Mr. James Campbell reports
ROCKWELL REPORTS TENTH SUCCESSIVE QUARTERLY IMPROVEMENT AND RECORD DIAMOND PRODUCTION AND SALES REVENUE
Rockwell Diamonds Inc. has provided its quarterly production and sales update for the three months ended Nov. 30, 2014.
Salient features
-
Middle Orange River operations (MOR), as of Dec. 5, 2014, achieved a record 4.7 million lost-time injury free hours (LTIFH) of operation.
-
The successful implementation of the earthmoving vehicle (EMV) renewal plan at Saxendrift and Saxendrift Hill complex (SHC) helped the complex process a record 1.5 million cubic metres of gravel up 47 per cent from the same quarter last year.
-
The company increased processing volumes compensated for lower grades at Saxendrift.
-
Carat production was up 15 per cent compared with the same period last year.
-
Record diamond sales revenue was $15.8-million (U.S.), driven by 127-per-cent increase in carats sold.
-
The average carat price was down 35 per cent from company-owned properties due to lower incidence of large diamonds in third quarter.
-
The company's inventory of 2,624 carats (including royalty contract miners' inventory of 815 carats) was carried over into fourth quarter of fiscal 2015.
Commenting on third quarter production and sales James Campbell, chief executive officer and president, said:
"Our production and sales performance continues to improve with record volumes of both gravel mined and processed and carat sales from the MOR in the third quarter. A highlight for the quarter was bedding down of the earthmoving vehicle renewal plan and ongoing optimization of our in-field screens that helped us post a 60-per-cent increase in mining volumes and 47-per-cent increase in gravel processed. The increase in volumes processed offset the lower grades and lower prices achieved for the rough product.
"Also our new mine, Niewejaarskraal, made good progress in ramping up its production with a commensurate improvement in diamond value and the royalty mining contractors continued to make a positive contribution to the company's performance."
Production review
Volume and carat production for total company-owned properties to Nov. 30, 2014, were as displayed in the table.
Q3 F2015 Q3 F2014 Q2 F2015 YTD F2015
Volumes processed (000m3) 1,522 1,035 1,467 4,131
Carats produced (carats) 10,228 8,913 9,581 28,786
Grade (carats/100m3) 0.67 0.86 0.65 0.70
Saxendrift
Volumes of gravel mined increased 62 per cent from the previous year, facilitated by the implementation of the new mining fleet, enabled the average monthly plant throughput to exceed 180,000 cubic metres. Lower grades were processed from the traditional Saxendrift mining area, now in the second half of its life of mine (LOM). The remaining mining areas require higher stripping ratios and accordingly, gravel volumes processed increased 21 per cent. Carat production declined 29 per cent, but included eight stones larger than 20 carats.
Saxendrift Hill complex
Volumes of gravel mined and processed increased 46 per cent and 3 per cent respectively. As a result of continuing exploration, SHC's mine life has been extended into 2015. Year-on-year carat production, whilst on plan, declined 63 per cent due to the exceptional recoveries in the prior year. SHC's bulk X-ray processing plant operated at its nameplate capacity of 80,000 cubic metres per month throughout the third quarter. Notable stones included a 68-carat rough diamond.
Niewejaarskraal
Volumes showed strong increases of 68 per cent and 92 per cent in gravels mined and processed respectively. Toward the end of the quarter, the monthly capacity of the plant was increased to 120,000 cubic metres with modifications to the front end in-field-screen. Carat production increased almost threefold, underpinned by higher volumes and grades, which increased to 0.54 carat per 100 cubic metres, in line with the average grade for the mine. Notable stones recovered in the period included five stones exceeding 20 carats, the largest of which weighed 68.6 carats.
Royalty contractor mining
The royalty mining contractors operating at Tirisano and in joint venture at Kwartelspan continue to deliver positive results, with volumes of gravel processed up 98 per cent and carat production up 59 per cent for the third quarter.
Sales review
Diamond sales for total company-owned properties to Nov. 30, 2014, were as displayed in the table.
Q3 F2015 Q3 F2014 Q2 F2015 YTD F2015
Sales value (U.S.$000s) 15,763 10,699 13,197 37,725
Carats sold 13,759 6,066 8,864 29,302
Average price 1,146 1,764 1,489 1,287
For additional information, please refer to the "Detailed sales data"
table.Saxendrift
Diamond sales rose 5 per cent to $4.2-million (U.S.) from the sale of 2,442 carats (up 10 per cent) at a stable average price per carat of $1,707 (U.S.) compared with the prior year. The average carat value was lower than in the preceding quarter due to the lack of recovery of exceptional diamonds experienced in the current period.
SHC
The number of carats sold was in line with the prior year, and although the value of diamonds sold was down 24 per cent, this was on plan. The decline was due to the lack of recovery of high valued stones experienced in the current quarter.
Niewejaarskraal
Diamond sales increased to $2.9-million (U.S.), in line with the ramp-up of operations at Niewejaarskraal. Carat sales increased more than six-fold and the average value per carat more than doubled.
Royalty mining contractors
The contractors at Tirisano delivered a solid performance. The value of sales rose 107 per cent in line with the increased number of contractors compared with a year ago and operations at the Kwartelspan joint venture gained momentum.
