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Rockwell Announces Results for Fourth Quarter of Fiscal 2011 May 30, 2011 (PR Newswire) --
VANCOUVER, May 30, 2011 /PRNewswire/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI) (JSE: RDI) (OTCBB: RDIAF) announces results for the three and twelve months ended February 28, 2011.
Highlights:
Operating profit of $4.0 million, a turnaround of $7.5 million from a $3.6 million operating loss in 2010 43% year-on-year increase in revenue to $42.5 million 35% increase in average price to US$1,365 per carat and 2% rise in sales to 27,017 carats Production increased 5% to 26,165 carats Cash generated by operating activities of $8.9 million compared from $110,694 consumed in fiscal 2010 Net cash balance increased to $2.9 million from $1.8 million Appointment of CEO with extensive track record in the diamond sector Strategic review to improve production and enhance operational efficiencies Growth plans redefined to capitalize on significant portfolio of alluvial diamond deposits Financial Overview
(Currency values are presented in Canadian dollars unless otherwise indicated.)
Rockwell's financial position showed substantial improvements during the year however its operational performance fell short of internal production targets. Total revenue increased 43% and Rockwell achieved an operating profit of $4.0 million from a loss of $3.6 million. The improved operational performance also translated into higher cash flows generated by operating activities of $8.9 million.
Fourth quarter ended February 28, 2011
Rockwell reported year-on-year revenue growth of 58% to $11.5 million for the fourth quarter, underpinned by the continued improvement in diamond prices. Quarter-on-quarter revenue increased 4%. The Company produced 3,711 carats (Q4 2010: 4,996 carats). This represents a quarter-on-quarter decrease of 26% which is due to exceptionally high rainfall and lower grades, particularly at Saxendrift.
Facilitated by higher inventories accumulated at the end of the third quarter to take advantage of anticipated stronger seasonal demand, carats sold in the fourth quarter increased 10% year-on-year to 6,453 at an average price of US$1,430 per carat (Q4 2010: US$1,154 per carat). The Company reported an operating profit of $755,000 in the quarter under review compared to an operating loss of $2.2 million in the fourth quarter of fiscal 2010.
Twelve months ended February 28, 2011
Tender sales of $37.8 million were achieved in fiscal 2011. The beneficiation profit share agreement delivered further revenue of $4.7 million. Accordingly, Rockwell reported a strong increase in total revenue to $42.5 million. During fiscal 2011, eight tender sales of rough diamonds were held, and special diamonds exceeding 10 carats were sold for beneficiation. The average value in fiscal 2011 went up 35% to $1,365 per carat (fiscal 2010: $1,010 per carat) while 27,017 carats (fiscal 2010: 26,533 carats) were sold. Production increased by 5% to 26,165 carats (fiscal 2010: 24,916 carats).
A loss of $5.1 million (fiscal 2010: $7.0 million) or $0.01 per share (fiscal 2010: $0.03) was realized for the year. This improvement is mainly attributable to the higher average diamond price. Diamond inventories at February 28, 2011 totalled 1,057 carats (at February 28, 2010: 1,910 carats).
Balance sheet
Rockwell's liquidity continued to improve with net cash holdings increasing by $1.1 million to $2.9 million (end of fiscal 2010: $1.8 million), after investing $12.4 million to purchase equipment and mineral properties. Debt repayments of $3.3 million rendered the Company virtually debt free. At February 28, 2011, the Company's cash and cash equivalents increased to $4.8 million (end of fiscal 2010: $2.5 million) with bank indebtedness amounting to $1.8 million (end of fiscal 2010: $0.7 million).
With current assets amounting to $12.9 million and current liabilities of $8.6 million, the Company's current ratio improved to 1.49 times (February 28, 2010: 1.02 times).
Annual Operational Overview
Production Sales and inventories Volume (m3) Carats Average grade (carats / 100 m3) Sales (carats) Average value (US$ / carat) Inventories (carats) Fiscal 2011 3,386,872 26,165 0.77 27,017 1,365 1,087 Year-year change 16% 5% -9% 2% 35% -45% The production of the Company increased by 16% to 3,386,872 cubic metres (February 28, 2010: 2,918,097 cubic metres) which was below internal targets. Delays in commissioning the in-pit de-sanding plant at Saxendrift and heavy floods in January 2011, followed by sustained high levels of precipitation during the rainy season impacted overall productivity. Saxendrift delivered a 19% increase in production and 261,214 cubic metres were processed at the Klipdam Extension bulk sampling project.
