Doubling Rough Diamond Prices, Lower Costs, Pull Rockwell Back to Profit

(IDEX Online News) – Rockwell Diamonds’ revenues have declined in the second quarter ending August 31 due to shrinking production. However a doubling in the achieved average diamond price and a sharp cut in costs helped the company end the second quarter with a $2.0 million profit.

The South Africa-based diamond miner posted revenue of $9.2 million, compared with revenue of $11.4 million in the prior year.

The company sold 3,223 carats during the quarter at an average of $2,186 per carat, a 109 percent increase. Beneficiation revenue from the joint venture with Steinmetz increased 64 percent to $2.3 million.

The rise in the company’s achieved average diamond prices reflects its production more than it reflects the change in rough diamond prices. While prices increased by 35-60 percent between August 2010 and August 2011, Rockwell mined 46 diamonds exceeding 10 carats, of which 11 stones exceeded 20 carats.

These stones were channeled into the joint venture with the Steinmetz Diamond Group, which delivers value added revenues for stones that exceed 2.8 carats.

During the quarter the high quality stones sold through the joint venture included a 128.67-carat fancy yellow with high clarity stone, a 21.52-carat clean D/E color stone, and a 179.95-carat makeable, clean brown colored stone.

Mine site operating costs were brought down by 18 percent to $5.1 million.

Production decreased 47 percent to 3,611 carats chiefly due to the closure of Holpan.

“By focusing and delivering on our strategic imperatives to optimize our current operations and sustainably increasing our production profile, our operations have the potential to deliver strong returns for shareholders,” said CEO James Campbell.