TORONTO, July 17, 2017 /CNW/ - Rockwell Diamonds Inc.
("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) announces
results for the three months ended May 31,
2017.
Salient features
There were no formal results of operations in the first quarter
as all mining activity, processing, sales and costs for sales are
accounted for as commissioning costs, and capitalised to property,
plant and equipment. In this respect, during commissioning:
- MOR operating results: Volumes mined from the WPC
ramp-up operation during the quarter totalled 166,328
m3. A total of 359 carats were recovered with 8 stones
larger than 10 carats, for an average price of US$ 2,599 per carat.
- WPC: All phases of the WPC plant have now been
commissioned, however some bottlenecks and design shortcomings have
been identified and work is ongoing to address these. As a result
the plant can now be run at a throughput rate that varies between
100 and 150 tons per hour depending on the type of gravel being
treated, but the run time is still low albeit improving.
- Safety: At the end of Q1 F2018, the Company had
achieved 466,488 lost time injury free hours ("LTIFH") at its MOR
activities. Rockwell's drive towards zero harm will continue.
- Operating results: Rockwell experienced a total
comprehensive loss of $2.7 million
for the quarter, which was primarily driven by no completed
operations being conducted during the period, resulting in very few
diamonds recovered to cover operational costs and overheads.
- Business rescue: The business rescue process in
respect of the three South African subsidiaries (Rockwell Resources
RSA Pty Limited, HC van Wyk Diamonds Limited and Saxendrift Mine
Pty Limited) is ongoing, with the objective to return the companies
to solvency. During this process all claims and liquidation orders
are stayed, allowing the ramp-up of the WPC operation on a legally
protected basis. The appointed business rescue practitioners are
actively working alongside the Companies' management to prepare a
business rescue plan which will deal with all claims against the
subsidiaries, to be published on or before September 30, 2017.
- Management and Directors: Mr. Tjaart Willemse, who was brought in to assist in
managing the crises brought about by the C-Rock attacks and to
design and implement a turn-around strategy, has resigned and Mr.
Stephen Le Roux has been employed to
lead Rockwell's Middle Orange River operations, as reported
previously. Messrs Le Roux and Oosthuizen (the current CFO) will
oversee the day-to-day executive management responsibilities of
Rockwell and along with the business rescue practitioners the
underlying subsidiaries.
First quarter summary
|
Three months
ended
31 May
|
$000's
|
2017
|
2016
|
Total
Revenue
|
-
|
12 466
|
|
Rough diamond
sales
|
-
|
12 097
|
|
Beneficiation
|
-
|
369
|
Gross (loss) profit
before amortization and depreciation
|
-
|
3 293
|
Profit (loss)
attributable to owners of the parent
|
(2 289)
|
570
|
Basic earnings (loss)
per share – cents
|
(4.16)
|
1.04
|
Net Cash and cash
equivalents
|
(958)
|
(88)
|
Commenting on the third quarter financial performance before
his departure, Tjaart Willemse
said:
"This past quarter has seen a real effort from the management
and operating teams, working in conjunction with the BRPs, to
deliver against the Wouterspan mining and development plan put
together last year when I joined.
Significant effort has
gone into getting the mobile fleet up and running in order to feed
the plant with steady supply of quality gravels. With Stephen
joining us, the geology and mining models have been re-evaluated
and any uneconomic and marginal areas were removed from the ore
inventory. Mining faces have been re-established and its now about
mining to plan and delivering to the processing
plant.
The primary focus has moved to short interval
controls aimed at making every input count in adding value to
realize revenue. Initiatives to drive operating costs down further
and to increase revenue are key to returning the business to
profitability".
Market update
The diamond market for the months March to May 2017 was active with a steady demand. The
Hong Kong Jewellery show at the beginning of March had steady
demand and prices remained stable. Sellers tried to achieve higher
prices, but there was resistance from buyers. The Basel show towards the end of March - which is
known for high-end watch and jewellery sales - had a slower than
usual demand for larger diamonds. This was also evident in auctions
during this period where prices of larger diamonds were relatively
soft compared to the previous year.
De Beers had two sights during this quarter, occurring the end
of March and beginning of May, with sales of US$580M and US$520M
respectively. Alrosa had increased sales over this period with no
increases in prices. The demand for rough diamonds during this
period was strong, and particularly in the secondary market, partly
due to the reduced supply by DTC. The prices of rough compared to
polished prices remain relatively high with profitability under
pressure.
Polished prices fluctuated in the various size fractions but on
average prices of polished remained stable. Demand by retailers who
continue to purchase polished for immediate requirements, to avoid
increased inventory, was healthy during the quarter.
About Rockwell Diamonds:
Rockwell is engaged in the
business of operating and developing alluvial diamond deposits. The
Company also evaluates consolidation opportunities that have the
potential to expand its mineral resources and production and
provide accretive value to the Company.
Rockwell has set a strategic goal to become a mid-tier diamond
production company with specific focus on the Middle Orange River
region in South Africa.
As at the date of this report Rockwell's subsidiary in
South Africa (Rockwell Resources
RSA Pty Limited) and its two subsidiaries (HC van Wyk Diamonds
Limited and Saxendrift Mine Pty Limited) were being operated under
Business Rescue Management as ordered by the Court, following an
application by creditors of the three South African subsidiaries on
May 18, 2017.
Rockwell's common shares trade on the Toronto Stock Exchange and
the JSE Ltd under the symbol "RDI". Trading of Rockwell's shares is
currently suspended initially at the request of the Company,
pending clearance of the above uncertainty.
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 the transaction and the ability of each party to
satisfy the conditions precedent in a timely manner or at all,
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 of 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 as 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 home jurisdiction filings that are available at
www.sedar.com.
SOURCE Rockwell Diamonds Inc.