The Company continued to drive down unit costs across its operations, with the average operating cash cost decreasing to US$7.91 per cubic meter in fiscal 2011 compared to US$10.40 per cubic meter in the previous year. The decline is attributable to higher throughput and was achieved despite increased input costs, such as fuel, oil and electricity.
Holpan and Klipdam
The Holpan operation was faced with significant challenges resulting from heavy and unseasonal rainfall during the fourth quarter. The resource became saturated, which decreased the plant's throughput and put upward pressure on unit costs. The mine was unprofitable in the fourth quarter. Rockwell entered into negotiations with the recognized trade union (National Union of Mineworkers) to implement full calendar operations (continuous operations) but an agreement was not reached.
The Klipdam mine also encountered challenges related to rainfall. The impact was mitigated by increasing the ore extraction from the palaeo channel that is less impacted by moisture, but production still came in below expectation. Klipdam continued to recover high quality gem stones, which had not yet been sold at the financial reporting date.
The adjacent Holpan and Klipdam operations are being reviewed by management with a view to rationalizing the operations. The Holpan operation was placed on care and maintenance in May 2011. Both mines' resources will be processed through the Klipdam plant at a lower cost. This should also result in a longer life of mine.
Saxendrift
The annual production volume increased 19% but carats recovered declined 24% because of dilution from large sand lenses in the current area of production. However, the value of carats produced remained constant, confirming that the resource continues to deliver high quality gemstones.
The technical challenges associated with the in-pit de-sanding plant persisted, and were exacerbated by the wet operating conditions throughout the fourth quarter. Rockwell, in conjunction with external consultants, is developing a strategy to resolve the problems.
Initiatives at Saxendrift forming part of the strategic review include modifying the in-pit screening plant, adjustments in the rotary pan plant and optimising the ore mass balance. The benefits are expected to become meaningful from the third quarter of fiscal 2012.
Progress on Tirisano acquisition
Two conditions remain to close out the agreement to acquire the Tirisano mine operation, namely obtaining the Section-11 consent which includes cession by the Department of Mineral Resources and restructuring senior debt initially provided by the Industrial Development Corporation of South Africa Limited for the development of the Tirisano Mine.
A high volume (180,000 cubic metres / month) four stream production facility is being completely rebuilt at the site. It will be commissioned later than initially envisaged as improvements and extensions were made to the initial plans. Commercial production will commence upon completion of the remaining conditions precedent.
The first stream started operating in April 2011 and is being fine-tuned by processing the ore dumps left on the mine by the previous operators. The second stream was completed four weeks later and the remaining two streams are scheduled for commissioning at the end of September 2011. On completion, the high volume plant is expected to benefit the company by smoothing its production profile.
In line with the strategic review, Rockwell plans to complete a new detailed mine plan in the second quarter of fiscal 2012, assisted by consultants who will use the completed SRK geotechnical study.
Wouterspan
The strategic assessment of Wouterspan (put on care and maintenance in February 2009) continued and a review of the proposed new plant design by external consultants is in progress. A high volume low cost production plant with a capacity of 340,000 cubic metres / month is currently envisaged. Funding for the plant is planned through the capital markets and Rockwell is evaluating the use of contractors to mine the deposit.
Diamond Market
Both rough and polished diamonds prices improved during the 2010 calendar year with prices enjoying support from strong retail demand for diamonds in the second half of 2010. In the fourth quarter prices reached the record 2008 levels. The growth in the Indian and Chinese domestic markets has led to an increase in market share at the retail consumer level.
Rockwell recovered 38 stones exceeding 10 carats in size during the fourth quarter of fiscal 2011. These stones were sold into the Company's joint venture with Steinmetz Diamond Group and once sold as polished goods, will provide additional profit share revenue to the Company.
