Mr. James Campbell reports

ROCKWELL ARRANGES $4.1 MILLION UNSECURED CONVERTIBLE DEBENTURES

Rockwell Diamonds Inc. has completed an offering of two-year unsecured convertible debentures in a principal amount of $4.1-million with two insiders, namely Rockwell's principal shareholder Daboll Consultants Ltd., an affiliate of Diacore, as to $3.0-million and with Mark Bristow, Rockwell's non-executive chairman, as to $1.1-million. The proceeds of the offering will be used to finance current and proposed work programs on the company's diamond projects and for general working capital purposes.

The debentures bear interest at a rate of 5 per cent per year and will become convertible, subject to the prior approval of the disinterested minority shareholders, into equity securities of the company. Subject to such approval, the debenture holders may convert the principal and interest into the same securities issued as may be issued in any equity financings completed by the company within the first 12 months after the debentures are issued, and if no equity financings are completed, then the debentures may be converted into common shares at the undiscounted five-day volume-weighted average price (VWAP) any time in the second 12 months. If conversion occurs in connection with an equity financing, the debenture holders will receive a 10-per-cent discount to the equity financing price not to exceed a discount of more than 25 per cent from the VWAP (where the company's shares trade at 50 cents or less and 20-per-cent discount from VWAP if above 50 cents). If the equity financing is $10-million or more the debentures automatically convert into the same securities on those terms. In accordance with MI 61-101 the company will seek disinterested minority shareholder approval at the earliest of the next shareholder meeting and in conjunction with the next round of equity financing and a valuation is expected to be provided in connection with seeking minority approval.

Commenting on the issue of the debenture James Campbell, chief executive officer and president, said: "We are pleased that our chairman Mark Bristow and Diacore, our beneficiation joint venture partner, have taken up these $4.1-million debentures, which will enable Rockwell to strengthen its balance sheet and continue financing its organic growth projects. Having funded two new processing plants, at Saxendrift Hill complex and Niewejaarskraal, from working capital during the last two years. Management felt it prudent to pursue this additional funding and received board approval to do so. All key shareholders were consulted and given an opportunity to participate. These two processing plants, together with Saxendrift, are currently processing gravels at an increased rate of some 380,000 cubic metres per month and continue to recover large, high-quality rough diamonds that are being sold through our partnership with Diacore.

"Our partnership with Diacore has delivered significant value for both parties over the last seven years and we are delighted to have this further vote of confidence from them. Furthermore, the additional investment by Mark Bristow, who is already a substantial investor in the company, reflects his confidence in the future growth of Rockwell. The additional funding makes us more resilient in the short term while we continue with internal developments to increase our capacity towards our medium target of processing 500,000 cubic metres of quality gravels per month from our Middle Orange River operations as well as pursue external opportunities to grow and leverage our diamond value chain capabilities."

We seek Safe Harbor.