| Mon 18 Jan 2010, 9:03 | | RDI - Rockwell Diamonds Incorporated - Rockwell announces results for Q3 FISCAL |
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RDI
RDI
RDI - Rockwell Diamonds Incorporated - Rockwell announces results for Q3 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 TSXV: RDI CUSIP Number: 77434W103
Share code on the OTCBB: RDIAF
("Rockwell")
ROCKWELL ANNOUNCES RESULTS FOR Q3 FISCAL 2010
January 14, 2010, Vancouver, BC - Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX:RDI; JSE:RDI, OTCBB:RDIAF) announces financial results for the
three and nine months ended November 30, 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.
In 2010, Rockwell has operated the Holpan, Klipdam, and Saxendrift mines and its
fourth operation, the Wouterspan mine, is currently on care and maintenance.
The Company has implemented a number of key initiatives at its operations in
fiscal 2010 resulting in better mining and processing plant efficiencies,
increased production, higher diamond recoveries, lower operating costs, and
improved overall operating performance.
The improved operating efficiencies implemented by the Company, in
combination with improving diamond prices, resulted in profitable
operations in the three months ended November 30, 2009.
PRODUCTION OF EXCEPTIONAL STONES
- Three large stones recovered in September/early October: a
122-carat rounded octahedral 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 at
Saxendrift.
- Three high quality coloured diamond recovered in October:
a 30.54 carat salmon-pink stone and two intense fancy yellow
stones of 35.54 and 36.32 carats were recovered at Saxendrift.
- Three greater than 50-carat stones recovered in
November - a 60.8 carat rounded off-white stone at Saxendrift and
a 52.4 carat light yellow octahedral stone of excellent clarity
at Holpan.
INCREASING DIAMOND PRICES
Average price received during the three months ended November 30,
2009 was US$1,269 per carat, a 48% increase over the US$855 per carat
in the previous three month period.
OPERATING COSTS IMPROVED AND STABILIZING
The average operating cash cost for the Company`s three operations over the
nine months in fiscal 2010 is US$2.73 per tonne. The average cost for all the
operations including rehabilitation, hire purchase payments and royalties is
US$4.44 per tone.
OPERATIONS OVERVIEW
In the three months ended November 30, 2009:
- 7,963.28 (2008: 5,981.25) carats were produced at the Holpan/Klipdam and
Saxendrift operations. 5.3 carats were recovered from the Wouterspan final
recovery plant during auditing and reprocessing of concentrate material.
- 9,409.94 carats were sold at an average price of US$1,268.83 per carat.
- Sales of $12.8 million, together with other sales of $0.09 million, resulted
in $12.9 million in revenue.
- Cost of sales of totalled $7.1 million and amortization totalled $3.
3 million.
- An operating profit of $2.5 million was realized for the period.
- Net general and administrative expenses amounted to $1.6 million,
interest amounted to $0.3 million and taxation was $0.05 million
- A profit of $ 0.5 million or 0.002 cents per share was realized
for the period.
In the nine months ended November 30, 2009:
- 19,920.44 (2008: 16,558.09) carats were produced from operations at
Holpan/Klipdam, Wouterspan and Saxendrift.
- 20,646.13 carats were sold at an average price of US$969.17 per carat.
- Tender sales of $21.9 million, plus beneficiation profit share of US$0.5
million and other sales of $0.3 million, resulted in total revenue of $22.7
million.
- Cost of sales of $16.7 million and amortization of $8.3 million. As a result,
an operating loss of $2.3 million was realized for the period.
- Net general and administrative expenses amounted to $4.8 million, and net
interest expenses were $1.1 million, offset by a net tax recovery of $1.6
million. As a result a loss of $6.1 million or $0.026 cents per share was
realized for the period.
Diamonds in inventory at November 30, 2009 totalled 2,800.51 carats.
PRODUCTION, SALES AND INVENTORY
The following is a comparison of the nine months ended November 30, 2009 with
the nine months ended November 30, 2008.