Strategy
During the fourth quarter, a strategic review was conducted and Rockwell clearly aligned its corporate objectives with the associated deliverables to increase its production profile. As such, the Company will continue to focus on optimizing its productive mines to deliver better returns. There are two specific areas of focus:
To continue driving down unit costs by achieving design plant throughput rates and improving both utilization and availability; and To pursue sustainable improvement of metallurgical processes, improving the recovery of diamonds and increasing revenue. The Company has evaluated a number of options to leverage its production profile through further development of its assets and selected two projects with the highest projected returns:
Rockwell will embark on the second phase of the Tirisano development, being an excavation and conveyor system providing access to the southern ore body with works commencing after the plant has been fully commissioned. The simultaneous construction of a high volume production plant at Wouterspan. In order to fund these developments, the Company will seek additional financing in the capital markets.
Outlook
The fundamentals for the diamond market are strong, with robust demand and pricing. Rockwell is positioned to benefit from these positive fundamentals with inventories of 1,057 carats.
Production at all operations in the first quarter of fiscal 2012 was impacted by factors including abnormally high precipitation levels during the 2010/2011 rainy season in the Northern Cape Province. The impact was the most severe at Holpan.
Decisive action is being taken to enhance plant efficiency and to maximize recovery rates at all mines. This includes engaging the services of a world-renowned diamond metallurgist to technically and economically assess plant processes at all the mines, including Tirisano. The analysis and subsequent optimization measures are expected to start yielding benefits in the second half of fiscal 2012.
With ongoing operational improvements to enhance the recovery of diamonds, reductions in operating costs, and the increasing prices and demand for diamonds, the positive trend of the Company's financial performance over the last four quarters should be sustainable in fiscal 2012.
Commenting on Rockwell Diamonds, Mr David Copeland, Chairman of Rockwell Diamonds said:
"During the last six months, Rockwell has made enormous progress in repositioning itself to ramp up its production profile. Our team of alluvial diamond geology, mining and processing experts is unique in that they have skills across the value chain from exploration to processing and recovery. It was recently strengthened with the appointment of our new CEO to lead the execution on our strategy."
"Earlier this year, we completed a thorough strategic review to map the way forward for our Company. Our focus is on implementing this strategy to unlock the inherent value in the Company. We will do this by optimising output from our producing assets to continue improving the Company's financial performance. We will also leverage our assets by developing high volume production plants on our dormant mines. The outlook for Rockwell Diamonds is underpinned by strong fundamentals in the diamond market."
Conference Call:
Rockwell will host a telephone conference call on Tuesday, May 31 at 10:00 a.m. Eastern Time (7:00 a.m. Pacific; 4:00 p.m. Johannesburg) to discuss these results. The conference call may be accessed as follows:
Country Access Number Canada (Toll-Free) 1 866 605 3852 USA (Toll-Free) 1 800 860 2442 UK (Toll-Free) 0 800 917 7042 South Africa (Toll-Free) 0 800 200 648 Other Countries (Intl Toll) +27 11 535 3600 A transcript of the audio webcast will be available on the Company's website: www.rockwelldiamonds.com. The conference call will be archived for later playback until midnight (ET) June 3, 2011 and can be accessed by dialing the relevant number in the table below and using the pass code 17768#.
Country Access Number South Africa (Telkom) 011 305 2030 USA and Canada (Toll) 1 412 317 0088 Other Countries (Intl Toll) +27 11 305 2030 UK (Toll-Free) 0 808 234 6771 For further details, see the Rockwell's complete financial results and Management Discussion and Analysis posted on the website and on the Company's profile at www.sedar.com. These include additional details on production, sales and revenues for the quarter, as well as comparative results for fiscal 2010.
About Rockwell Diamonds:
Rockwell is engaged in the business of operating and developing alluvial diamond deposits, with a goal to become a mid-tier diamond mining company. The Company has three existing operations, which it is progressively optimising, two development projects and a pipeline of other projects with future development potential. Rockwell is also at an advanced stage of completing the acquisition of an additional development property.
Rockwell continually evaluates merger and acquisition opportunities which have the potential to expand its mineral resources and to develop additional production that would provide accretive value to the Company.
No regulatory authority has approved or disapproved the information contained in this news release.
Forward Looking Statements
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.
