Mr. James Campbell reports

ROCKWELL ISSUES FURTHER DETAILS ON ITS RECENTLY ANNOUNCED AGREEMENT TO ACQUIRE ADDITIONAL OPERATING AND RESOURCE ASSETS WHICH WILL SUBSTANTIALLY ENHANCE ITS PRODUCTION AND EXPLORATION FOOTPRINT IN THE MIDDLE ORANGE RIVER REGION

Rockwell Diamonds Inc. has provided further technical information relating to its conditional agreement to acquire three alluvial diamond properties and associated plant and equipment from Bondeo 140 CC and its affiliates, as announced on Jan. 6, 2015. Rockwell also was granted additional licences in the Middle Orange River (MOR) region, extending its footprint in the region.

Acquisition highlights:

• The projects, Remhoogte/Holsloot and Bo-Karoo, are contiguous to Rockwell's existing properties in the MOR region, South Africa.
• The properties have produced more than 7,300 carats of high-quality diamonds (at a sample grade of about 0.8 carat per 100 cubic metres) valued at $3,000 (U.S.) to $4,000 (U.S.) per carat for the nine months ended December, 2014;
• The properties have the potential to increase the company's portfolio by 11 million to 12 million cubic metres of gravel at target grades of 0.4 to 1.5 carats per 100 cubic metres. The transaction is expected to increase the company's existing processing capacity in the MOR by approximately 200,000 cubic metres per month.
• The company has also recently been granted additional prospecting and mining rights in the MOR, spanning an area of more than 50,000 hectares.
• Closing of the transaction is expected to occur in second quarter 2015, subject to satisfaction of all conditions precedent, and Section 11 applications have been filed with the Department of Mineral Resources (DMR).

Commenting on the transaction James Campbell, chief executive officer and president, said:

"We are confident that we have delivered a value accretive acquisition with Remhoogte/Holsloot and Bo Karoo, which will be a foundation to further Rockwell's MOR growth strategy. The Remhoogte/Holsloot properties add exploration targets of some 11 [million] to 12 million cubic metres of gravels, with target grades which are higher than those on our current MOR properties. Furthermore they are early-life mines with exploration upside potential comprising three recently commissioned processing plants that include some state-of-the-art bulk X-ray technology. Recent production has confirmed the high-value-per-stone potential of the properties and the transaction also includes the brownfields Bo Karoo project, where bulk sampling has produced typical MOR-style stones in the past.

"Along with our own planned rationalization and expansion projects and the recently granted mining and exploration rights, we expect that this transaction will allow us to grow our production target to materially above the magic 500,000 cubic metres per month. This has been shown to be the minimum rate at which one overcomes the variances that are inherent in mining alluvial diamond deposits and which lead to swings in quarterly operating results associated with the industry."

Acquired mineral deposits and processing plants

Remhoogte/Holsloot project

Under the terms of the transaction, Rockwell will acquire the mining rights to Remhoogte, a 1,585-hectare property, in the Northern Cape. Remhoogte is contiguous to Holsloot, a 1,050-hectare property, as well as the company's existing MOR operations. The properties comprise early stage projects, with three fit-for-purpose processing plants with total monthly processing capacity of approximately 200,000 cubic metres.

The processing plant at Remhoogte, commissioned in June, 2014, from all-new equipment, consists of a Bourevestnik bulk X-ray system for the processing of coarse gravels and a four-rotary-pan plant to treat the fine gravels. A second rotary-pan plant at Remhoogte consisting of four pans was commissioned on the property in November, 2014. At Holsloot, a processing plant was recently commissioned from new equipment and consists of a desanding system, a Bourevestnik bulk X-ray system for the processing of coarse gravels and a dense media separation system for fine gravels.

Extensive historical drilling combined with limited reconnaissance sampling of the properties indicates the presence of exploration targets with 11 million to 12 million cubic metres of gravel at a grade of 0.4 to 1.5 carats per 100 cubic metres. Average diamond values realized from the properties on the sale of plus 5,000 carats on the open market, are in the range of $3,000 (U.S.) to $4,000 (U.S.) per carat for the nine-month period ended December, 2014, resulting in total sales of $16.9-million (U.S.). The recovered stones produced better colours than Rockwell's current MOR assortment with the largest stone weighing 178 carats. These statements of potential quantity, grade and value are conceptual in nature, there has been insufficient exploration in these areas to define a mineral resource, and it is uncertain if further exploration will results in the targets being delineated as a mineral resource.

