Rockwell Diamonds Records 59% Increase in Q3 Revenues

Saxendrift

(IDEX Online News) – Rockwell Diamonds Inc. reports that gross diamond revenues increased 59 percent year over year to C$18.9 million ($15.8 million), composed of rough diamond sales and beneficiation revenue, during the three months ended November 30, 2014.

This is the tenth successive quarter to have shown growth, notes the miner, whose company-owned operations in South Africa include the three producing Middle Orange River (MOR) mines Saxendrift, Saxendrift Hill Complex (SHC), and Niewejaarskraal.

Rough diamond sales increased 55 percent to C$17.5 million ($14.6 million), led by a 127 percent improvement in carat sales to 13,759 carats. Revenue from Rockwell’s beneficiation profit-share agreement with Diacore, previously Steinmetz Diamond Group, totaled C$1.4 million ($1.2 million) for the quarter, up from C$600,000 ($501,525) from a year ago.

However, the average price per carat from company-owned properties declined 35 percent to $1,267 due to the lower incidence of large diamonds recovered in the quarter.

The cash cost of sales increased to C$22.1 million ($18.5 million), in line with the higher carat sales. This was led by increased mining output at Niewejaarskraal and the royalty mining contractors at Tirisano while the inventory movement also had an impact.

The company said that its cost reduction initiatives continued during the three-month period, resulting in a reduction of 15 percent in consolidated average cash operating costs for the MOR operations to $11.5 per cubic meter, the main drivers being increased volumes mined (up 60 percent) and processed (up 29 percent). The company recorded an operating loss of C$3.2 million ($2.7 million).

“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. Equally pleasing was the 15% reduction in the cash operating cost per m³,” says Rockwell James Campbell, CEO and president.

“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 (SHC) resource through the Saxendrift plant; and relocate SHC’s assets to the other MOR properties, in particular Niewejaarskraal. In spite of a C$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,” concluded Campbell.

The company recently announced a transaction to acquire certain alluvial diamond properties and associated plant and equipment in the MOR region contiguous to Rockwell’s existing properties there, which will extend the current operating and resource base and allow additional rationalization of plant and equipment to lift the overall volumes processed to above the targeted 500,000m³ in the MOR. The assets in question comprise early life mines that are in production and capable of being enhanced by Rockwell’s management team to deliver immediate operational and financial benefits.