HomeDiamonds & GemstonesRockwell Diamonds considers sale of assets to improve financial position

Rockwell Diamonds considers sale of assets to improve financial position

Rockwell Diamonds, the JSE and TSX-listed alluvial diamond miner,  has received offers for some of its assets and is considering selling one or more of them to improve the company’s liquidity and working capital position.

This comes after the company announced in mid-October that it was undertaking a strategic review of its assets and business options.

Rockwell Diamonds said the materiality of the possible transaction is not such that it would require shareholder approval. The company will update the market on any further developments or final transaction agreements.

The new CEO of Rockwell Diamonds, Tjaart Willemse, implemented an operational turnaround strategy after he took over the helm of the company in September, as he believed the business was in a state of disrepair.

It firstly involved the implementation of a new contract for outsourced mining services and sale of the company’s earthmoving vehicle fleet and the transfer of two thirds of the company’s staff. The contract would be structured to externalise risk from variance in mining volumes and equipment availability.

Rockwell Diamonds would also commission the third and fourth line of the Wouterspan wet plant during October 2016.

The new strategy is also aimed at reviewing the current mining plan at Remhoogte to reflect a reduced Rooikoppie resource and less economic Palaeo gravels and included the shut-down of Saxendrift during September 2016 and exploration drilling and bulk sampling in the vicinity of Wouterspan.

Rockwell Diamonds further plans to develop a resource development strategy for its Middle Orange River asset to facilitate good business decisions for future production expansion or replacement. In addition, the company will focus on assessing potential kimberlite acquisitions to increase stability in monthly production and cash flow.

This new focus is the result of a detailed board review and intervention in late August as a result of the performance of its Remhoogte acquisition, which has been below plan, and the construction of the new Wouterspan plant that is behind schedule with a higher cost.

The result of the review included a change in certain roles and continued close monitoring by the board of operations and project performance on a weekly basis.

The company also announced that the implementation of the mining agreement between H C van Wyk Diamonds (HCVW) and C-Rock Mining and other related agreements between HCVW, Saxendrift Mine and CML have been terminated by the subsidiaries as they have not proceeded as per the agreements.

Rockwell Diamonds said that CML and some of its agents have been distributing confidential information to third parties – in contradiction with their contractual and confidential agreements with Rockwell and its subsidiaries – in an attempt to influence the outcome of the legal process which the company intends to pursue “robustly”.