Factors that could cause actual results to differ materially from those in forward-looking statements include uncertainties and costs related to exploration and development activities, such as those related to determining whether mineral resources exist on a property; uncertainties related to expected production rates, timing of production and cash and total costs of production and milling; uncertainties related to the ability to obtain necessary licenses, permits, electricity, surface rights and title for development projects; operating and technical difficulties in connection with mining development activities; uncertainties related to the accuracy of our mineral resource estimates and our estimates of future production and future cash and total costs of production and diminishing quantities or grades if mineral resources; uncertainties related to unexpected judicial or regulatory procedures or changes in, and the effects of, the laws, regulations and government policies affecting our mining operations; changes in general economic conditions, the financial markets and the demand and market price for mineral commodities such and diesel fuel, steel, concrete, electricity, and other forms of energy, mining equipment, and fluctuations in exchange rates, particularly with respect to the value of the US dollar, Canadian dollar and South African Rand; changes in accounting policies and methods that we use to report our financial condition, including uncertainties associated with critical accounting assumptions and estimates; environmental issues and liabilities associated with mining and processing; geopolitical uncertainty and political and economic instability in countries in which we operate; and labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in which we operate our mines, or environmental hazards, industrial accidents or other events or occurrences, including third party interference that interrupt operation of our mines or development projects.
For further information on Rockwell, Investors should review Rockwell's annual Form 20-F filing with the United States Securities and Exchange Commission www.sec.com and the Company's home jurisdiction filings that are available at www.sedar.com.
SOURCE Rockwell Diamonds Inc.
Source: PR Newswire (May 30, 2011 - 7:38 PM EDT)
-------------------- WHADDYA MEAN I CAN BE PRESIDENT OF THE USA.ITS STILL WE THE PEOPLE.RIGHT?
IP: Logged |
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filled 195k at .054 avg.this is a long hold.target price .20c min.hold for a couple of years.its sick the amount of diamond reserves they have.
Rockwell updates its mineral resources and mineral reserves May 31, 2011 (PR Newswire) --
Announces probable reserves at Saxendrift
Preliminary assessments of Wouterspan, Tirisano and Niewejaarskraal
VANCOUVER, May 31, 2011 /PRNewswire/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI; OTCBB: RDIAF) is pleased to announce the release of updated mineral resource estimates for its alluvial diamond deposits on its properties in South Africa.
At the time that Rockwell was founded in 2006, the Company started developing a proprietary resource management system which is directly applicable to the specifics of alluvial diamond deposits. It is based on the National Instrument 43-101 regulations for the statement of mineral resources and reserves but refined to be specific to alluvial deposits. The Company's system is a conservative and consistent method of declaring its mineral resources and mineral reserves. The grades and diamond values, which have been calculated using this methodology during the last four years, have been shown to accurately reflect the output of the mines. The results of these studies are summarized in the tables attached to this release and further details are provided in the Company's Annual Information Form and technical reports that have been filed today.
Mark Bristow, Director and acting CEO, Rockwell explains that: "we embarked on this process when Rockwell first started as a diamond company. The progress is such that today, for the first time, we have stated an estimate of mineral reserves: probable reserves of 4.9 million cubic metres at Saxendrift. This is the culmination of a pre-feasibility study conducted during 2009 and 2010."
"Over the past five years, our resource base has grown from some 12.3 million cubic metres of Inferred Resources to the current 82.1 million cubic metres of inferred resources, 35.1 million cubic metres of indicated resource and 4.9 million cubic metres of probable reserves in our latest NI 43-101 statements. We have achieved this through extensive exploration of our existing projects as well as the purchase of other high potential properties. We have conducted preliminary economic assessments at our Wouterspan, Niewejaarskraal and Tirisano projects, and are encouraged by the potential returns of these properties." adds Bristow.
The Company, which currently produces some 2,500 carats of large gem quality diamonds per month has set itself the objective of growing its production to 10,000 carats per month within five years. It has the capacity to deliver this growth through organic means, based on its significant resource base and is currently reviewing various options to fund these capital investments.
Rockwell owns 14 prospecting rights comprising some 30,000 hectares of alluvial diamond potential in South Africa. Holpan and Klipdam, which are currently being consolidated into a single operation, are located in the Northern Cape. Saxendrift is located in the Middle Orange River in the Northern Cape Province. In addition, the Company is in the final stages of acquiring and redeveloping the Tirisano mine, located in Ventersdorp in the North West Province. The mine will come on stream in the second half of fiscal 2012. Other significant deposits include Wouterspan and Niewejaarskraal, which the Company plans to re-commission within the next two years.
