VANCOUVER, April 15, 2013 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or
the "Company") (TSX: RDI; JSE: RDI) is pleased to announce that it has
reached an agreement to sell the Klipdam Mine and associated properties1 for a total cash consideration R23 million (C$2.5 million). This brings
the total proceeds from the sale of this asset to R48 million,
including the sale of the earth moving equipment in October 2012. The
proceeds will be reinvested in bringing the Niewejaarskraal Mine into
production and progressing its strategy of growing its operating
footprint in the Middle Orange River region of South Africa. The
Company has a strong track record in operating successful mines in this
region which typically yields large, high valued diamonds.
The right sizing project that was initiated at Klipdam in October 2012
led to the expected unit cost reductions and increased volume
throughputs, however the operation is not considered to be a core
asset. Consequently the Company has accepted an unsolicited cash offer
to sell the mine to a private alluvial diamond miner. The purchase
consideration of R23 million is payable in three tranches. The first
payment of R10 million was received upon signature of the sale
agreement. The rest of the purchase price will be paid in eight monthly
instalments of R1 million each with R5 million to be paid upon receipt
of Section 11 approval from the Department of Minerals Resources
("DMR"). Under the terms of the agreement, Rockwell will retain
ownership of certain items of plant and machinery that will be
redeployed, chiefly to Niewejaarskraal Mine.
Elaborating on the rationale for the transaction, James Campbell, CEO of
Rockwell stated: "Klipdam Mine has a remaining life of two years, based
on current resources. We accepted the offer for this mine, as opposed
to investing further resources to extend its projected mine life
through additional exploration, because our analyses projected higher
long-term returns from Rockwell's Middle Orange River properties which
have better grades and diamond values than Klipdam and yield
high-value, gem-quality diamonds."
At the same time, a proposal to take the Niewejaarskraal Mine2 out of care and maintenance has been approved by the Board of
Directors, with a total capital budget of R20.1 million (C$2.2 million)
that is comprised chiefly of labour and earthworks. The project entails
bringing the Dense Media Separation ("DMS") plant at Niewejaarskraal
Mine back into operation. The DMS production will be supplemented
through the addition of four 16-ft Rotary pans from the Tirisano mine
in addition to using equipment from Klipdam that was not part of the
sale. Trial mining operations are expected to come on stream after a
six-month implementation phase with a six-month ramp up to a monthly
processing capacity of 115,000 m3.
During the design phase, management considered deploying the same Bulk
X-ray technology that has been installed at other Rockwell operations
but this would have taken one year to implement at Niewejaarskraal. The
Company opted to re-commission the existing DMS plant and install the
16-ft Rotary pans - a lower cost option which has the added advantage
of a shorter implementation period. The production team from Klipdam
has the requisite expertise and experience to efficiently run a pan and
DMS plant, and will be relocated to Niewejaarskraal as will the
contract miner CML Operations from Klipdam. As part of the design
phase, the Company evaluated the potential for a second phase of
commissioning to increase the capacity of Niewejaarskraal to 200,000 m3; this option will be revisited once the initial phase has been bedded
down.
"The Niewejaarskraal development is another important milestone towards
delivering on our stated objective of growing monthly production
volumes to 500,000 m3 from our existing inventory of properties in the Middle Orange River
region. With three productive mines, namely Saxendrift, the Saxendrift
Hill Complex which is in the production ramp-up phase, to be followed
by Niewejaarskraal, we expect to reach three quarters of this target,"
commented CEO Campbell. "The Niewejaarskraal deposit average grade is
0.74 carats / 100 m3, and so has the potential to produce higher recovery grades than
Saxendrift, with the added benefit of slightly better projected average
carat values. Our plans for Niewejaarskraal also make use of the
existing production plant and equipment without placing undue pressure
on our capital resources. We believe our track record in the Middle
Orange River region positions us to start delivering positive net
returns by the end of fiscal 2014."
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 production
company. The Company's flagship mine is the Saxendrift Mine, in the
Middle Orange River and the Saxendrift Hill Complex, which will come
into production in the first quarter of fiscal 2014. Rockwell also has
two development projects and a pipeline of earlier stage properties
with future development potential. The operations are based on high
throughput processing capability and Saxendrift has among the lowest
unit costs in the industry as a result of implementing fit for purpose
technologies.
The Company is known for producing large, high quality gemstone
comprising a major portion of its diamond recoveries that is enhanced
through a beneficiation joint venture that enables it to participate in
the profits on the sale of the polished diamonds.
Rockwell also evaluates merger and acquisition opportunities which have
the potential to expand its mineral resources and production profile
and to 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 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 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
home jurisdiction filings that are available at www.sedar.com.
_____________________________
1 The Klipdam Mine and associated properties consists of the contiguous
Holpan 161 and Klipdam 157 farms, covering an area of 3,836 hectares as
well as prospecting properties, Erf 1 and Erf 2004, Windsorton. Mining
operations at Holpan were placed on care and maintenance in May 2011.
2 The Niewejaarskraal Mine project is a past producer that was acquired
by Rockwell in 2009. The Company announced results from a Preliminary
Assessment of Niewejaarskraal in May 2011.
SOURCE: Rockwell Diamonds Inc.
For further information on Rockwell and its operations in South Africa, please contact