| Tue 31 May 2011, 16:19 | | RDI - Rockwell Diamonds Incorporated - Rockwell updates its Mineral Resources |
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RDI
RDI
RDI - Rockwell Diamonds Incorporated - Rockwell updates its Mineral Resources
and Mineral Reserves
ROCKWELL DIAMONDS INCORPORATED
(A company incorporated in accordance with the laws of British Columbia, Canada)
(Incorporated number: BC0354545)
(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
May 31, 2011
Rockwell updates its mineral resources and mineral reserves
Announces probable reserves at Saxendrift
Preliminary assessments of Wouterspan, Tirisano and Niewejaarskraal
May 30, 2011, Vancouver, BC - Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX: RDI; JSE: RDI; OTCBB: RDIAF) is pleased to announce the
release of updated mineral resource estimates for its alluvial diamond
deposits on its properties in South Africa.
At the time that Rockwell was founded in 2006, the Company started developing a
proprietary resource management system which is directly applicable to the
specifics of alluvial diamond deposits. It is based on the National Instrument
43-101 regulations for the statement of mineral resources and reserves but
refined to be specific to alluvial deposits. The Company`s system is a
conservative and consistent method of declaring its mineral resources and
mineral reserves. The grades and diamond values, which have been calculated
using this methodology during the last four years, have been shown to accurately
reflect the output of the mines. The results of these studies are summarized in
the tables attached to this release and further details are provided in the
Company`s Annual Information Form and technical reports that have been filed
today.
Mark Bristow, Director and acting CEO, Rockwell explains that: "we embarked on
this process when Rockwell first started as a diamond company. The progress is
such that today, for the first time, we have stated an estimate of mineral
reserves: probable reserves of 4.9 million cubic metres at Saxendrift. This is
the culmination of a pre-feasibility study conducted during 2009 and 2010."
"Over the past five years, our resource base has grown from some 12.3 million
cubic metres of Inferred Resources to the current 82.1 million cubic metres of
inferred resources, 35.1 million cubic metres of indicated resource and 4.9
million cubic metres of probable reserves in our latest NI 43-101 statements. We
have achieved this through extensive exploration of our existing projects as
well as the purchase of other high potential properties. We have conducted
preliminary economic assessments at our Wouterspan, Niewejaarskraal and Tirisano
projects, and are encouraged by the potential returns of these properties." adds
Bristow.
The Company, which currently produces some 2,500 carats of large gem quality
diamonds per month has set itself the objective of growing its production to
10,000 carats per month within five years. It has the capacity to deliver this
growth through organic means, based on its significant resource base and is
currently reviewing various options to fund these capital investments.
Rockwell owns 14 prospecting rights comprising some 30,000 hectares of alluvial
diamond potential in South Africa. Holpan and Klipdam, which are currently being
consolidated into a single operation, are located in the Northern Cape.
Saxendrift is located in the Middle Orange River in the Northern Cape Province.
In addition, the Company is in the final stages of acquiring and redeveloping
the Tirisano mine, located in Ventersdorp in the North West Province. The mine
will come on stream in the second half of fiscal 2012. Other significant
deposits include Wouterspan and Niewejaarskraal, which the Company plans to re-
commission within the next two years.
Rockwell`s mineral resource statement is summarized below:
ROCKWELL MINERAL RESERVES & RESOURCES
PROPERTY CATEGORY VOLUME (m3) VOLUME (m3) GRADE
(ct/100m3)
NOV 30 2010 FEB 28 2011*
Probable* 4,859,900 4,570,40000 0.50
Saxendrift/
Indicated 1,774,600 NC 0.66
Kwartelspan
Inferred 5,986,000 NC 0.56
Indicated 2,091,200 1,907,900
Klipdam 1.21
Inferred 949,000 NC
Indicated 517,800 415,600
Holpan 0.95
Inferred 527,000 NC
Indicated 404,700 NC
Erf 404 0.63
Inferred 127,000 NC
Rietputs Inferred 782,000 736,000 0.76
Indicated 5,025,500 NC
Wouterspan 0.70
Inferred 37,774,000 NC
Niewejaarskraal Inferred 20,630,000 NC 0.84
Indicated 25,279,900 NC
Tirisano** 2.37
Inferred 15,334,000 NC
Estimates were done as at November 30, 2010. These have been reconciled to
February 28, 2011 by including material removed by trial mining and bulk
sampling during the fourth quarter (Dec 1-Feb 28).