Bondeo has processed approximately 900,000 cubic metres of gravel since start-up in May, 2014, producing 7,307 carats with an estimated sample grade of 0.8 carat per 100 cubic metres. The company will undertake detailed surveying and infill drilling during 2015 in order to define a mineral resource and expects to report the results during the first quarter of fiscal 2017.

Bo-Karoo project

Bo-Karoo is a diamond mining right situated on a farm in the Hopetown district of the Northern Cape measuring 3,508 hectares and located 20 kilometres northeast of Saxendrift. The property has previously been sampled by various operators that have not invested in exploration hence limited data are available regarding the potential volume of gravels.

This property is a brownfields project with many areas at the same elevation levels as the Saxendrift and Niewejaarskraal properties, and has extensive exploration targets with historical sample grades of 0.2 to 0.4 carat per 100 cubic metres and diamonds values ranging between $3,000 (U.S.) and $4,000 (U.S.) per carat.

The relevant Section 11 applications for the transfer of the Remhoogte and Bo-Karoo mineral rights have been lodged with the Department of Mineral Resources.

Earthmoving vehicle fleet (EMV)

In addition to the Remhoogte/Holsloot and Bo-Karoo projects and their processing plants, Rockwell is purchasing a portion of Bondeo and its affiliates' fleet of EMV equipment that match the company's MOR mines' operational requirements. This EMV equipment is relatively new and has a low number of operating hours, which meets the specifications of the fleet optimization strategy determined by Rockwell in 2014. Additional required equipment will be sourced on similar terms to the existing fleet leased through Eqstra Holdings Ltd.

Rockwell is reviewing its EMV fleet arrangements across the MOR to standardize its fleet fully, including its inventory requirements, spares and supplies, as well as mining practices across all operations with a single fleet management team to achieve full economies of scale and related purchasing power and supply line efficiencies. After closing the transaction, and as part of the integration process, Rockwell plans to transition the Remhoogte Hlsloot EMV fleet to Rockwell's standard operating practices.

Further expansion of MOR footprint

The company has recently been granted prospecting and mining rights to approximately 50,000 hectares in the MOR region (rights are still to be executed) providing significant upside potential beyond the life of its current assets. These prospecting and mining rights, together with the assets and rights being acquired as part of the transaction, effectively give Rockwell access over the majority of the Orange River alluvial diamond fields over a 100-kilometre length.

Integration plans

The increase in scale in the MOR region will also offer an opportunity for efficiencies in the short term through more efficient allocation of the same resources across a broader asset base.

The immediate priorities are as follows.

The remaining resource at Saxendrift hill complex (SHC) will be processed through the Saxendrift processing infrastructure, with portions of the SHC EMV fleet being relocated to Niewejaarskraal. A process to retrench the affected work force is in progress with issuing of the Section 189 retrenchment notices in compliance with the South African Labour Relations Act, 1995.

At Niewejaarskraal, the reallocation of the SHC fleet will enable that mine to operate at its current design capacity of 130,000 cubic metres per month. The SHC plant assets will be relocated in the short term to Niewejaarskraal, increasing capacity up to 200,000 cubic metres per month.

At the properties, operations will be standardized to Rockwell's operational template in operation at Rockwell's other existing MOR sites. Rockwell will also apply its geological and technical skill in operating in the MOR to the properties, including longer term planning. Rockwell's optimization could include integration of the plants on the properties.

The current employees from the Remhoogte project will also be transferred to Rockwell employment to ensure continuous production, in terms of Section 197 of the Labour Relations Act.

After closing the transaction, Rockwell will launch a formal exploration program at the properties to define a mineral resource by the end of February, 2016. Exploration will also commence at Bo Karoo, to evaluate its potential as a possible replacement for Saxendrift, which is now in the second half of its mine life.

Following the granting of more than 50,000 hectares of new mining and prospecting rights the company is expanding its regional geological strategy, to identify new targets for follow-up and economic assessment.

Financing

The transaction is subject to conditions precedent, including customary regulatory approvals and the company obtaining financing in order to raise the 245.63 South African rand (approximately $25.8-million) payable on the closing date. Rockwell expects that the closing will occur in second quarter 2015, subject to the satisfaction of all conditions precedent. Rockwell intends to raise the necessary funds by way of one or more debt or equity financings.

Rockwell previously announced that it has engaged Dundee Capital Markets as its adviser in connection with the transaction and to explore financing options.

This press release was reviewed and approved by Rockwell's group technical manager, G.A. Norton, BSc (honours) (PrSciNat), a qualified person who is not independent of the company, and T.R. Marshall, PhD (PrSciNat), a qualified person who is independent of the company.

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