Rockwell announces performance for Q3 F2017

Rockwell Diamonds Inc. announced its performance for the quarter closing November 30, 2016. The Group reported a 65 percent decrease in rough diamond revenues at $2.4 million (Q3 F2016: $6.9 million), due to substantially curtailed diamond production following the suspension of operations. The increase in beneficiation revenue to $1.1 million (Q3 F2016: $0.2 million) is due to the forward sale of the beneficiation pipeline due to low rough diamond sales. Total revenues decreased by 51 percent to $3.5 million (Q3 F2016: $7.1 million).

The Group announced a gross loss of $(3.4) million for Q3 F2017, which compares to a loss of $(5.1) million for Q3 F2016 (profit of $1.2 million for Q2 F2017). MOR carats sold were down 51 percent compared to the previous year, and MOR revenue per carat increased marginally to US$1,368 (Q3 F2016: US$1,328; Q2 F2017 US$1,560). Average MOR grades were up 57 percent during Q3 F2017 to 0.75 carats per 100m3 of gravel processed compared to last year and up 21 percent on Q2 F2017, reflecting the higher grades during commissioning at Wouterspan in the quarter.

The company described the quarter as challenging. “Tjaart Willemse, Chief Executive Officer said, “Rockwell completed a challenging quarter which commenced with a review of the practices, strategy and business plans and ended with new financing to complete WPC, whilst having to attend to a series of unfounded and malicious legal attacks from its erstwhile mining and construction contractor. On restarting the operations production ramp-up has been slower than anticipated, mostly as a result of unexpected challenges with earthmoving equipment after it was found to have been tampered with during the period following the interim spoliation ruling in favour of the contractor. Not all challenges have been overcome yet but this is receiving due attention.”

He further noted that “The Company was taken back from being effectively operated by third parties and is now managed by its management – the way it should be. After a number of setbacks following an interim spoliation order granted in favour of the contractor, Rockwell is once again in full control of its business. Construction to complete the Wouterspan wet plant has started. Completion of the second and final section is scheduled for March 2017.”

The company Board has approved an US$8 million funding plan to finance the completion of the business repositioning strategy and related plans.

The Company has entered into an agreement to dispose of its non-core Remhoogte/Holsloot and Saxendrift mines for a reasonable cash consideration and added benefit of reducing its outstanding rehabilitation liabilities by more than 80 percent. Also, it has completed a comprehensive restructuring and rightsizing exercise reducing thereby its total labour complement from 604 to 297 employees.