Rockwell's mineral resource statement is summarized below:
Tirisano** Indicated 25,279,900 NC 2.37 Inferred 15,334,000 NC Estimates were done as at November 30, 2010. These have been reconciled to February 28, 2011 by including material removed by trial mining and bulk sampling during the fourth quarter (Dec 1-Feb 28).
NC - denotes no change. "Value" denotes the average value of the sales of diamonds during sampling.
Mineral resources that are not mineral reserves do not have demonstrated economic viability.
* The Saxendrift probable mineral reserves are exclusive from the indicated mineral resources.
** Tirisano acquisition is not yet complete as the mining rights have not yet been ceded to Rockwell.
Note that Rockwell also holds the the Zwemkuil Project, including the Zwemkuil, Mooidraai and Holsloot properties, which was also reviewed during the 2011 fiscal year. Although a significant exploration target exists, there has not been sufficient work done to estimate mineral resources as this time.
Estimates were completed by Rockwell's Manager, Resources, G.A. Norton, (Pr. Sci. Nat.), a qualified person who is not independent of the Company and reviewed by T.R. Marshall, PhD, (Pr. Sci. Nat.). Dr Marshall, a qualified person who is independent of the Company, is responsible for the estimates and has reviewed and approved the contents of this release.
Further details of the resource estimates and the studies described below are provided in technical reports which are filed on the Company's profile at www.sedar.com.
The following studies were done in South African Rand (ZAR) and US dollars (USD), and used a conversion rate of 6.8 ZAR:1 USD.
Saxendrift Prefeasibility Study
The Saxendrift property is located on the south bank of the Orange River in the Herbert district of the Northern Cape Province, some 50 km southwest of Douglas and some 160 km from Kimberley. Rockwell holds a 74% interest in the property. The other 26% is held by the Company's Black Economic Empowerment partner.
During 2009/2010 trial-mining was initiated on Saxendrift as part of a study to determine what portion of the gravel resource could be converted to a reserve. Capital costs of plant and equipment have been determined through formal quotations acquired from suppliers. Operational parameters and operating costs were determined both during the bulk-sampling and trial-mining phases on Saxendrift, and from Rockwell's experience on its other operations. It is believed that the detail and accuracy of this study is at a pre-feasibility level.
The mine plan involves continued mining on the Saxendrift A terrace during 2011/2012 while detailed exploration is undertaken on the C terrace. The preferred method of mining the alluvial gravels is strip-mining in a shallow, opencast operation. The diamondiferous alluvial gravels are relatively thin, unconsolidated to semi-consolidated, tabular bodies with generally less than 20 metres overburden. The upper 2-3 metres of the sequence is calcreted to varying degrees - usually to laminar or hardpan levels. As a result, prior to excavation, the sample block needs to be blasted, which breaks up the hard calcrete carapace without damaging diamonds, which is then stripped off using hydraulic excavators. In various areas of the property varying depths of calcretisation has meant that some of the upper gravel layers are also highly cemented. In order to mitigate against this problem, prior to excavation, the gravels are ripped by a bulldozer which effectively liberates the gravels (and the diamonds) from the calcrete matrix. The disaggregated material is then loaded by excavator, onto articulated dump trucks (ADT's) and transported to the screening plant where some 23% of the gravel is removed.
The processing plant, which was commissioned in late 2008, is comprised of four scrubbers followed by four 18 ft rotary pan-plants and has a design plant-throughput of 800 tonnes per hour. With an expected annual treatment of 1,800,000 cubic metres some 9,000 carats of diamonds are expected to be recovered through a bank of ten FlowSort machines and an electronic grease table, as well as final hand-sort in a glove-box under secure conditions.
On the basis of the trial-mining on terrace A and subsequent pre-feasibility study, probable reserves were estimated for the Saxendrift Mine. The life-of-mine, based on these reserves, at the proposed rate of mining of 150,000 cubic metres per month is estimated at 2.7 years. Since the plant has been built no additional capital expenditure has been budgeted for the outstanding life of mine. Operating costs have been budgeted at ZAR7.5M/month. The net present value (NPV) at a discount rate of 20% is USD9.8 million.
