Mr. James Campbell reports
ROCKWELL PROVIDES PRODUCTION UPDATE FOR FOURTH QUARTER OF FISCAL 2013 ENDING FEBRUARY 28, 2013
Rockwell Diamonds Inc. is providing the market with an
operational update that is in line with plan. On a consolidated basis,
fourth-quarter gravel volumes processed declined by 6 per cent to 619,546 cubic metres year on year with a commensurate change in diamond production of 3,854
carats. The reduction in volume is largely the result of placing the
Tirisano mine on care and maintenance in December, 2012, and, consequently,
if Tirisano was excluded, the remaining operations showed a 9-per-cent
improvement both in gravel volume processed and diamonds produced for
the same period.
The Saxendrift operations (comprising Saxendrift, Saxendrift extension
and the bulk X-ray plant) delivered a 36-per-cent increase in carat production,
although gravel volume processed declined by 5 per cent. Klipdam achieved a 44-per-cent
increase in gravel processed, demonstrating the benefits of outsourcing
the mining operations. However, Klipdam's carat recovery declined by
45 per cent, underscoring management's decision to accept an unsolicited offer
to sell the mine in late March, 2013. The cessation of operations at
Tirisano and the sale of Klipdam represents another step in effecting
the strategy of realigning Rockwell as a value diamond play with a
focus on creating real returns for its shareholders. It also creates a
centre of operations focused within the Middle Orange River area.
Fourth-quarter operational update
Volume and carat production for the company's operational mines for the
quarter ended Feb. 28, 2013, are shown.
Volumes of gravel processed (m3) Carats produced
Operation Q4 2013 Q4 2012 Q4 2013 Q4 2013
Saxendrift 383,770 409,348 1,929 1,43
Saxendrift
tailings 6,592 - 26
Tirisano 1,823 94,643 39 55
Klipdam 227,361 157,636 1,133 2,04
Other* 0 - 727
Total 619,546 661,627 3,854 4,04
* Other refers to independent contractor(s) processing gravel and
sold through the group's tender. These carats are excluded from
grade calculations.
Saxendrift operations and Middle Orange River prospects
Combined quarterly volumes of gravel processed at the Saxendrift mine
and further bulk sampling at the Saxendrift extension project declined
6 per cent year on year to 383,770 cubic metres for the fourth quarter, in line with plan. The decline was directly
related to the longer haulage distances from the Saxendrift extension
project bulk sampling activities. However, the overall grade improved
by 43 per cent to 0.5 carat over 100 cubic metres, up from 0.35 carat over 100 cubic metres a year ago as a result of better grades achieved from the Saxendrift
extension site. Accordingly, the combined diamond production from the
Saxendrift mine and the Saxendrift extension project increased by 34 per cent
and yielded 1,929 carats.
Included in the Saxendrift total is a further bulk sample of 94,142 cubic metres at the Saxendrift extension project that was carried out to complete
the definition of an additional resource for this section of the
property. This will be included in an updated National Instrument 43-101 technical
report for Saxendrift to be published by the end of May, 2013.
Recoveries from the bulk X-ray system were as expected, with the recovery
of 26 carats from the remainder of the coarse recovery tailings in the
first half of the fourth quarter. In mid-December, 2012, the system was
permanently relocated to the new Saxendrift Hill complex mine, which is
currently in its production ramp-up phase.
The company continues to make good progress with its strategy to extend
the mine life of its Middle Orange River properties with the status of
projects as follows:
- The production ramp-up the new Saxendrift Hill complex mine, based on
two bulk X-ray systems, is proceeding on track.
-
The prefeasibility study for Wouterspan is nearing completion.
-
A proposal to bring the Niewejaarskraal mine back into production within
six months has been approved by the board. It will be financed in part
from the proceeds of the sale of the Klipdam mine and will use existing
equipment relocated from Klipdam and Tirisano.
Klipdam
Klipdam delivered a 44-per-cent increase in volume production due to mining
operations being outsourced to CML Operations, a specialized
earthmoving contractor, in November, 2012, with total gravel processed
of 227,361 cubic metres for the fourth quarter.
However, carat production fell 45 per cent from the same period last year, with
total recovery of 1,133 carats due to metallurgical issues, which were
largely resolved by the end of the reporting period.
The company accepted an unsolicited cash offer to sell the mine to a
private alluvial diamond miner for a total purchase consideration of
23 million rand after quarter-end. The rationale was that with a remaining
life of two years, based on current resources, the mine was considered
a non-core asset and that the sale proceeds could be better applied to
increase production from Rockwell's Middle Orange River properties.
These Middle Orange River properties have better grades and have
received higher diamond values from gem-quality diamonds than Klipdam.
Tirisano
Volumes processed at Tirisano until it was placed on care and
maintenance in December, 2012, amounted to 1,823 cubic metres, recovering 39 carats.
Two royalty mining contracts were also operated by smaller-scale
operators on specific areas of the Tirisano property, yielding a total
of 727 carats. The royalty miners incur all the operational costs for
these activities, while Rockwell maintains responsibility for diamond
security and sales and earns a 12.5-per-cent royalty on all diamond sales, which
is used to offset the care and maintenance costs. A third royalty
mining contract commenced operation subsequent to the financial year-end.
"We are pleased that production of diamonds from our core Middle Orange
River operations is in line with our budget. Having eliminated the
negative impacts of our problematic mines, Tirisano and Klipdam, and
expanding our Middle Orange properties, we are on a sounder footing,"
explains James Campbell, chief executive officer, Rockwell Diamonds. "We will increasingly
focus our efforts and capital resources towards delivery of our Middle
Orange River properties and their potential to produce large,
high-quality diamonds. We are confident that our innovative approach
will enable us to unlock the value of these properties, chiefly by
recycling our portfolio of assets. For example, we relocated the bulk
X-ray system to the new Saxendrift Hill complex mine and have board
approval to apply the cash generated from the sale of Klipdam that was
nearing the end of its mine life to bring Niewejaarskraal into
production within six months."
We seek Safe Harbor.
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