| Tue 18 Jan 2011, 17:14 | | RDI - Rockwell Diamonds Incorporated - Rockwell announces results for Third |
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RDI
RDI
RDI - Rockwell Diamonds Incorporated - Rockwell announces results for Third
Quarter of Fiscal 2011
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 THIRD QUARTER OF FISCAL 2011
January 14, 2011, Vancouver, BC -- Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX: RDI; JSE: RDI, OTCBB: RDIAF) announces results for the three
and nine months ended November 30, 2010. Currency values are presented in
Canadian dollars unless otherwise indicated.
Overview
Rockwell is focused on the mining and development of alluvial diamond deposits
that yield high value gemstones. During the third fiscal quarter of 2011, the
Company continued to operate three mines, namely Holpan, Klipdam and Saxendrift,
and a bulk sampling evaluation program on the Klipdam Extension property, which
is near to the Klipdam operation. All of these operations are located in the
Northern Cape Province area of South Africa.
Rockwell has an excellent pipeline of other alluvial diamond projects, and
progressed with assessing the potential of the advanced-stage projects for
development. The Company also continues to consider merger and acquisition
opportunities in order to expand its mineral resources, and add to its
production profile.
Underpinned by the strong recovery in diamond prices, Rockwell reported quarter-
on-quarter revenue growth of 44% to $16.4 million for the three months ended
November 30, 2010. The average price achieved in the third quarter of fiscal
2011 was US$1,566 per carat compared to US$1,048 per carat in the previous three
month period. The Company reported an operating profit of $1.8 million in the
quarter under review compared to an operating loss of $614, 000 in the second
quarter.
On a fiscal year-to-date basis, both carat production and prices received have
increased. In the nine months to November 30, 2010, Rockwell produced 22,519
carats of diamonds compared to 19,920 carats produced during the same period in
the previous year. Four tender sales of rough diamonds have been held, and
regular sales of special diamonds exceeding 10 carats were sold for
beneficiation. The Company continued to experience a positive trend in prices
for its better quality stones, particularly for diamonds with good color and
clarity. The average price achieved over the nine months of fiscal 2011 is
US$1,345 per carat, a significant increase from the US$969 per carat received in
the previous year.
During the third quarter of fiscal 2011, Rockwell recovered eight large
gemstones from its Holpan, Klipdam and Saxendrift operations, bringing the total
number of plus 50-carat stones recovered in its current fiscal year to nineteen.
In addition to recovering several high quality white and fancy yellow coloured
gemstones, the following notable diamonds were also produced:
83-carat sawable diamond, with a slight yellow tint with a small spot;
84-carat industrial quality diamond;
63-carat sawable, white diamond with a few spots throughout the stone;
50-carat makeable shape, clean D color diamond; and
72-carat makeable shape, clean H color diamond.
These stones were sold into the Company`s joint venture with Steinmetz Diamond
Group. Once manufactured and sold as polished goods, they will provide
additional profit share revenue to the Company.
Diamond Market
The recovery of the international diamond market gained momentum with prices
continuing to trend towards 2008 levels and jewellery retail sales have been
higher than expectations of major retailers. These sales will support a
reduction in polished inventory and, consequently, could fuel the trade of rough
diamonds.
The price recovery of rough diamonds has outpaced polished stones, as a result
of high polished inventory levels; however, polished prices improved in November
2010, particularly in the 3- to 4-carat range, and creating optimism that the
fundamentals are in place for polished stone prices to close the gap with rough
diamonds. The improved prices of rough diamonds have contributed to the
improving performance Rockwell which is increasing production volumes to meet
perceived shortages in the secondary market.
Acquisitions
Early in fiscal 2011, Rockwell announced that it had embarked on a process to
purchase 74% of Etruscan Diamonds Limited`s ("Etruscan") well known Blue Gum
diamond operation in the Ventersdorp region, South Africa, for an amount not
exceeding ZAR33.5 million (approximately $4.83 million) payable in Rockwell
shares.
The Blue Gum Project hosts the Tirisano alluvial diamond deposit. According to
an October 2009 estimate, the mineral resources comprise 25 million cubic meters
(indicated) with a grade of 2.37 carats/100 cubic meters and 15 million cubic
meters (inferred) with a grade of 2.37 carats/100 cubic meters (see March 11,
2010 news release). With its 0.9 carat average stone size and consistent grades,
the mine`s production is ideally suited to the bridal market and is expected to
help create more regular quarterly production volumes for the Company.
Completion of the acquisition is subject to the South African mining ministry
consent, which is well advanced, securities regulatory approvals (including TSX)
and electric power negotiations. The Company is also making excellent progress
with the engineering and fabrication of a new, low-cost processing plant, and
implementation of a new mine plan. Completion is targeted for early fiscal 2012.
