| Fri 16 Jul 2010, 13:41 | | RDI - Rockwel Announces Fiscal 2011 First Quarter Results |
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RDI
RDI
RDI - Rockwel Announces Fiscal 2011 First Quarter 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 ANNOUNCES FISCAL 2011 FIRST QUARTER RESULTS
July 15, 2010, Vancouver, BC - Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX:RDI; JSE:RDI, OTCBB:RDIAF) announces financial results for
the three months ended May 31, 2010. 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 has continued to operate three mines - Holpan, Klipdam and
Saxendrift - during its first fiscal quarter of 2011, and has initiated a
bulk sampling program on the Klipdam Extension property to evaluate this
property, which is near to the Klipdam operation. All of these operations
are located in the Northern Cape Province area of South Africa.
A total of 7,316 carats of diamonds were produced during the quarter,
including a 66-carat stone recovered at the Company`s Holpan mine and 124-
carat and 145-carat stones recovered from production at its Saxendrift mine.
The large diamonds were sold into Rockwell`s joint venture agreement with
Steinmetz Diamond Group ("SDG") to be manufactured and sold as polished
goods, and will provide additional profit share revenue to the Company.
One tender sale of rough diamonds was held during the quarter. The Company
received significantly improved prices for its better quality stones,
particularly for diamonds with good color and clarity. The average price
achieved was US$1,611.11 per carat.
DIAMOND MARKET
The prices received for the rough diamonds its recent tender are comparable
to those achieved during calendar 2008, indicating the diamond business has
improved over the past eighteen months. Other evidence of this recovery
includes an increasing demand for larger stones. In addition, polished
diamond prices have also improved in calendar 2010, although the increase in
price of polished stones on a percentage basis is still less than for rough
diamonds. The retail sector has shown a year-on-year increase in trade but
has not yet fully recovered. Margins on polished stones are still small
because of high rough diamond prices. Yet credit terms have improved from the
exceptionally high terms offered to the industry prior to the credit crisis
in late 2008, and this should increase the purchasing power of the retail
sector.
OPERATIONS AND PROJECTS
During the first two months of the quarter Rockwell`s three operations
underperformed against budgeted production targets, but exceeded budgeted
carats in May. This was primarily the result of weather factors and high
sand contents in the ore bodies, which impeded plant throughput and
processing capacity. Remedial actions have been put in place. The Company
has implemented the construction of an in-pit screening facility at
Saxendrift that will remove the fine sand fraction and oversize gravel
component and produce a pre-concentrate ore that will be transported to the
processing plant. This will result in cost savings in respect of transport
and diesel greater processing capacity through the plant, and quicker
rehabilitation thereby providing additional savings.
In May, the Company pre-commissioned its Klipdam Extension bulk sampling
project to the east of the Klipdam mine. This project will evaluate alluvial
diamond properties that the Company holds in the vicinity of Klipdam with a
view to developing further production capacity from properties which yield
good results in terms of grade and diamond value. The Company is also
proceeding with the design, re-engineering of the Wouterspan processing plant
to build a high volume low cost mining and processing operation with greater
production capacity Saxendrift. The Company plans to delay the construction
and re-commissioning of Wouterspan to ensure that front end engineering
enhancements made at Saxendrift are incorporated into the new Wouterspan
plant design. These will ensure greater throughput capacity and lower
operating costs. At the same time Rockwell aims to fast track the
acquisition of the Tirisano project (see below) to provide additional carat
production in place of production from Wouterspan.
OPERATIONS OVERVIEW
In the three month period ended May 31, 2010:
- 7,368 carats were produced at the Holpan, Klipdam and Saxendrift operations
and the Klipdam Extension bulk sampling project, including contractor
recoveries.
- 4,927.46 carats were sold at an average price of US$1,611.11 per carat.
- Tender sales of US$7.9 million plus US$0.3 million returns from
beneficiation profit share (the joint venture with the Steinmetz Group, where
rough stones are polished and sold and the profit shared) resulted in diamond
revenues for the quarter of $8.5 million (US$8.2 million).
- Cost of sales including amortization, depletion and impairment charges
totalled $6.0 million. A fair value adjustment on investments of $0.1 million
was recognized in the quarter. This resulted in a combined amortization,
depletion and impairment charge of $3.1 million for the quarter.
- An operating profit of $2.5 million was realized for the period.
- Net general and administrative expenses amounted to $1.4 million, travel
and conference expenses amounted to $0.1 million, interest expenses amounted
to $0.1 million and future income tax expense was $0.3 million.
- A loss of $0.03 million or $0.00 per share was realized for the period.
- Diamond inventories at May 31, 2010 totalled 4,351 carats.
- Production at the three operations steadily increased, reaching 756,476
cubic metres. The Company`s overall increase in production has been
significantly influenced by the expanded capacity of the Saxendrift plant.
- The Company`s drive to cut costs and optimize its operations continues to
yield results. The average operating cash cost over the quarter for the
three operations was US$6.68 per cube, which is within the US$6.00 - US$7.0
per cube range that was forecasted for fiscal 2011.
- The average total cost for all the operations over the first quarter of
fiscal 2011, including rehabilitation, lease payments and royalties was
US$9.95 per cube. These costs include the pre-commissioning of the Klipdam
Extension bulk sampling project.
