| Thu 27 Oct 2011, 16:10 | | RDI - Rockwell Diamonds Incorporated - Rockwell provides update on Tirisano |
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RDI
RDI
RDI - Rockwell Diamonds Incorporated - Rockwell provides update on Tirisano
production startup and midamines arbitration
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: CA77434W2022
Share code on the TSX: RDI CUSIP Number: 77434W103
Share code on the OTCBB: RDIAF
ROCKWELL PROVIDES UPDATE ON TIRISANO PRODUCTION STARTUP AND MIDAMINES
ARBITRATION
October 27, 2011 Vancouver, BC - Rockwell Diamonds Inc. ("Rockwell" or the
"Company") (TSX: RDI; JSE: RDI; OTCBB: RDIAF) announces production at the
Tirisano Mine project has commenced and results of Midamines arbitration.
Tirisano startup
The Company is pleased to report that having completed the acquisition of the
Tirisano project, with effect from September 1, 2011, production has now
commenced at the mine. October 18, 2011 was the first day of full production at
Tirisano. Management is confident that production will ramp up to the full
capacity of 90,000 m3 per month by the end of October 2011. Continuous
operations (`contops`) have been implemented since start up.
The issues revealed from a review of the plant in June 2011 have been fully
addressed, and the Holpan mine`s containerized recovery plant has been relocated
to Tirisano, and will provide a completely hands off proven recovery process. In
addition, the barrel screen from the Company`s Wouterspan project (both the
Holpan and Wouterspan projects are currently on care and maintenance) has been
installed to double the front end capacity as an interim solution.
During the remainder of fiscal 2012, the focus at Tirisano will be on fine
tuning mining and plant efficiencies and continuing to develop long term
solutions for the front end processing, as well as working on concept designs to
increase the plant`s capacity.
While the Tirisano mine is of strategic importance to Rockwell`s long term
growth objectives, it is also expected to contribute positively to the socio-
economics of the Ventersdorp area. A total of 208 full time jobs and 17
contractor positions have been created, 60% of which are from the local Mogopa
community that has a 26% holding in the mine as required by South Africa`s black
economic empowerment laws. In support of the Company`s objective to provide
equal opportunities, 11 women are employed on the mine who will be trained as
machinery operators. The Company is committed to initiatives that attract women
to mining, which reflects the South African Government`s requirements for female
representation in direct mining activities.
The Company has also carried out significant work relating to the safety
measures at the mine to comply with the Mine Health & Safety Act (MHSA). The
operational team at Tirisano, with the support and guidance of the executive
team, remains committed to maintaining and improving the mine`s safety
standards.
The quality and price of the stones recovered at Tirisano during the
commissioning and recovery testing phase were encouraging, and exceeded that
which was achieved by the mine`s previous operators. All carats recovered will
be graded and sold at the Company`s next diamond tender early in November 2011.
Tirisano Mine is hosted in a unique geological environment that being karst
derived sinkholes. The Tirisano alluvial gravels found on the mine are different
from Rockwell`s other mines as the gravels have been captured and preserved in
vast sinkholes compared to the Palaeo Channels which are prevalent at its
properties in the Northern Cape. These gravels have a grade that is
approximately five times higher than those in the Northern Cape and the spatial
distribution of the diamonds is far more consistent. The characteristics of the
property can be likened to an alluvial kimberlite in terms of the hour glass
shape of the deposit and features of the in situ diamonds.
"Having completed the testing phase, we are confident that the historically
higher grades and more consistent diamond distribution at Tirisano will make a
positive impact on the Company`s objective to ramp up production", explained
James Campbell, CEO, Rockwell. "With a life of mine of approximately 30 years at
Tirisano (1) at the current production capacity, we are confident that our
investment in commissioning this new plant will create long term value for all
our stakeholders."
Midamines arbitration results
Rockwell`s indirect subsidiary, Durnpike Investments (Proprietary) Limited`s
("Durnpike")`s interest in the Kwango River Project was constituted by an
agreement ("Midamines Agreement" or "Agreement") in 2006 with Midamines SPRL
("Midamines"), the holder of the exploitation permit on the Kwango River
Project. It was also agreed that Midamines would act as independent contractor
on to manage and carry out exploration activities and, potentially, mining
activities in a certain portion of the concession area ("Contract Area").
Under the Midamines Agreement, Durnpike agreed to make minimum royalty payments
to Midamines, in return for which it undertook several obligations, including
that of procuring and facilitating Durnpike`s access to the Kwango River Project
site. These annual royalty payments amounted to a minimum of US$1.2 million
(commencing on December 31, 2007). During the first quarter of 2008, the
Midamines Agreement was amended, inter alia, giving Durnpike access to the
entire concession area, as opposed to the limited Contract Area for a
consideration of $0.6 million and Midamines waived its right to payment of the
first royalty payment on December 31, 2007.
During 2008, Rockwell and/or Durnpike cancelled the Agreement as a result of
breach of material provisions thereof, and a dispute arose in relation to the
Company`s entitlement to do so. The dispute was referred to arbitration.
Midamines claimed the payment of the final amount of $41.1 million, while
reserving the right to increase the claim to $68.073 million. Rockwell and/or
Durnpike instituted a counter-claim in the final amount of approximately $6.6
million for equipment, start-up and acquisition costs and possible lost
earnings.
The Company has now received the results of the arbitration process. Rockwell
and/or Durnpike were directed to pay Midamines an amount of US$ 1.2 million with
each party paying its own costs. While management is disappointed at the outcome
of the arbitration, having vigorously argued against the claims made by
Midamines and robustly defended its position throughout the hearings, the
Rockwell Board is supporting the decision to conclude the matter in line with
the findings.
Commenting on the matter, Mr Campbell said "The settlement amount that has been
prescribed by the agreement is a small fraction of Midamines` total claim of
$48.0 million (plus interest since 2008). It will not materially impact the
Company`s capacity to progress with our strategic growth projects. Having
reached a conclusion on this process, which demanded significant management time
and attention, our executive team can now focus on implementing its diamond
value management initiatives. Our primary focus is now on implementing a number
of projects which we have initiated to continue improving the performance of our
operations."
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 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.
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.
(1) Based on the 2011 preliminary economic assessment (see news release dated
August 2, 2011)
Canada
27 October 2011
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 27/10/2011 16:10:13 Produced by the JSE SENS Department.
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