PRODUCTION
Operation 9 months ended November 30, 2009
Volume Carats Average
(cubic meters) grade
(carats
per 100
cubic
meters)
Holpan 653,992 4,913.61 0.75
Klipdam 737,369 7,945.42 1.08
Wouterspan 0 14.08 0.00
Saxendrift 905,582 7,047.33 0.78
Total 2,296,943 19,920.44 0.86
PRODUCTION
Operation 9 months ended November 30, 2008
Volume Carats Average
(cubic meters) grade
(carats
per 100
cubic
meters)
Holpan 512,510 3,869.78 0.76
Klipdam 668,674 6,520.90 0.98
Wouterspan 552,293 3,896.42 0.71
Saxendrift 175,441 2,270.99 1.29
Total 1,908,918 16,558.09 0.87
SALES, REVENUE AND INVENTORY
Operation 9 months ended November 30, 2009
Sales Value of Average Inventory
(carats) Sales value (carats)
(US$) (US$ per
carat)
Holpan 5,252.96 2,052,602 390.75 501.73
Klipdam 8,634.08 5,109,645 591.80 1,053.65
Wouterspan 589.68 280,187 475.15 0.00
Saxendrift 6,169.41 12,567,081 2,037.00 1,245.13
Total 20,646.13 20,009,515 969.17 2,800.51
*Included in the Klipdam sales are 322.02 carats at $122,973 from Windsorton, a
prospecting right
SALES, REVENUE AND INVENTORY
9 months ended November 30, 2008
Operation
Sales Value of Average Inventory
(carats) Sales value (carats)
(US$) (US$ per
carat)
Holpan 2,946.42 3,958,748 1,343.58 1,287.79
Klipdam 4,825.13 18,779,616 3,892.04 2,050.74
Wouterspan 2,673.86 4,360,884 1,630.93 1,529.26
Saxendrift 1,520.17 3,274,483 2.154.02 751.45
Total 11,965.58 30,373,731 2,538.43 5,619.24
INVENTORY (carats)
Operation Rough Production Rough Rough
Diamond Diamond Diamond
Inventory Sales Inventory
Beginning End of
of Period Period
Holpan 841.08 4,913.61 5,252.96 501.73
Klipdam 1,742.31 7,945.42 8,634.08 1,053.68
Wouterspan 575.60 14.08 589.68 0.00
Saxendrift 367.21 7,047.33 6,169.41 1,245.13
Total 3,526.20 19,920.44 20,646.13 2,800.51
*Included in the Klipdam inventory are 199.89 carats from Windsorton, a
prospecting rights.
PROFIT AND LOSS
The Company realized a loss of $6.1 million for the nine month period
ended November 30, 2009 compared to a loss of $1.5 million for the comparable
period in the prior year. The loss was due to weakness of diamond prices
through the first two quarters of fiscal 2010. Though prices remained weak
during this period, there has been an overall improvement in prices of about 49%
from the initial sharp fall in the last quarter of fiscal 2009. During the nine
months ended November 30, 2009, the Company realized rough diamond sales of
$22.4 million compared to $33.4 million for the comparable period in the prior
year.
As noted above, the credit crunch and ensuing recession resulted in prices
falling sharply in late calendar 2008 (fourth quarter of fiscal 2009). Sales
prices achieved in the Company`s first fiscal quarter of 2010 were below the
cost of production; however, prices achieved in the second quarter covered the
cost of production but were not sufficient to cover fixed overheads in full
and lease payments. As the Company was required to maintain liquidity, sales
were made below production cost. In July and August (second quarter fiscal
2010), cash inflows from sales exceeded outflows from operating expenses,
though overall inflows were not sufficient to cover the full costs of the
lease payments on a limited amount of earth moving equipment which resulted
in the Company invoking the payment deferral with Komatfin, which ended on
the November 1. Income generated in November has been sufficient to cover all
the third quarter costs and significant arrear creditors, including ZAR11.4
million ($1.6 million) for outstanding royalties. The November income
resulted in a third quarter operating profit.
