| Fri 10 Jun 2011, 14:30 | | RDI - Rockwell unveils recapitalization plan and bridge loan to spearhead |
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RDI
RDI
RDI - Rockwell unveils recapitalization plan and bridge loan to spearhead
growth strategy
ROCKWELL DIAMONDS INCORPORATED
(A company incorporated in accordance with the laws of British Columbia,
Canada)
(Incorporation number BCO354545)
(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 UNVEILS RECAPITALIZATION PLAN AND BRIDGE LOAN TO SPEARHEAD GROWTH
STRATEGY
10 June 2011 Vancouver, BC -- Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX:RDI; JSE:RDI, OTCBB:RDIAF) announces a strategic refinancing
plan and that it has entered into an agreement with Daboll Consultants Ltd.,
an affiliate of the Steinmetz Diamond Group ("Steinmetz"), to borrow $2
million under a convertible bridge loan ("Loan").
The loan bears interest at a rate of 5% p.a. and is unsecured. If the Loan is
not repaid after 12 months it will become convertible into common shares of
the Company at $0.0375 per share. Although Daboll is currently an insider of
Rockwell, the Loan is exempt from the minority shareholder approval and
valuation requirements under Canadian securities policy 61-101 because it
represents under 25% of Rockwell`s current capitalization. However, unless
shareholder approval of the Loan is obtained, conversion of the Loan is
limited under TSX rules to a maximum of 52.48 million shares or 10% of
Rockwell`s currently issued share capital of 524.5 million shares.
Rockwell has a long standing partnership with Steinmetz, formalized in
October 2007 through a marketing agreement focused on adding value to
selected large and special high value stones. The arrangement pays Rockwell
90% of the prevailing rough diamond price, with the other 10% being on risk.
It also provides for the Company to participate in 50% of the downstream
added value from polishing and marketing.
Rockwell also updated the market today on its latest diamond tender sales
which amounts to a total of 4,779 carats being sold in the first quarter of
fiscal 2012 for $7.8 million. Over the same period, the Company realized
additional revenues of $1.0 million from its profit share arrangement with
Steinmetz, based on 974 carats beneficiated.
With regard to the value unlocked by this partnership, James Campbell, the
newly appointed CEO of Rockwell highlighted the significance of its
downstream value added initiatives through the partnership with Steinmetz.
"While this is integral to the Company`s diamond value management strategy,
it is also a demonstrable step forward in Rockwell`s contribution to the
South African government`s agenda, encouraging mining companies to support
local beneficiation."
"We hold Rockwell in high regard, both as a strategic partner and supplier of
high value stones to Steinmetz. We also view this Loan as a strategic
investment," says Ori Temkin, Managing Director, Steinmetz. "By providing
this convertible loan, we are showing both our confidence in Rockwell and the
importance of this long term partnership to our organization."
"We are particularly excited to have concluded this bridging Loan which
enables us to continue with two of our key projects as well as continued
optimization of our production profile", said Campbell.
Planned Private Placement
The Loan is an integral step in the planned recapitalization that will see
the Company seek to raise up to $35 million in new financings over the coming
months in a combination of potential private, shareholder and public
placements, the terms of which have not been determined or agreed at this
time. The Company is working with financial intermediaries internationally
with a view to developing its final objectives. Discussions are underway with
a number of interested investors. It is possible that the recapitalization
will require shareholders` approval, including approval to terminate the 2008
shareholder rights plan. If so, this will be sought in conjunction with the
annual meeting tentatively scheduled for early August.
"A recent strategic review enabled our leadership team to identify the
deliverables in order to achieve our target to increase the Company`s
production profile to 10,000 carats per month within six years. We continue
to focus on optimizing our existing operations, while also prioritizing
initiatives to unlock value from our pipeline of high potential projects,"
explains Campbell. "Investing the proceeds from the placement in the ongoing
development of the Tirisano mine and a new plant at Wouterspan is key to
delivering on our strategic plan and the consequential unlocking of
shareholder value."
Share consolidation
As part of the Company`s recapitalization, the board has approved a 15:1
share consolidation (or reverse-split) which is likely to be effected before
the shareholders meeting.
The Daboll loan has received conditional TSX acceptance and will be closed
shortly.
Further announcements are expected to be made in the near future about the
refinancing.
For further information on Rockwell and its operations in South Africa,
please contact
James Campbell
CEO
+27 (0)83 457 3724
Stephanie Leclercq
Investor Relations
+27 (0)83 307 7587
About Rockwell Diamonds:
Rockwell is engaged in the business of operating and developing alluvial
diamond deposits, with a goal to become a mid-tier diamond mining company.
The Company has three existing operations, which it is progressively
optimizing, two development projects and a pipeline of earlier stage
properties with future development potential. Rockwell is also at an advanced
stage of completing the acquisition of the Tirisano property.
Rockwell also evaluates merger and acquisition opportunities which have the
potential to expand its mineral resources and production profile and would
provide accretive value to the Company.
About Steinmetz Diamond Group
`Creators of the world finest diamonds`, With seven decades of expertise and
heritage in the diamond industry, the company has a diversified interest in
the diamond business - providing rough and polished diamonds to our customers
around the world, cutting and polishing rough diamonds in Botswana, South
Africa, Namibia and New York.
Steinmetz is known for its leadership in rare and exceptional diamonds as
well as creation of unique high-end jewelry.
Some of the famous diamonds crafted by Steinmetz are the 203.04 carats, De
Beers Millennium Star and the magnificent Steinmetz Pink - 59.60 carats,
flawless fancy vivid pink diamond.
The group marketing arm has been innovative and creative through special
exhibitions at the Smithsonian in Washington as well as `Diamonds` at the
Natural History museum in London. Steinmetz is a proud sponsor of Formula 1
team Vodafone McLaren Mercedes and holds annually the Monaco GP Flawless
Engineering Weekend.
The main administrative offices are based in Geneva, Switzerland with a
global presence in Antwerp, Tel Aviv, London, New York, Chicago, Dubai,
Mumbai, Hong Kong, Johannesburg, Gaborone and Windhoek.
For more information, visit www.steinmetzdiamonds.com
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; 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. In particular there can b e no assurance that
refinancing funds will be available to Rockwell on acceptable terms or any
terms at all.
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.
Canada
10 June 2011
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 10/06/2011 14:30:01 Produced by the JSE SENS Department.
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