US$718.22 per carat.
* Revenues from sales of $9.67 million and other sales of $0.17 million
resulted in $9.8 million in revenue.
* Cost of sales of $9.6 million and amortization totalled $5.0 million,
resulting in an operating loss of $4.8 million for the period.
* Net general and administrative expenses amounted to $3.2 million, interest
expenses of $0.8 million offset by a net tax recovery of $2.0 million,
resulted in a loss of $6.6 million or $0.03 per share.
Diamonds in inventory at August 31, 2009 totalled 4,247.49 carats.
Production, Sales and Inventory
The following is a comparison of the first six months of fiscal 2010 (ending
August 31, 2009) with the six months ending August 31, 2008.
PRODUCTION
Operation 6 months ending August 31, 6 months ending August 31,
2009 2008
Volume Carats Average Volume Carats Average
(cubic grade (cubic grade
meters) (carats meters) (carats
per 100 per 100
cubic cubic
meters) meters)
Holpan 428,152 3,146.09 0.73 356,751 2,579.36 0.72
Klipdam 486,970 5,268.91 1.08 429,429 4,232.01 0.99
Wouterspan - 8.78* - 363,069 2,328.42 0.64
Saxendrift 508,390 3,533.38 0.7 89,484 1,437.04 1.58
Total 1,423,512 11,957.16 0.84 1,238,733 10,576.83 0.85
*from reprocessed concentrate
SALES, REVENUE AND INVENTORY
Operation 6 months ending August 31, 2009
Sales Value of Average Inventory
(carats) Sales value (carats)
(US$) (US$ per
carat)
Holpan 2,710.52 1,438,365 530.66 1,276.65
Klipdam 5,107.23 2,393,682 468.69 1,904.31*
Wouterspan 561.69 269,088 479.07 22.49
Makoenskloof - - - -
Saxendrift 2,856.55 3,968,797 1,389.37 1,044.04
Total 11,235.99 8,069,931 718.22 4,247.49
Table continues
SALES, REVENUE AND INVENTORY
Operation 6 months ending August 31, 2008
Sales Value of Average Inventory
(carats) Sales value (carats)
(US$) (US$ per
carat)
Holpan 2,589.96 3,471,620 1,340.41 267.65
Klipdam 3,912.71 7,744,322 1,979.27 679.31
Wouterspan 2,360.46 3,704,334 1,569.33 272.88
Makoenskloof - - - 0.38
Saxendrift 1,016.48 1,967,072 1,935.18 420.56
Total 9,879.61 16,887,348 1,709.31 1,640.78
*Included in the Klipdam inventory are 199.89 carats from Windsorton, a
prospecting right
Profit and Loss
The Company realized a loss of $6.6 million for the six month period ending
August 31, 2009 compared to a net loss of $3.1 million for the comparable period
in the prior year. The loss was due to the collapse in the diamond market and
precipitous decline in diamond prices that commenced in the fourth quarter of
fiscal 2009 due to the ongoing global credit crisis and economic recession,
resulting in weakness of diamond prices through the first two quarters of fiscal
2010. There has been an overall improvement in prices of about 15 to 20% from
the initial sharp fall of about 50% in the last quarter of fiscal 2009.
During the six months ending August 31, 2009, the Company realized rough diamond
sales of $9.7 million compared to $17.0 million for the comparable period in the
prior year. Sales prices achieved in the first quarter were below the cost of
production. Prices achieved in the second quarter have covered the cost of
production but have not been sufficient to cover fixed overheads in full and
lease payments. To maintain liquidity, sales were made below production cost. In
July and August, cash inflows from sales have exceeded outflows from operating
expenses, though overall inflows have not been sufficient to cover the full
costs of the lease payments on a limited amount of earth moving equipment. For
this reason, the Company has invoked a payment deferral with Komatfin.
Mining costs for the six months ending August 31, 2009 amounted to $9.6 million
(six months ending August 31, 2008 - $12.3 million), which excludes amortization
and depletion charges of $5 million (six months ending August 31, 2008 - $5.2
million).
Exploration expenses (excluding stock-based compensation) decreased to $59,916
for the six months ending August 31, 2009 compared to $271,182 for the same
period in the prior year. This decrease is due to lower engineering activities
performed and property assessment fees paid on the South African diamond
properties.
Administrative costs for the six months ending August 31, 2009 decreased to $1.5
million in comparison to $1.8 million incurred in for the same period in the
prior year, primarily due to controlling costs and reducing overheads. Travel
and conference expenses amounted to $76,782 for the six months ending August 31,
2009 compared to $319,709 for the same period in the previous year. Legal,
accounting and audit expenses for the six months ending August 31, 2009 amounted
to $493,009 compared to $776,895 incurred for the same period in the prior year,
even though the Company experienced significant legal costs due to the
unsolicited bid by Pala.
Stock-based compensation decreased to $134,066 for the six months ending August
31, 2009 in comparison to $1,058,101 for the same period in the previous year.
Interest expenses increased to $480,349 for the six months ending August 31,
2009, compared to $248,831 for the six months ending August 31, 2008, mainly due
to the use of the credit facility to maintain working capital.
Additional details can be found in the Company`s Financial Statements and
Management`s Discussion and Analysis which are filed on www.sedar.com.
Plans Moving Forward
Rockwell`s priority is to maintain flexibility and resourcefulness to overcome
the challenges of the world economic crisis and the concomitant significant
decline in international diamond prices. In this respect the Company continues
to manage costs, leverage diamond sales, and increase production to maximize
revenues at its operations.
Rockwell is in the process of securing equity purchase commitments to raise $7
to $10 million at prevailing share prices, less allowable discounts, in order to
strengthen the Company`s balance sheet, settle short term debt including the
payment standstill negotiated with Komatfin in respect of equipment leases and
to undertake further production improvements and cost saving measures at
existing operations. If funds permit, the Company will also initiate the
modernization of the Wouterspan processing plant with a view to re-commission
this operation subject to further improvements in diamond prices. The fund-
raise is expected to be achieved through a combination rights offering and
private placement although there can be no certainty of its success at the
present time.
President and CEO John Bristow commented, "Importantly, there has been an
improvement in both sentiment and prices in the diamond market. Rockwell is well
positioned to benefit from further improvements in diamond prices. The Company
has implemented significant improvements to operating and costs structures in
all parts of its business, and management believes that these will stand the
Company in good stead for the future, providing the foundation on which to
proceed with growth and expansion plans."
The Company will host a telephone conference call on Monday October 19 at 10:00
a.m. Eastern Time (7:00 a.m. Pacific; 4:00 p.m. Johannesburg) to discuss these
results. The conference call may be accessed by dialing (800) 946-0716 (toll
free) or 719-457-2573 (toll) in North America, 0 800 980 989 (toll free) in the
United Kingdom and 0 808 101 1147 (toll free) in South Africa. A live and
archived audio webcast will also be available at on the Company`s website at
www.rockwelldiamonds.com
The conference call will be archived for later playback until October 26, 2009
and can be accessed by dialing (888) 203-1112 (toll free) in North America or
(719) 457-0820 (toll) and using the pass code 8864739
For further information, please 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 Statements
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, 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.
Canada
16 October 2009
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 16/10/2009 08:29:54 Produced by the JSE SENS Department.
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