NC - denotes no change. "Value" denotes the average value of the sales of
diamonds during sampling. Mineral resources that are not mineral reserves do not
have demonstrated economic viability.
* The Saxendrift probable mineral reserves are exclusive from the indicated
mineral resources.
** Tirisano acquisition is not yet complete as the mining rights have not yet
been ceded to Rockwell.
Note that Rockwell also holds the Zwemkuil Project, including the Zwemkuil,
Mooidraai and Holsloot properties, which was also reviewed during the 2011
fiscal year. Although a significant exploration target exists, there has not
been sufficient work done to estimate mineral resources as this time.
Estimates were completed by Rockwell`s Manager, Resources, G.A. Norton, (Pr.
Sci. Nat.), a qualified person who is not independent of the Company and
reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.). Dr Marshall, a qualified
person who is independent of the Company, is responsible for the estimates
and has reviewed and approved the contents of this release.
Further details of the resource estimates and the studies described below are
provided in technical reports which are filed on the Company`s profile at
www.sedar.com.
The following studies were done in South African Rand (ZAR) and US dollars
(USD), and used a conversion rate of 6.8 ZAR:1 USD.
Saxendrift Prefeasibility Study
The Saxendrift property is located on the south bank of the Orange River in the
Herbert district of the Northern Cape Province, some 50 km southwest of Douglas
and some 160 km from Kimberley. Rockwell holds a 74% interest in the property.
The other 26% is held by the Company`s Black Economic Empowerment partner.
During 2009/2010 trial-mining was initiated on Saxendrift as part of a study to
determine what portion of the gravel resource could be converted to a reserve.
Capital costs of plant and equipment have been determined through formal
quotations acquired from suppliers. Operational parameters and operating costs
were determined both during the bulk-sampling and trial-mining phases on
Saxendrift, and from Rockwell`s experience on its other operations. It is
believed that the detail and accuracy of this study is at a pre-feasibility
level.
The mine plan involves continued mining on the Saxendrift A terrace during
2011/2012 while detailed exploration is undertaken on the C terrace. The
preferred method of mining the alluvial gravels is strip- mining in a shallow,
opencast operation. The diamondiferous alluvial gravels are relatively thin,
unconsolidated to semi-consolidated, tabular bodies with generally less than 20
metres overburden. The upper 2-3 metres of the sequence is calcreted to varying
degrees - usually to laminar or hardpan levels. As a result, prior to
excavation, the sample block needs to be blasted, which breaks up the hard
calcrete carapace without damaging diamonds, which is then stripped off using
hydraulic excavators. In various areas of the property varying depths of
calcretisation has meant that some of the upper gravel layers are also highly
cemented. In order to mitigate against this problem, prior to excavation, the
gravels are ripped by a bulldozer which effectively liberates the gravels (and
the diamonds) from the calcrete matrix. The disaggregated material is then
loaded by excavator, onto articulated dump trucks (ADT`s) and transported to the
screening plant where some 23% of the gravel is removed.
The processing plant, which was commissioned in late 2008, is comprised of four
scrubbers followed by four 18 ft rotary pan-plants and has a design plant-
throughput of 800 tonnes per hour. With an expected annual treatment of
1,800,000 cubic metres some 9,000 carats of diamonds are expected to be
recovered through a bank of ten FlowSort machines and an electronic grease
table, as well as final hand-sort in a glove-box under secure conditions.