Flawless Diamond Trading House ("Flawless"), which became 20% owned by Rockwell
during the first quarter of fiscal 2011, provides a unique marketing and sales
platform for the Company`s growing diamond production volumes. Flawless is in
the process of integrating a diamond cleaning technology - the first of its kind
to be implemented commercially - that would enhance the appearance of rough
diamonds presented for sale.
Operations Overview
In the three month period ended November 30, 2010:
8,404 carats (November 30, 2009: 7,963 carats) were produced at the
Holpan, Klipdam and Saxendrift operations and the Klipdam Extension bulk
sampling project, including contractor recoveries.
6,414 carats (November 30, 2009: 9,410 carats) were sold at an average
price of US$1,566 per carat (November 30, 2009: US$1,269 per carat).
Tender sales of US$10.0 million plus US$0.8 million of returns from the
beneficiation profit share resulted in diamond revenues of US$10.8 million
(November 30, 2009: US$12.9 million).
An operating profit of $1.8 million (November 30, 2009: $2.5 million) was
reported for the period.
A loss of $1.4 million or $0.003 per share was realized for the period.
In the nine month period ended November 30, 2010:
20,564 carats (November 30, 2009: 20,646 carats) were sold at an average
price of US$1,345 per carat (2009: US$969 per carat).
Tender sales of US$27.6 million plus US$2.3 million of returns from the
beneficiation profit share resulted in diamond revenues of US$29.9 million
(November 30, 2009: US$22.7 million).
An operating profit of $3.7 million (November 30, 2009: operating loss of
$2.3 million) was reported for the period.
A loss of $2.4 million (November 30, 2009: loss of $6.1 million) or
$0.005 (November 30, 2009: $0.026) per share was realized for the period.
Diamond inventories at November 30, 2010 totalled 3,865 carats (2009: 2,800
carats).
At November 30, 2010, the Company`s cash and cash equivalents increased to $3.7
million (November 30, 2009: $2.5 million) with bank indebtedness amounting to
$2.2 million (November 30, 2009: $0.4 million), resulting in net cash holdings
of $1.5 million (November 30, 2009: $ 2.1 million indebted). The Company also
had working capital of $9.2 million (November 30, 2009: deficit of $4.1
million).
Production at the three operations steadily increased, reaching 2,765,415 cubic
meters 1 (November 30, 2009: 2,296,943 cubic meters). The increase was driven
primarily by a 28% increase in production at Saxendrift and processing 214,763
cubic meters at the Klipdam Extension bulk sampling project.
The Company successfully maintained its focus on reducing unit costs through
operational optimization, achieving average operating cash cost at the three
productive operations of US$6.28 per cubic meter, well within the Company`s
target range of US$6.00 to US$7.00 per cubic meter. The average total cash cost
for all the operations over the first nine months of fiscal 2011, including
rehabilitation, lease payments and royalties amounted to US$7.49 per cubic meter
(November 30, 2009: US$8.21 per cubic meter).
Additional details on production, sales and revenues for the quarter, as well as
comparative results for the first nine months of fiscal 2010 are provided below.
For further details, see the Rockwell`s complete financial results and
Management Discussion and Analysis posted on the website and on the Company`s
profile at www.sedar.com.
Production and Sales
The following is a comparison of the current quarter (ended November 30, 2010)
with the quarter ended November 30, 2009.
PRODUCTION
Operation 3 months ended November 30, 2010
Volume Average grade
(cubic Carats (carats per 100
meters)(1) cubic meters)
Holpan 233,029 2,131 0.91
Klipdam 255,250 3,756 1.47
Wouterspan - - -
Klipdam Extension 118,478 946 0.80
Saxendrift 405,551 1,527 0.38
Other(2) 6,383 44 -
Total 1,018,691 8,404 0.83
Operation 3 months ended November 30, 2009
Volume Average grade
(cubic Carats (carats per 100
meters)(1) cubic meters)
Holpan 225,840 1,768 0.78
Klipdam 250,399 2,676 1.07
Wouterspan - 5 0.00
Klipdam Extension - - -
Saxendrift 397,192 3,514 0.88
Other(2) - - -
Total 873,431 7,963 0.91
(1) For conversion from cubic meters or cubes to metric tonnes, the specific
gravity factor for the Holpan, Klipdam, and Klipdam Extension deposits is 1.85
g/cm3, for the Saxendrift and Wouterspan deposits the factor is 2.1 g/cm3. For
the Blue Gum (Tirisano) deposit the factor is 1.80 g/cm3.
(2) "Other" in the Production and Sales tables below refers to an independent
contractor processing gravels and sold with the Company`s tender. These carats
are excluded from grade calculations.