Mining costs for the nine months ended November 30, 2009 amounted to $16.7
million (nine months ended November 30, 2008 - $15.9 million), which excludes
amortization and depletion charges of $8.3 million (nine months ended November
30, 2008 - $8.1 million).
Exploration expenses (excluding stock-based compensation) decreased to $93,985
for the nine months ended November 30, 2009 compared to $367,170 for the same
period in the prior year. This decrease is due to less engineering activities
and property assessment fees performed during the nine month period ended
November 30, 2009 on South African diamond properties.
Administrative costs for the nine months ended November 30, 2009 decreased to
$2.3 million from $2.5 million incurred for the same period in the prior year,
primarily the result of controlling costs and reducing overheads. Travel and
conference expenses amounted to $152,474 for the nine months ended November 30,
2009 compared to $458,782 for the same period in the previous year. Legal,
accounting and audit expenses for the nine months ended November 30, 2009
amounted to $884,124 compared to $1,454,927 incurred for the same period in the
prior year. The Company has experienced significant legal costs due to the
unsolicited bid by Pala and the capital raising exercise.
Stock-based compensation decreased to $146,444 for the nine months ending
November 30, 2009 in comparison to $1,557,517 for the same period in the
previous year.
Interest expenses were $1,221,402 for the nine months ended November 30, 2009,
compared to $1,939,516 for the nine months ended November 30, 2008. These
charges were incurred due to the use of the credit facility to maintain working
capital and the deferred lease payments.
Additional details can be found in the Company`s Financial Statements and
Management`s Discussion and Analysis which are filed on www.sedar.com.
PRIVATE PLACEMENT AND RIGHTS OFFERING
Further to its news release of January 6, 2010, Rockwell has closed a second
round of its private placement, which was oversubscribed and resulted in the
receipt of approximately $8.6 million in total. These funds were raised
through the issue of a total of 132.8 million new shares at share price of
$0.065.
Due to the success of the private placement and the intervening holiday period,
the Company`s rights offering was delayed slightly so that the private placement
could close. The Company expects to file the final rights offering circular
Canadian securities regulatory authorities in all of the provinces and
territories of Canada and with the Toronto and Johannesburg stock exchanges
shortly, following which the Company will be in a position to provide a
timetable for the implementation and closing of the rights offering.
Completion of at least $3.1 million of this rights offering is guaranteed by
Daboll Consultants, which is associated with the Steinmetz Diamond Group.
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.
Through the success of its private placement, and the support of its new long
term investors such as Godia Capital and existing shareholders, Rockwell expects
to raise up to $14.7 million through the combined private placement and rights
offering. Proceeds from the combined fund raising will be utilized to
strengthen the Company`s balance sheet, settle short term debt, and undertake
further production improvements and cost saving measures at existing operations.
Given the improvements in diamond prices, the Company also plans to use a
portion of the proceeds to upgrade and re-commission the plant at Wouterspan
in the last quarter of fiscal 2010.
President and CEO John Bristow commented, "Rockwell is well positioned to
benefit from further increases 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 provide the foundation on which to
proceed with growth and expansion plans."
The Company will host a telephone conference call on Monday January 18 at 10:00
a.m. Eastern Time (7:00 a.m. Pacific; 5:00 p.m. Johannesburg) to discuss these
results. The conference call may be accessed by dialing (888) 282-4591 (toll
free) or 719-457-2637 (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 midnight (ET)
January 24, 2010 and can be accessed by dialing (888) 203-1112 (toll free) in
North America or (719) 457-0820 (toll) and using the pass code 2475528.
For further information on Rockwell and its operations in South Africa,
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
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 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 annual Form 20-F filing with the United
States Securities and Exchange Commission www.sec.com and the Company`s
home jurisdiction filings that are available at www.sedar.com. The Company
undertakes no obligation to update forward-looking information if circumstances
or management`s estimates or opinions should change except as required by law.
Canada
17January 2010
Sponsor
Sasfin Capital (a division of Sasfin Bank Limied)
Date: 18/01/2010 09:03:04 Produced by the JSE SENS Department.
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