On the basis of the trial-mining on terrace A and subsequent pre-feasibility
study, probable reserves were estimated for the Saxendrift Mine. The life-of-
mine, based on these reserves, at the proposed rate of mining of 150,000 cubic
metres per month is estimated at 2.7 years. Since the plant has been built no
additional capital expenditure has been budgeted for the outstanding life of
mine. Operating costs have been budgeted at ZAR7.5M/month. The net present value
(NPV) at a discount rate of 20% is USD9.8 million.
The key parameters and results from the mine study are tabulated below:
Key Parameters Key Results
Volume of gravel Cubic Metres
Probable Reserve 4,859,900
0.5 ct/100m3
Average Grade
Average sales value (2011) USD2,029/ct
Proposed monthly throughput 150,000m3
Proposed mine life (reserves only) 2.7
ZAR43/m3
Operating Costs (2011)
Mining Royalties 0.5-7%*
Capex required to bring mine into production *ZAR 88,237,005
Earthmoving fleet budget N/A
Tax 28%
NPV at discount values of:
15% (reserves only) ZAR 75,082,638
20% (reserves only) ZAR 65,480,170
25% (reserves only) ZAR 57,464,170
*Royalties vary according to the profitability of the mining company, subject to
a minimum rate of 0.5% and maximum rate 7.0% for diamonds.
Wouterspan Preliminary Assessment
The Wouterspan Property is located on the northern bank of the Orange River,
about 100 km west of Douglas in the Northern Cape Province, South Africa. It is
across the river from the Saxendrift mine. Rockwell holds 75% interest in the
property. The other 27% interest is held by a Black Economic Empowerment
partner.
Rockwell conducted bulk sampling and trial mining activities at Wouterspan until
November 2008 and has retained the property on care and maintenance since that
time. Since the geology is similar to the adjacent Saxendrift mine.
A preliminary assessment of the project was done based on the indicated and
inferred mineral resources at 30 November 2010. The diamond value used in the
statement is the average received for +5,500 carats of diamonds sold from the
adjacent Saxendrift mine (USD2,029 per carat) during fiscal 2010. The assessment
is preliminary in nature, and includes inferred mineral that are considered too
speculative geologically to have the economic considerations applied to them
that would enable them to be categorized as mineral reserves, and there is no
certainty that the preliminary assessment will be realized.
Wouterspan is located in the same area as Saxendrift, so the geology is similar
and similar mining methods are expected to be employed. Excavation of the
gravels is not planned to change from the standard techniques applied on all of
Rockwell`s alluvial diamond mines - excavation by hydraulic excavator followed
by transport of gravel to the plant site in mine haul trucks.
The proposed processing plant will be a high-volume, low-cost plant,
specifically designed to deal with the peculiarities of the gravels being
processed. The plant will comprise 8 (or 12) 18` rotary pan plants and trial-
mining will investigate the efficiency of sending selected size fractions to
selected pans, namely +2-6mm,-6-12mm and +12-32mm. This is expected to greatly
improve the recovery efficiencies of the pans. The plant is planned to be
automated to the extent that optimal production, along with minimal downtime and
maintenance, can be attained.
The mine plan has been developed in two phases - phase 1, comprising plant
throughput of 180,000 cubic metres per month, for a period of some 24 months,
followed by phase 2, to achieve at throughput at some 340,000 cubic metres per
month. The overall mine life is 10 years. The net present value (NPV) at a
discount rate of 20% is USD126.4 million.
Key parameters and results of the preliminary assessment are summarized below:
Key Parameters Key Results
Volume of Gravel Cubic Meters
Indicated resources 5,025,500
Inferred resources 37,774,000
0.7 ct/100m3
Average Grade
Average sales value USD2,029/ct
340,000 m3
Proposed monthly throughput
Proposed mine life (indicated and inferred resources) 10
ZAR45/m3
Operating Costs
Mining Royalties Variable *
ZAR122,000,000
Capex required to bring mine into production
Tax 28%
IRR 135%
NPV at discount values of:
15% ZAR1,199,219,358
20% ZAR885,000,000
25% ZAR667,000,000
*Royalties vary according to the profitability of the mining company, subject to
a minimum rate of 0.5% and maximum rate 7.0% for diamonds.