The key parameters and results from the mine study are tabulated below:
Key Parameters Key Results Volume of gravel Cubic Metres Probable Reserve 4,859,900 Average Grade 0.5 ct/100m3 Average sales value (2011) USD2,029/ct Proposed monthly throughput 150,000m3 Proposed mine life (reserves only) 2.7 Operating Costs (2011) ZAR43/m3 Mining Royalties 0.5-7%* Capex required to bring mine into production *ZAR 88,237,005 Earthmoving fleet budget N/A Tax 28% NPV at discount values of: 15% (reserves only) ZAR 75,082,638 20% (reserves only) ZAR 65,480,170 25% (reserves only) ZAR 57,464,170 *Royalties vary according to the profitability of the mining company, subject to a minimum rate of 0.5% and maximum rate 7.0% for diamonds.
Wouterspan Preliminary Assessment
The Wouterspan Property is located on the northern bank of the Orange River, about 100 km west of Douglas in the Northern Cape Province, South Africa. It is across the river from the Saxendrift mine. Rockwell holds 75% interest in the property. The other 27% interest is held by a Black Economic Empowerment partner.
Rockwell conducted bulk sampling and trial mining activities at Wouterspan until November 2008 and has retained the property on care and maintenance since that time. Since the geology is similar to the adjacent Saxendrift mine.
A preliminary assessment of the project was done based on the indicated and inferred mineral resources at 30 November 2010. The diamond value used in the statement is the average received for +5,500 carats of diamonds sold from the adjacent Saxendrift mine (USD2,029 per carat) during fiscal 2010. The assessment is preliminary in nature, and includes inferred mineral that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.
Wouterspan is located in the same area as Saxendrift, so the geology is similar and similar mining methods are expected to be employed. Excavation of the gravels is not planned to change from the standard techniques applied on all of Rockwell's alluvial diamond mines - excavation by hydraulic excavator followed by transport of gravel to the plant site in mine haul trucks.
The proposed processing plant will be a high-volume, low-cost plant, specifically designed to deal with the peculiarities of the gravels being processed. The plant will comprise 8 (or 12) 18' rotary pan plants and trial-mining will investigate the efficiency of sending selected size fractions to selected pans, namely +2-6mm, -6-12mm and +12-32mm. This is expected to greatly improve the recovery efficiencies of the pans. The plant is planned to be automated to the extent that optimal production, along with minimal downtime and maintenance, can be attained.
The mine plan has been developed in two phases - phase 1, comprising plant throughput of 180,000 cubic metres per month, for a period of some 24 months, followed by phase 2, to achieve at throughput at some 340,000 cubic metres per month. The overall mine life is 10 years. The net present value (NPV) at a discount rate of 20% is USD126.4 million.
Key parameters and results of the preliminary assessment are summarized below:
Key Parameters Key Results Volume of Gravel Cubic Meters Indicated resources 5,025,500 Inferred resources 37,774,000 Average Grade 0.7 ct/100m3 Average sales value USD2,029/ct Proposed monthly throughput 340,000 m3 Proposed mine life (indicated and inferred resources) 10 Operating Costs ZAR45/m3 Mining Royalties Variable * Capex required to bring mine into production ZAR122,000,000 Tax 28% IRR 135% NPV at discount values of: 15% ZAR1,199,219,358 20% ZAR885,000,000 25% ZAR667,000,000 *Royalties vary according to the profitability of the mining company, subject to a minimum rate of 0.5% and maximum rate 7.0% for diamonds.
Niewejaarskraal Preliminary Assessment
The Niewejaarskraal project is located on the south bank of the Orange River in the Herbert district of the Northern Cape Province, some 57 km southwest of Douglas and some 170 km from Kimberley. The property is a past producer that was acquired by Rockwell in 2009. It is held 74% by Rockwell and 26% by the Black Economic Empowerment partner.
