UPDATE: Rockwell Diamonds Inc.

ROCKWELL Diamonds’ announced results for the three and twelve months ended February 29, 2012. Shares decreased on Friday as the mining junior reported a $13m annual loss, with CEO James Campbell admitting that the company’s turnaround was still very much “a work in progress”.

The loss came courtesy of an asset impairment to the tune of $4.9m, as well as Rockwell’s recently acquired Tirisano mine gobbling up $6.7m in operating costs during the ramp up phase of its recovery plant. The same mine accounted for an additional provision towards rehabilitation of $1.3m, while Rockwell settled the Midamines legal dispute for $1.5m.

At the close of trading on Friday, the company’s JSE-listed shares were down 9.3%, at R3.80, on thin volumes.

Operational Overview

• 17,416 carats produced and 19,174 carats sold at average price of US$1,400 per carat
• Continuous operations implemented at Northern Cape operations in January 2012
• Good progress with strategic turnaround projects including commissioning of in field screen and pilot bulk x-ray implementation at Saxendrift
• Saxendrift unit cost down 5% due to success of diamond value management initiatives
• Saxendrift reserves increased 60% according to updated NI 43 101 Technical Statement as at February 29, 2012 that will be posted on SEDAR (see further details below)         

“The bleed essentially was Tirisano,” Campbell commented on the group’s financials to end-February, adding that if he had his way the plant would’ve been rebuilt from scratch again.

Since Campbell’s appointment the group has twice replaced Tirisano’s mine manager.

He said the construction of a wet front-end system at the plant has contributed to Tirisano achieving its throughput levels of late, but that the mine would still require working capital for the next three months.

Campbell was also critical of the previous management’s assesments on the value of Rockwell’s assets, saying the impairments was necessary and “the right thing to do”, applying the same principle to the R1.3m increase in Tirisano’s rehabilitation obligation.

“The loss for the year of $13.7m reflects the impact of the strategic decisions that were taken during the year to place Rockwell on a solid footing,” the company said. “These will flow through to the financials as its mines’ operational transformation continues to yield improved production and lower unit costs.”

The company still had $9.9m cash in the bank at the end of the period. Apart from the working capital which Tirisano would need, Rockwell plans to spend some money on the exploration of Jasper mines – the property it acquired as part of a settlement agreement with BEE partner African Vanguard Resources. Jasper is adjacent to Rockwell’s flagship Saxendrift property.

Campbell said the cash sources would be more than adequate for the group’s obligations, adding the caveat that “the world must continue as it is”.

Financial Overview

• Gross diamond revenues of $34.2 million: 26% increase in diamond sales at Saxendrift offset by impact of Holpan care and maintenance
• Beneficiation revenues increased 64%
• The loss for the year of $13.7 million includes asset impairment of $4.9 million, Tirisano operating costs of $6.7 million, total litigation expenses in respect of the Midamines dispute of $1.5 million and the Tirisano rehabilitation obligation of R1.3 million

• Effective cash preservation: Net cash of $9.9 million after capital expenditure of $6.8 million funded from internal cash flows

About Rockwell Diamonds:

Rockwell is engaged in the business of developing and operating alluvial diamond mines, to become a mid-tier diamond mining company. The Company has three existing operations, namely Saxendrift, Klipdam and Tirisano, which it is progressively optimizing. It also has two development projects -Wouterspan and Niewejaarskraal- and a pipeline of other projects with future development potential. Rockwell’s operations and projects are all located in the Republic of South Africa.

In addition to its project work, Rockwell continues to evaluate merger and acquisition opportunities which have the potential to expand its mineral resources and provide new opportunities to develop the additional production that would provide accretive value to the Company.

The Company has an established track record of producing large gem quality diamonds; these comprise a significant proportion of its production profile. The diamonds recovered from Rockwell’s mines are frequently acquired for investment purposes. The Company has a beneficiation joint venture which enables it to participate in the profit on the sale of its +2.8 carat sized stones after they have been polished.

FULL REPORT: [ rockwelldiamonds.com ]

Short URL: http://woodlawnpost.com/?p=50319

Posted by WoodlawnPost on May 26 2012. Filed under Diamonds. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.