Niewejaarskraal Preliminary Assessment
The Niewejaarskraal project is located on the south bank of the Orange River in
the Herbert district of the Northern Cape Province, some 57 km southwest of
Douglas and some 170 km from Kimberley. The property is a past producer that was
acquired by Rockwell in 2009. It is held 74% by Rockwell and 26% by the Black
Economic Empowerment partner.
During 2008, Rockwell reprocessed the drilling data from a prior operator and
re-
estimated the resources. Since no processing has taken place on Niewejaarskraal
in the period 2009-2010, the resource volume and grade figures remain unchanged
as at November 30, 2010. However, during FY2010, Rockwell sold +5,500 carats of
diamonds from the adjacent Saxendrift mine on the open market for USD2,029 per
carat. Until a reasonable parcel of stones have been recovered from the
Niewejaarskraal mine and sold, this value will be accepted at an Inferred
resource classification level.
During 2009/2010 Rockwell has proceeded with plans to complete trial-mining and
other studies. Niewejaarskraal is located in the same area as Saxendrift and
Wouterspan, so the geology is similar and similar mining methods are expected to
be employed.
There is an existing processing plant on Niewejaarskraal, but it will need to be
completely re-furbished and upgraded prior to re-commissioning. The current
plan, given that Rockwell is currently in the process of re-opening the
Wouterspan and Tirisano mines, is for the Niewejaarskraal mine to remain on care
and maintenance for the period to fiscal 2013.
The proposed new processing plant will be a high-volume, low-cost plant,
specifically designed to deal with the peculiarities of the gravels being
processed. The plant will comprise 8 (or 12) 18` rotary pan plants and trial-
mining will investigate the efficiency of sending selected size fractions to
selected pans, namely +2-6mm, -6-12mm and +12-32mm. This is expected to greatly
improve the recovery efficiencies of the pans. The plant is planned to be
automated to the extent that optimal production, with minimal downtime and
maintenance can be attained. The mine plan has been developed to run at some
340,000 cubic metres per month. Anticipated costs for re-commissioning the mine
in 2013 is ZAR130 million, with an anticipated ZAR3 million budgeted for on-
going capital expenditures.
A preliminary assessment was completed, at a proposed throughput of 340,000
cubic metres per month at full production, the preliminary estimation of mine
life is 6 years, based on the inferred mineral resources currently outlined at
Niewejaarskraal. The net present value (NPV) at a discount rate of 20% is
USD52.7 million.
This assessment is preliminary in nature, and includes inferred mineral
resources that are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as
mineral reserves, and there is no certainty that the preliminary assessment will
be realized.
The key parameters and results are tabulated below:
Key Parameters Key Results
Volume of gravel Cubic Metres
Inferred Resources 20,630,000
0.84ct/100m3
Average Grade
Average sales value USD2,029/ct
340,000m3
Proposed monthly throughput
Proposed mine life (inferred resources) 6 years
ZAR45/m3
Operating Costs
Mining Royalties 0.5-7%
Capex required to bring mine into production ZAR130,000,000
Earthmoving fleet budget N/A
Tax 28%
IRR 123%
NPV at discount values of:
15% ZAR 450,436,454
20% ZAR 368,824,670
25% ZAR 304,043,501
Royalties vary according to the profitability of the mining company, subject to
a minimum rate of 0.5% and maximum rate 7.0% for diamonds.
Tirisano Preliminary Assessment
The Tirisano Project is a past producer that has been on care and maintenance
since 2008. The 10,805.57 ha property is located some 35 km due north of the
town of Ventersdorp, in the Northwest Province approximately 150 km west of
Johannesburg. Rockwell is acquiring the Project from Etruscan Diamonds (see news
release dated March 24, 2010). The acquisition will be completed once the mining
rights have been ceded to Rockwell.