During 2008, Rockwell reprocessed the drilling data from a prior operator and re-estimated the resources. Since no processing has taken place on Niewejaarskraal in the period 2009-2010, the resource volume and grade figures remain unchanged as at November 30, 2010. However, during FY2010, Rockwell sold +5,500 carats of diamonds from the adjacent Saxendrift mine on the open market for USD2,029 per carat. Until a reasonable parcel of stones have been recovered from the Niewejaarskraal mine and sold, this value will be accepted at an Inferred resource classification level.
During 2009/2010 Rockwell has proceeded with plans to complete trial-mining and other studies. Niewejaarskraal is located in the same area as Saxendrift and Wouterspan, so the geology is similar and similar mining methods are expected to be employed
There is an existing processing plant on Niewejaarskraal, but it will need to be completely re-furbished and upgraded prior to re-commissioning. The current plan, given that Rockwell is currently in the process of re-opening the Wouterspan and Tirisano mines, is for the Niewejaarskraal mine to remain on care and maintenance for the period to fiscal 2013.
The proposed new processing plant will be a high-volume, low-cost plant, specifically designed to deal with the peculiarities of the gravels being processed. The plant will comprise 8 (or 12) 18' rotary pan plants and trial-mining will investigate the efficiency of sending selected size fractions to selected pans, namely +2-6mm, -6-12mm and +12-32mm. This is expected to greatly improve the recovery efficiencies of the pans. The plant is planned to be automated to the extent that optimal production, with minimal downtime and maintenance can be attained. The mine plan has been developed to run at some 340,000 cubic metres per month. Anticipated costs for re-commissioning the mine in 2013 is ZAR130 million, with an anticipated ZAR3 million budgeted for on-going capital expenditures.
A preliminary assessment was completed, at a proposed throughput of 340,000 cubic metres per month at full production, the preliminary estimation of mine life is 6 years, based on the inferred mineral resources currently outlined at Niewejaarskraal. The net present value (NPV) at a discount rate of 20% is USD52.7 million.
This assessment is preliminary in nature, and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.
The key parameters and results are tabulated below:
Key Parameters Key Results Volume of gravel Cubic Metres Inferred Resources 20,630,000 Average Grade 0.84ct/100m3 Average sales value USD2,029/ct Proposed monthly throughput 340,000m3 Proposed mine life (inferred resources) 6 years Operating Costs ZAR45/m3 Mining Royalties 0.5-7% Capex required to bring mine into production ZAR130,000,000 Earthmoving fleet budget N/A Tax 28% IRR 123% NPV at discount values of: 15% ZAR 450,436,454 20% ZAR 368,824,670 25% ZAR 304,043,501 Royalties vary according to the profitability of the mining company, subject to a minimum rate of 0.5% and maximum rate 7.0% for diamonds.
Tirisano Preliminary Assessment
The Tirisano Project is a past producer that has been on care and maintenance since 2008. The 10,805.57 ha property is located some 35 km due north of the town of Ventersdorp, in the Northwest Province approximately 150 km west of Johannesburg. Rockwell is acquiring the Project from Etruscan Diamonds (see news release dated March 24, 2010). The acquisition will be completed once the mining rights have been ceded to Rockwell.
Mining from the Tirisano project by open cast methods took place from 2002 - 2008 by the previous operator. Prospecting, geophysical surveys, drilling comprising 2,391 boreholes, totalling 53,576 metres, and bulk-sampling activities have been taking place since 1979.
Tirisano occurs in a karst environment where the dolomite walls of the host-rock are vertical. The mode of gravel deposition is not typical fluvial alluvial, but periodic subsidence has taken place during deposition which has been ongoing since, at least, the Mesozoic period, resulting in a build-up of a very thick gravel sequence. The gravel stratigraphy comprises an upper gravel horizon and a lower gravel unit that are both economically diamondiferous, separated by a sub-economic fine-grained pebble-clay unit. Mineralisation is confined to the gravel packages in-filling karst caverns etched out of the chert-rich dolomites of the Malmani Group. The clay-poor Lower Gravel Package and Upper Gravel Package units are considered to be the major exploration targets as the diamond grades encountered in these units have, historically, supported commercial mining ventures.
A preliminary assessment, based on both indicated and inferred resources, has been completed in support of the planned trial-mining operation. The assessment is preliminary in nature, and includes inferred mineralization that is considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.