Financing revision and update
Further to the news release of Nov. 19, 2014, the company has now received $2.33-million of the $4.1-million committed by the two related parties with the balance to be in-hand by Jan. 23, 2015. The structure of the financing was also slightly revised to comply with the requirements of certain securities laws exemptions in Canada. The revised transaction is that $3.775 (92 per cent) will be raised by issuance of the previously announced debentures, and $325,000 (8 per cent) as demand loans bearing interest at 5 per cent (second year 8 per cent) and without any optional or mandatory conversion aspects. The structure revision was necessary in order to rely on the exemption from the requirements of Canadian Multilateral Instrument 61-101 protection of minority security holders in special transactions where the company is relying upon exemptions from the formal valuation requirements and minority shareholder approval requirements of MI 61-101 in Sections 5.5(a) and 5.7(a), which requires that the value of the debenture portion of the transaction must not exceed 25 per cent of the company's 20-day average market capitalization on the date of announcement. Therefore the company and the related parties agreed that the aggregate amount of debentures will be limited to $3,775,000 and the balance of the $4.1-million will be advanced by way of separate loans from Emerald Holdings Ltd. (Mark Bristow) ($89,000) and Daboll Consultants Ltd. (Diacore) ($236,000). The loans are exempt from the minority shareholder approval requirements set out in Section 5.7(f) of MI 61-101 loan to issuer, no equity or voting component. The exemptions are only in connection with the issuance of the debentures, actual conversion of the debentures into common shares on either an option or mandatory basis as described in the Nov. 19, 2014, news release will still require the approval of Rockwell's minority shareholders.
Volumes and carat production for the company's owned mines and its royalty mining contractors to Nov. 30, 2014, were as displayed in the table.
Gravel mined (000m3) Q3 F2015 Q3 F2014 Q2 F2015 YTD F2015
Saxendrift 655 404 547 1,597
SHC 332 227 287 799
NJK 427 255 340 1,164
Total 1,414 886 1,174 3,560
Gravel processed (000m3) Q3 F2015 Q3 F2014 Q2 F2015 YTD F2015
Saxendrift 487 400 498 1,351
SHC 230 224 227 571
NJK 266 139 239 728
Total MOR 983 763 964 2,650
Contractors' mining* 539 272 503 1,481
Grand total 1,522 1,035 1,467 4,131
Carats produced (carats) Q3 F2015 Q3 F2014 Q2 F2015 YTD F2015
Saxendrift 2,240 3,164 1,531 6,116
SHC 579 1,579 938 2,267
NJK 1,444 410 1,295 4,010
Total MOR 4,263 5,153 3,764 12,393
Contractors' mining* 5,965 3,760 5,817 16,393
Grand total 10,228 8,913 9,581 28,786
Average grade (carats 100m3) Q3 F2015 Q3 F2014 Q2 F2015 YTD F2015
Saxendrift 0.46 0.79 0.31 0.45
SHC 0.25 0.71 0.41 0.40
NJK 0.54 0.29 0.54 0.55
Total MOR 0.43 0.68 0.39 0.47
Contractors' mining* 1.11 1.38 1.16 1.11
Grand total 0.67 0.86 0.65 0.70
Sales for each of the company's own mines and its royalty mining contractors to Nov. 30, 2014, were as displayed in the table.
Sales value (U.S.$000s) Q3 F2015 Q3 F2014 Q2 F2015 YTD F2015
Saxendrift 4,169 3,971 5,089 13,001
SHC 2,806 3,709 1,177 4,935
NJK 2,873 158 2,745 7,188
Total MOR 9,848 7,839 9,011 25,124
Contractors' carats** 5,915 2,860 4,186 12,601
Grand total 15,763 10,699 13,197 37,725
Carats sold (carats) Q3 F2015 Q3 F2014 Q2 F2015 YTD F2015
Saxendrift 2,442 2,210 1,861 6,068
SHC 1,166 1,106 743 2,458
NJK 1,805 250 1,206 3,665
Total MOR 5,413 3,566 3,810 12,191
Contractors' carats** 8,346 2,500 5,054 17,111
Grand total 13,759 6,066 8,864 29,302
Average price (U.S.$ per carat) Q3 F2015 Q3 F2014 Q2 F2015 YTD F2015
Saxendrift 1,707 1,797 2,734 2,143
SHC 2,408 3,354 1,585 2,008
NJK 1,592 632 2,276 1,961
Total MOR 1,820 2,198 2,365 2,061
Contractors' carats** 709 1,144 828 736
Grand total 1,146 1,764 1,489 1,287
* Contractors' mining refers to independent royalty contractors processing
gravel for their own risk and reward on Rockwell-owned mineral properties.
Carats recovered are then sold through the company's tender process. The
company retains the responsibility for diamond security and sales, and
recognizes 100 per cent of the revenue on sale. The contractual 87.5 per
cent of the sales value, payable to the contractor, is recognized as
production costs in the statement of profit and loss.
** Contractors' carats refers to independent royalty contractors processing
gravel for their own risk and reward on Rockwell-owned mineral properties.
Carats recovered are then sold through the company's tender process. The
company retains the responsibility for diamond security and sales, and
recognizes 100 per cent of the revenue on sale. The contractual 87.5 per
cent of the sales value, payable to the contractor, is recognized as
production costs in the statement of profit and loss.We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.