Rockwell Diamonds Saxendrift operation will be closed by February 2016

Rockwell Diamonds Middle Orange River alluvial diamond projectTSX- and JSE-listed Rockwell Diamonds has delivered a revenue increase and lowered operating costs due to higher volumes processed but lower grades lead to rationalization of Saxendrift Hill Complex.

This comes despite the fact that average diamond prices realized from operations owned by Rockwell Diamonds has declined by 35%. “The operating result is reflective of a difficult quarter due to the low incidence of large diamonds across all our operations,” the company said in a statement.

Diamond revenue growth continues upward trend

“These results reflected a challenging quarter with a lower incidence of large stones. Despite this we achieved US$-denominated revenue growth for the tenth successive quarter on the back of an increase in carat sales,” said James Campbell, Rockwell Diamonds CEO and President.

Gross diamond revenues increased for the tenth successive quarter, to $18.9 million including beneficiation revenue. Rough diamond sales increased 55% to $17.5 million, led by a 127% improvement in carat sales to 13,759 carats. The 35% decline in average carat price from Company owned properties is due to the lower incidence of large diamonds recovered in the quarter.

Operating costs lowered by 15%

The company also focused on the expansion of its Niewejaarskraal ahead of acquisition of contiguous Middle Orange River alluvial diamond assets, which is expected to close in April 2015.

At this operation, cost reduction initiatives by the company have resulted in a reduction of 15% in consolidated average cash operating costs to US$11.5 per cubic metre, the main drivers being increased volumes mined (up 60%) and processed (up 29%).

Campbell noted that the lowered operating costs is “pleasing” and added that “We are mindful that we need to ensure our ability to profitably process some of the lower grade resources and are committed to further drive down unit costs, thus the decision to process the remaining Saxendrift Hill Complex resource through the Saxendrift plant; and relocate SHC’s assets to the other Middle Orange River properties, in particular Niewejaarskraal.

“In spite of a $3.2 million operating loss I believe we remain within the statistical variance modeled for MOR alluvial deposits and this volatility in diamond recoveries is best addressed by lifting our monthly processing capacity above 500 000m3.”

A sneak peek into Rockwell Diamonds’ 2015 strategy

Rockwell’s ongoing exploration activities aim to increase production from its Middle Orange River properties, and extend the mine lives. These include contiguous exploration of existing resources at the Saxendrift Extension property. Through trial mining, the Niewejaarskraal inferred resource will also be upgraded. Furthermore, Rockwell continues to review options to bring the Wouterspan property into production on a phased approach, following the completion of a preliminary economic assessment in May 2014.

“Given the progress we have made in rebuilding Rockwell as a diamond value focused business on the back enhanced management and operational efficiency, and cost discipline (without external funding), our priority is now to build on past achievements through our recently announced acquisition which we believe will be the game changer we have been searching for. The most critical component of being able complete the transaction will be our ability to raise the required equity within the time frame,” said Campbell.

Top Stories:

Platinum Group Metals aims for first Project 1 production in 2015
African Energy and First Quantum Minerals proceed with Sese JV

African Minerals secures $13m to address Ebola-related costs