Mr. Willem Jacobs reports

ROCKWELL ISSUES SECOND QUARTER RESULTS OF FISCAL 2018

Rockwell Diamonds Inc. has filed its second quarter 2018 results and provided a further update as to the developments with respect to its three subsidiaries in South Africa. These subsidiaries are Rockwell Resources RSA (Pty.) Ltd., HC van Wyk Diamonds Ltd. and Saxendrift Mine (Pty.) Ltd. Material elements include:

• The financial results presented included the financial statements of the company and its two subsidiaries in the Cayman Islands, but not the three subsidiaries in South Africa. The company no longer has control over the three subsidiaries sufficient to consolidate under IFRS (international financial reporting standards).
• The financial results show a comprehensive income (but non-cash) of $23.2-million, which results almost entirely from the reversal of foreign currency reserves in respect of the operations in South Africa and certain stock-based compensation reserves that were unwound.
• Operations were on cash break-even in August, 2017, notwithstanding the fact that only 25 per cent of the planned volumes were actually processed. The break-even position included the additional burden of the business rescue practitioner and its legal adviser's fees.
• The three subsidiaries were again placed in provisional liquidation on Sept. 22, 2017, by the business rescue practitioner, Metis Strategic Advisors Pty. and its legal counsel, Werksmans of Johannesburg, notwithstanding the fact that an offer had been received from Ascot Diamonds, a company with a proven purchasing capability, to buy the three subsidiaries on a going-concern basis at a value in excess of liquidation value and notwithstanding that the operations were break-even for August.
• The return date for hearing on the liquidation order is Nov. 3, 2017, by which date the provisional liquidators will ask the High Court either to proceed with full liquidation or keep the subsidiaries in provisional liquidation pending the successful outcome of the transaction with Ascot Diamonds.
• Statistical information shown in the attached table was recorded during the period under business rescue administration:

                                        June, 2017   July, 2017   August, 2017

Volume processed (m3)                       39,851       63,960         56,457     
Carats recovered                               131          215            408        
Grade (carats per 100 m3)                     0.33         0.34           0.72       
Revenue in respect of 
diamonds sold (US$)                      $ 177,735    $ 161,621      $ 915,000    
Average price per carat (US$)            $   1,440    $     899      $   2,685      

• Budgeted volumes were 175,000 cubic metres for each of the three months, and the operations at Wouterspan never achieved that under the business rescue practitioner's administration. Budgeted grade was 0.6 carat per 100 cubic metre and planned revenue per carat was $ $2,000 (U.S.).
• The management discussion and analysis for the period from June to August, 2017, reflects a detailed account of the actions of the business rescue practitioner and the company's attempt to undertake this sale transaction to Ascot Diamonds.
• The provisional liquidator is the attorney Honey's of Bloemfontein, which formally took over from the business rescue practitioner on Oct. 11, 2017.
• The buyer and its attorney met with the provisional liquidator on Friday, Oct. 13, 2017, to reinforce its interest in purchasing the three entities as a going concern. To undertake this, the provisional liquidator is undertaking its own assessment of liquidation value.
• The buyer has also offered to the company in a separate offer and transaction to buy the Cayman companies from the company, although such offer is conditional on a successful transaction in South Africa with regard to the three South African subsidiaries. To the extent that such second offer does proceed, the company will approach creditors and shareholders in the company for approval.

About Rockwell Diamonds Inc.

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.

As at the date of this document, Rockwell's subsidiary in South Africa (Rockwell Resources RSA) and its two subsidiaries (HC van Wyk Diamonds and Saxendrift) had again been placed in provisional liquidation following an application by the business rescue practitioner on Sept. 7, 2017. The application was heard on Sept. 22, 2017, and so ordered by the court. A liquidator was appointed on Sept. 27, 2017; the return date for hearing on the liquidation order is Nov. 3, 2017.

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