HomeDiamonds & GemstonesRockwell to mothball Tirisano mine

Rockwell to mothball Tirisano mine

Rockwell Diamonds
CEO James
Johannesburg, South Africa — 13 December 2012 – Strikes, operational complexities, and a slower-than-anticipated recovery in the price of small diamonds have combined to force Rockwell Diamonds to place its 700 carat-per-month Tirisano mine near Ventersdorp on care and maintenance.

Announcing this here, Rockwell Diamonds CEO James Campbell said a study would weigh up a ‘fit for purpose’ plant suited to local conditions when the mine reopened. This would be the second mine that Rockwell Diamonds had ‘restructured’ in the last three months.

In October, the company said it was outsourcing mining of its 800cpm Klipdam alluvial diamond mine to a contractor. The sale of Klipdam’s yellow machinery would ameliorate its high cost base.

Campbell told Miningmx in a telephonic interview that shifting to outsourcing mining at the company’s other operations was worth considering, as the improvement in recoveries at Klipdam had been "a revelation".

Placing Tirisano on care and maintenance was not quite a company-saving initiative, but with cash burn still at R3 million per month (following a reduction in costs in the first half of the year when cash burn had totalled R7m/month), Campbell said it had become unsustainable.

“I wish I had moved earlier than this,” said Campbell, who added that financing of the company’s project pipeline would be unaffected by Tirisano’s losses.

“We have a new project, Saxendrift Hill, which has been funded out of working capital and is 90% funded,” he said. He declined to disclose Rockwell Diamonds’ cash position, but said there was no need to approach the capital markets for project finance.

Some 90 employees would be retrenched at Tirisano, although efforts would be made to redeploy workers at operations elsewhere within the company.

Campbell said Tirisano had been affected last week by a second unprotected strike in the last four months which related to wage demands. This was despite the fact the mine was loss-making, he said.

“Rockwell is committed to providing jobs in areas that are impacted by high unemployment rates and we are disappointed that these decisions will result in inevitable job losses at the mine,” said Campbell in a statement to the JSE.

Source: Miningmx. For more information, click here.