As TSX and JSE-listed Rockwell Diamonds’ Saxendrift operation is approaching the end of its economic life, the company has shifted its focus on rebuilding the production profile at its existing Middle Orange River (MOR) operations, while also redeploying assets to newly acquired operations and expediting work on development projects.
In its quarterly production and sales update for the three months ended May 31, 2015, last week Rockwell reported that volumes of gravel processed were down 30% from the prior year, related to the suspension of operations at Niewejaarskraal and closure of the Saxendrift Hill Complex (SHC), as well as the disposal of Tirisano.
This had a corresponding impact on carat production, together with a decline in grade as Tirisano had higher grades at lower per carat average values.
Saxendrift volumes, including SHC gravels, increased 30% and 11% respectively, as a result of improved plant and mining fleet efficiencies. Despite this, carat production declined 17%.
Notable stones recovered during the quarter included 20 stones exceeding 20 carats with four in the 50 to 100 carat range.
Rockwell Diamonds CEO James Campbell said that the company is planning for a reduced operation of 130 000m3/m, from 220 000m3/m, for the remaining life of mine.
Meanwhile, volumes of gravel mined and processed at Rockwell’s Niewejaarskraal operation declined 74% and 72% respectively, following a suspension of operations pending an optimisation study of the resource and processing plant, the company announced last week.
Rockwell’s MOR operations experienced a 15% decrease in the volumes of gravel processed in the quarter.
MOR carat sales were up 3% year-on-year to 3 068 carats but MOR diamond sales, excluding beneficiation, were down 13% to US$5.4 million due largely to the mix of goods between the operations, and the timing of sales.
Total sales declined 24% to US$6.7 million due to less goods from royalty contractor miners after the sale of Tirisano.
Commenting on first quarter production and sales Campbell said that the last quarter was very challenging as it managed the closure of some of its operations and worked to complete the Bondeo 140 cc transaction.
“We took over the Remhoogte/Holsloot (RH/HS) project from May 28, where the first three days’ production made a nominal first quarter contribution. We have adopted a conservative approach to the roll-out of our integration plan and expect to steadily ramp up the throughput and further rationalise the various business into one operational structure over the current quarter. The grades and volumes processed at the RH/HS project have been in line with expectations, said Campbell.
He further said that Rockwell’s team is also focused on advancing its Lanyonvale and Wouterspan development projects with the objective of replacing Saxendrift’s production and further increasing the company’s production profile.
Meanwhile, Rockwell is also finalising its plan of action to raise equity funding to repay the bridging loan provided by Diacore and its Chairman, Mark Bristow, which facilitated the closure of the acquisition.
“Having successfully assumed control of these new operations, we have significantly de-risked the financing aspect of the transaction. We believe that these new projects, together with our exciting development projects, present potential investors with an attractive entry point,” Campbell said.