TSX/JSE-listed diamond miner Rockwell Diamonds has revealed a strategic plan and business restructure aimed at achieving sustainable cash flow moving forward in light of production and recovery challenges.

The current level of diamond recovery, grade and volumes processed are an on-going area of concern across Rockwell’s operations. As a result, it has been challenging to achieve financial viability, growth and profitability, which have directly impacted the company’s human capital requirements, and sustainability.

In the last three months of calendar 2015, the company conducted an in-depth strategic and operational review of the business to assess its strategic direction, including its commitment to processing 500 000 m³ per month from its Middle Orange River (MOR) operations as well as a significant restructuring to place the business on a sustainable footing.

Closing Saxendrift

As a result of lower grades associated with processing old dumps during the third quarter, which are expected to be depleted at fiscal year-end, Rockwell Diamonds will close company directed operations at Saxendrift by February 2106, being the end of the fiscal year.

Rockwell Diamonds Saxendrift operation will be closed by February 2016
Rockwell Diamonds Saxendrift operation will be closed by February 2016

The company has also entered into two royalty mining contracts at Saxendrift with a term of three years. The first commenced operations at Saxendrift in December 2015 with the second starting to mine during February 2016.

The company is assessing further royalty proposals to continue to generate further value from the Saxendrift property. All diamonds recovered by royalty miners at Saxendrift will be sold by the company, through its sales system and 10% of gross sales will be retained by the company as a royalty.

Current estimates of tailings dumps, and other areas of possible processing interest, show in excess of three years of low grade gravels, which can be processed with little or no mining or stripping cost. This means that smaller low cost royalty miners can be commercial at grades as low as 0.3 cphm³.

Start-up of Wouterspan

The company is finalising the recommissioning of Wouterspan early in 2016 at an envisaged capital cost of C$4.4 million (R43 million).

The redeployment of existing processing and mining equipment from Saxendrift, Niewejaarskraal and Remhoogte will enable the construction of a 200 000 m³ per month operation, with little need for new equipment; accordingly the budget is composed mostly of relocation and set up costs.


Exploration on the extensive land package held by the company will be doubled with the view to identifying further royalty mining opportunities and to prioritise the development of near-term projects.


Closure of Rockwell’s Johannesburg corporate office will be undertaken, including the transfer of Rockwell’s key senior executives to MOR on a full time basis. Cost savings at an annual run rate of C$800 000 million (R7.9 million) are expected at corporate and operational levels including closure of the Johannesburg office.

A decision has been taken to restructure the workforce company-wide. In line with legislative requirements, as well as the company’s consultative culture, the relevant government bodies and employee representative bodies have been informed. All of the company’s employees were issued with Section 189 notices on January 5, 2016.

Consultation processes have commenced internally and the outcome will affect a number of employees, with the real impact to be assessed during the consultation process. Rockwell will make every effort to minimise the number of retrenchments and re-deploy as many employees as possible.

James Campbell
Rockwell Diamonds president and CEO James Campbell

“Our third quarter performance was driven by continued weakness in global diamond pricing which negatively impacted the balance sheet, and limited our ability to invest in increased processing capacity. While we chiefly met our third quarter production targets, reduced volumes at RHC following the fatality in early September, meant that we did not achieve the 1million m³ processing volumes generally necessary for the recovery of large stones,” says Rockwell CEO and president James Campbell.

“Operating performance has been adversely impacted by the declines in grade and overall sales values, and their impact on sales. Management and the board have however taken decisive action to place the company on a positive footing in order to meet its sustainable operations target of 500 000 m³ processing.”

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