Note: Rockwell has elected to report its production and cost data in terms of
cubic metres or cubes rather than per tonne as was the case in the past.
This is in line with conventional industry standards for alluvial deposits.
For conversion from cubic metres or cubes to metric tonnes, the specific
gravity factor for the Holpan, Klipdam, and Klipdam Extension deposits is 1.8
g/cm3, for the Saxendrift and Wouterspan deposits the factor is 2.1 g/cm3,
and for the Blue Gum (Tirisano) deposit near Ventersdorp (see below) the
factor is 1.80 g/cm Additional details on production, sales and revenues for
the quarter and with comparative results for the first quarter of fiscal 2010
are provided below. Complete financial results and the Company`s Management
Discussion and Analysis are posted on the website and on the Company`s
profile at www.sedar.com.
PRODUCTION AND SALES - QUARTER COMPARISON
PRODUCTION
Operation 3 months ending May 31, 3 months ending May 31,
2010 2009
Volume Carats Average Volume Carats Average
(cubic grade (cubic grade
meters) (carats meters) (carats
per 100 per 100
cubic cubic
meters) meters)
Holpan 199,030 2,016 1.01 190,660 987 0.52
Klipdam 216,083 2,950 1.37 210,710 1,608 0.76
Wouterspan - - - - - -
Klipdam 9,052 3 0.03 - - -
Extension
Saxendrift 332,311 2,346 0.71 236,963 1,427 0.6
Other* - 53 - - - -
Total 756,476 7,368 0.97 638,333 4,022 0.63
SALES AND REVENUE
Operation 3 months ending May 31, 2010
Sales (carats) Value of Average Inventory
Sales value (carats)
(US$) (US$ per
carat)
Holpan 1,514 1,475.62 1,282
2,233,774
Klipdam 1,390 623.98 2,156
867,695
Wouterspan - - - -
Klipdam - - - 3
Extension
Saxendrift 1,970 2,431.63 910
4,790,871
Other* 53 876.13 -
46,321
Total 4,927 7,938,660 1,611.11 4,351
SALES AND REVENUE
3 MONTHS ENDING MAY 31, 2009
Operation Value of Sales Average value Inventory
(US$) (US$ per carat) (carats)
316,344 276.41 683
Holpan 1,183,274 478.50 877
Klipdam 269,087 479.07 14
Wouterspan - - -
Klipdam Extension 1,069,744 1,141.36 857
Saxendrift - - -
Other* 2,838,449 554.79 2,431
Total
SALES AND REVENUE
Operation 3 months ending May 31, 2010
Sales Value of Average value Inventory
(carats) Sales (US$) (US$ per (carats)
carat)
Holpan 1,514 2,233,774 1,475.62 1,282
Klipdam 1,390 867,695 623.98 2,156
Wouterspan - - - -
Klipdam - - - 3
Extension
Saxendrift 1,970 4,790,871 2,431.63 910
Other* 53 46,321 876.13 -
Total 4,927 7,938,660 1,611.11 4,351
SALES AND REVENUE
3 months ending May 31, 2009
Operation Value of Sales Average value Inventory
(US$) (US$ per (carats)
carat)
316,344 276.41 683
Holpan 1,183,274 478.50 877
Klipdam 269,087 479.07 14
Wouterspan - - -
Klipdam Extension 1,069,744 1,141.36 857
Saxendrift - - -
Other* 2,838,449 554.79 2,431
Total
*Other refers to an independent contractor processing gravels and sold with
the groups tender. These carats are excluded from grade calculations.
PLANS MOVING FORWARD
In March 2010, the Company signed a term sheet for purchase 74% of the
Tirisano or Blue Gum diamond operation, located in the Ventersdorp region of
South Africa, from Etruscan Diamonds Ltd for an amount not exceeding South
African Rand 33.5 million (approximately $4.65 million), payable in Rockwell
shares. The Blue Gum property hosts an alluvial diamond deposit with 25
million cubic meters of indicated mineral resources and 15 million cubic
meters of inferred mineral resources, both at an estimated grade of 2.37
carats/100 cubic meters (see Rockwell March 11, 2010 news release);
operations are currently on care and maintenance.
The higher grade of the Tirisano deposits, compared to the low grades of
Rockwell`s Northern Cape operations, and large volume resources will
facilitate high production rates and greater consistency of carat production,
thereby smoothing the Company`s revenue stream. Completion of the acquisition
is subject to a number of conditions including South African mining ministry
consent, securities regulatory approvals including TSX, satisfactory due
diligence and project development financing and electric power negotiations.
The Rockwell shares to be issued will be subject to escrow, resale and voting
restrictions and will not materially affect control. Completion is targeted
for the third calendar quarter.
President and CEO John Bristow commented, "The Company continues to implement
initiatives to improve operating and costs structures in all parts of its
business which will form the foundation for Rockwell`s growth and acquisition
plans. The objective is to create a gemstone producer of about 10,000 carats
per month in the long term. Plans to fund and achieve this target will be
presented to shareholders in due course."
Rockwell will host a telephone conference call on Monday, July 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 888-349-9587
(toll free) or 719-457-2713 (toll) in North America, 0 808 101 1147 (toll
free) in the United Kingdom and 0 800 980 989 (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) July 26, 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 5136455
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.
16 July 2010
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 16/07/2010 13:41:01 Produced by the JSE SENS Department.
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