SALES, REVENUE AND INVENTORY
3 months ended November 30, 2010
Value of Average
Sales Sales value Inventory
Operation (carats) (US$) (US$ per (carats)
carat)
Holpan 1,412 1,432,818 1,015 1,102
Klipdam 2,862 5,227,460 1,826 1,565
Wouterspan - - - -
Klipdam Extension 824 708,303 860 387
Saxendrift 1,316 2,676,997 2,034 718
Other(2) 93
Total 6,414 10,045,578 1,566 3,865
3 months ended November 30, 2009
Value of Average
Sales Sales value Inventory
Operation (carats) (US$) (US$ per (carats)
carat)
Holpan 2,556 614,237 240 502
Klipdam 3,527 2,715,963 770 1,054
Wouterspan 14 11,099 788 -
Klipdam Extension - - - -
Saxendrift 3,313 8,598,285 2,595 1,245
Other(2) - - - -
Total 9,410 11,939,584 1,269 2,801
Production and Sales -Nine Month Comparison
The following is a comparison of the first nine months of fiscal 2011 (ended
November 30, 2010) with the nine months ended November 30, 2009.
PRODUCTION
9 months ended November 30, 2010
Operation Volume Average grade
(cubic (carats per 100
meters)(1) Carats cubic meters)
Holpan 675,675 6,259 0.93
Klipdam 708,259 8,801 1.24
Wouterspan - - -
Klipdam Extension 214,763 1,623 0.76
Saxendrift 1,160,335 5,743 0.49
Other2 6,383 93 -
Total 2,765,415 22,519 0.81
9 months ended November 30, 2009
Operation Volume Average grade
(cubic (carats per 100
meters)(1) Carats cubic meters)
Holpan 653,992 4,914 0.75
Klipdam 737,369 7,945 1.08
Wouterspan - 14 -
Klipdam Extension - - -
Saxendrift 905,582 7,047 0.78
Other2 - - -
Total 2,296,943 19,920 0.86
SALES, REVENUE AND INVENTORY
9 months ended November 30, 2010
Average
Operation Sales Value of value Inventory
(carats) Sales (US$ per (carats)
(US$) carat)
Holpan 5,937 7,299,066 1,229 1,102
Klipdam 7,832 8,092,870 1,034 1,565
Wouterspan - - - -
Klipdam
Extension 1,236 987,554 799 387
Saxendrift 5,559 11,281,589 2,029 718
Other2 - - - 93
Total 20,564 27,661,079 1,345 3,865
9 months ended November 30, 2009
Average
Operation Sales Value of value Inventory
(carats) Sales (US$ per (carats)
(US$) carat)
Holpan 5,253 2,052,602 391 502
Klipdam 8,634 5,109,645 592 1,054
Wouterspan 590 280,187 475 -
Klipdam
Extension - - - -
Saxendrift 6,169 12,567,081 2,037 1,245
Other2 - - - -
Total 20,646 20,009,515 969 2,801
INVENTORY (carats)
Rough Diamond
Inventory Rough Diamond
Operation Beginning of Rough Diamond Inventory End of
Period Production Sales Period
Holpan 780 6,259 5,937 1,102
Klipdam 596 8,801 7,832 1,565
Klipdam
Extension - 1,623 1,236 387
Saxendrift 534 5,743 5,559 718
Other2 - 93 - 93
Total 1,910 22,519 20,564 3,865
Mr David Copeland, Chairman of Rockwell Diamonds commented "Underpinned by its
portfolio of three operational alluvial diamond mines as well as a strong
pipeline of advanced alluvial diamond projects for future development, Rockwell
is well positioned to benefit from the continued recovery in the diamond market.
The Company also continues to leverage its low cost operations by optimizing and
increasing the production capacity of its mines to deliver sustainable
production growth and unit cost benefits in line with its long term growth
objectives."
Rockwell will host a telephone conference call on Monday, January 17 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 Toll Free Dial-In 877-381-4602
or Operator Assisted International Dial-In 760-666-3757 or 0 800 051 3806 (toll
free) in the United Kingdom and 0 800 999 567 (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, 2011 and can be accessed by
dialing (800) 642-1687 (toll free) in North America or (706) 645-9291 (toll) and
using the pass code 36658441.
For further information on Rockwell and its operations in South Africa, please
contact:
Stephanie Leclercq, Tielle Communications:
Landline: +27 (0)11 884 9681
Mobile: +27 (0)83 307 7587
Email:rockwelldiamonds@tielle.co.za
No regulatory authority has approved or disapproved the information contained in
this news release.
18 January 2011
(Sasfin Capital)
( A division of Sasfin Bank Limited)
Date: 18/01/2011 17:14:02 Produced by the JSE SENS Department.
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