The preferred method of extracting alluvial gravels at Tirisano is by means of opencast mining. The diamondiferous deposits range from thin tabular horizons to thick (+60 metres) unconsolidated to semi consolidated, gravel units infilling palaeokarst hollows and sinkholes.
Rockwell decided to re-engineer the entire concentration and recovery process before putting the mine back into production. Numerous mineralogical and metallurgical studies were initiated in order to determine the most effective methods for processing the clay-rich gravels that can cause recovery inefficiencies. The Company is constructing a processing facility that consists of 8 16 foot rotary pans that includes an over designed front end to be able effectively break down the clay inherent in the ore body. Since no diamonds have been sold from the Tirisano mine, no current values are available and the early 2008 value of USD606 carat has been applied for the resource estimate. Nevertheless, sales values of diamonds from the district are in the USD700 per carat range, and can be expected during 2011.
At a proposed 180,000 cubic metres per month throughput, the preliminary estimation of mine life is 11.7 years, based on indicated mineral resources only. An additional 7.1 years may be added if inferred mineral resources are included, resulting in a total expected mine life of 18.8 years. Rockwell has determined that the NPV of the Tirisano project at a 15% discount rate is USD 32.3 million. The net present value (NPV) at a discount rate of 20% is USD21.8 million.
The key parameters and results are tabulated below:
Key Parameters Key Results Volume of gravel Cubic Metres Indicated Resources 25,279,800 Inferred Resources 15,334,000 Average Grade 2.37ct/100m3 Average sales value USD606/ct Proposed monthly throughput 180,000m3 Proposed mine life 18.8years Operating Costs ZAR49/m3 Mining Royalties 0.5-7% Capex required to bring mine into production ZAR73,000,000 Earthmoving fleet budget N/A Tax 28% IRR 59% NPV at discount values of: 15% ZAR 226,070,559 20% ZAR 153,092,925 25% ZAR 105,432,364 *Royalties vary according to the profitability of the mining company, subject to a minimum rate of 0.5% and maximum rate 7.0% for diamonds.
During 2011, trial-mining and continued pre-feasibility studies are planned to determine the mine-plan which will be implemented to put the Tirisano mine back into full production. During this time, it is expected that the planned modifications to the plant will result in improved grade recoveries. Further, the sale of at least 5,000 carats on the open market will result in a realistic, current valuation of the diamonds.
No regulatory authority has approved or disapproved the information contained in this news release.
Forward Looking Statements
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.
Factors that could cause actual results to differ materially from those in forward-looking statements include uncertainties and costs related to exploration and development activities, such as those related to determining whether mineral resources exist on a property; uncertainties related to expected production rates, timing of production and cash and total costs of production and milling; uncertainties related to the ability to obtain necessary licenses, permits, electricity, surface rights and title for development projects; operating and technical difficulties in connection with mining development activities; uncertainties related to the accuracy of our mineral resource estimates and our estimates of future production and future cash and total costs of production and diminishing quantities or grades if mineral resources; uncertainties related to unexpected judicial or regulatory procedures or changes in, and the effects of, the laws, regulations and government policies affecting our mining operations; changes in general economic conditions, the financial markets and the demand and market price for mineral commodities such and diesel fuel, steel, concrete, electricity, and other forms of energy, mining equipment, and fluctuations in exchange rates, particularly with respect to the value of the US dollar, Canadian dollar and South African Rand; changes in accounting policies and methods that we use to report our financial condition, including uncertainties associated with critical accounting assumptions and estimates; environmental issues and liabilities associated with mining and processing; geopolitical uncertainty and political and economic instability in countries in which we operate; and labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in which we operate our mines, or environmental hazards, industrial accidents or other events or occurrences, including third party interference that interrupt operation of our mines or development projects.
For further information on Rockwell, Investors should review Rockwell's annual Form 20-F filing with the United States Securities and Exchange Commission www.sec.com and the Company's home jurisdiction filings that are available at www.sedar.com.
Information Concerning Estimates of Indicated and Inferred Resources
This news release also uses the terms 'indicated resources' and 'inferred resources'. Rockwell Diamonds Inc advises investors that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, 'inferred resources' have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for Preliminary Assessment as defined under 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.
SOURCE Rockwell Diamonds Inc.
Source: PR Newswire (May 31, 2011 - 9:10 AM EDT)
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