Mining from the Tirisano project by open cast methods took place from 2002 -
2008 by the previous operator. Prospecting, geophysical surveys, drilling
comprising 2,391 boreholes, totalling 53,576 metres, and bulk-sampling
activities have been taking place since 1979.
Tirisano occurs in a karst environment where the dolomite walls of the host-rock
are vertical. The mode of gravel deposition is not typical fluvial alluvial, but
periodic subsidence has taken place during deposition which has been ongoing
since, at least, the Mesozoic period, resulting in a build-up of a very thick
gravel sequence. The gravel stratigraphy comprises an upper gravel horizon and a
lower gravel unit that are both economically diamondiferous, separated by a sub-
economic fine-grained pebble-clay unit. Mineralisation is confined to the gravel
packages in-filling karst caverns etched out of the chert-rich dolomites of the
Malmani Group. The clay-poor Lower Gravel Package and Upper Gravel Package units
are considered to be the major exploration targets as the diamond grades
encountered in these units have, historically, supported commercial mining
ventures.
A preliminary assessment, based on both indicated and inferred resources, has
been completed in support of the planned trial-mining operation. The assessment
is preliminary in nature, and includes inferred mineralization that is
considered too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral reserves,
and there is no certainty that the preliminary assessment will be realized.
The preferred method of extracting alluvial gravels at Tirisano is by means of
opencast mining. The diamondiferous deposits range from thin tabular horizons to
thick (+60 metres) unconsolidated to semi consolidated, gravel units infilling
palaeokarst hollows and sinkholes.
Rockwell decided to re-engineer the entire concentration and recovery process
before putting the mine back into production. Numerous mineralogical and
metallurgical studies were initiated in order to determine the most effective
methods for processing the clay-rich gravels that can cause recovery
inefficiencies. The Company is constructing a processing facility that consists
of 8 16 foot rotary pans that includes an over designed front end to be able
effectively break down the clay inherent in the ore body. Since no diamonds have
been sold from the Tirisano mine, no current values are available and the early
2008 value of USD606 carat has been applied for the resource estimate.
Nevertheless, sales values of diamonds from the district are in the USD700 per
carat range, and can be expected during 2011.
At a proposed 180,000 cubic metres per month throughput, the preliminary
estimation of mine life is 11.7 years, based on indicated mineral resources
only. An additional 7.1 years may be added if inferred mineral resources are
included, resulting in a total expected mine life of 18.8 years. Rockwell has
determined that the NPV of the Tirisano project at a 15% discount rate is
USD 32.3 million. The net present value (NPV) at a discount rate of 20% is
USD21.8 million.
The key parameters and results are tabulated below:
Key Parameters Key Results
Volume of gravel Cubic Metres
Indicated Resources 25,279,800
Inferred Resources 15,334,000
2.37ct/100m3
Average Grade
Average sales value USD606/ct
180,000m3
Proposed monthly throughput
Proposed mine life 18.8years
ZAR49/m3
Operating Costs
Mining Royalties 0.5-7%
Capex required to bring mine into production ZAR73,000,000
Earthmoving fleet budget N/A
Tax 28%
IRR 59%
NPV at discount values of:
15% ZAR 226,070,559
20% ZAR 153,092,925
25% ZAR 105,432,364
*Royalties vary according to the profitability of the mining company, subject to
a minimum rate of 0.5% and maximum rate 7.0% for diamonds.
During 2011, trial-mining and continued pre-feasibility studies are planned to
determine the mine-plan which will be implemented to put the Tirisano mine back
into full production. During this time, it is expected that the planned
modifications to the plant will result in improved grade recoveries. Further,
the sale of at least 5,000 carats on the open market will result in a realistic,
current valuation of the diamonds.
For further information on Rockwell and its operations in South Africa, please
contact
Mark Bristow Director and acting CEO +44 778 071 1386
Stephanie Leclercq Investor Relations +27 (0)83 307 7587
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.
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.
Canada
31 May 2011
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 31/05/2011 16:19:01 Produced by the JSE SENS Department.
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