VANCOUVER, Oct. 15 /PRNewswire-FirstCall/ -- Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI; OTCBB: RDIAF) announces financial results for the three month and six month periods ending August 31, 2008. Financial information is stated in Canadian currency unless otherwise indicated.
Rockwell is focused on growth by mining and developing alluvial diamond deposits. The Company has established a significant footprint on alluvial deposits which consistently yield high value gemstone diamonds. Plus 2-carat stones comprise more than 65% of the Company's production and are of exceptional quality and value.
Diamond prices remained robust through the six month period ending August 31, 2008 and in September the Company recovered a large white 189.6-carat gemstone from the Klipdam mining operation. This stone realized a sale price of approximately US$10.2 million. This exceptional price was achieved against the background of turbulent conditions in world banking and capital markets which are likely to have an impact on diamond prices going forward.
During the six month period ending August 31, 2008, the Company expanded its operations to four (from an original three operations) with the re-commissioning of operations at Saxendrift on the south bank of the Middle Orange River, adjacent to its Wouterspan operation.
Rockwell is advancing production at the new Middle Orange River operations acquired from the Trans Hex Group, beginning with Saxendrift. Aside from the re-commissioning of the existing small scale Saxendrift plant during the six month period to August 31, 2008, the Company is on target and on budget with the construction of a new state-of-the-art, low-cost, high-volume wet Rotary pan plant on the Saxendrift terrace. Full scale pre-commissioning trials of the refurbished Saxendrift new final recovery facility began three weeks ahead of schedule in late September 2008. Commissioning of the new Saxendrift wet plant is scheduled for November 2008. Once commissioned this plant will add strong growth to the Company's diamond production profile, and yield further operational costs saving.
The Company experienced loss of production due to industrial action at its operations during the quarter ending August 31, 2008. This action was resolved to the benefit of the Company and its employees in late August and full scale production resumed on September 3, 2008.
In spite of industrial action, which resulted in approximately 35% loss in carat production during the second quarter of fiscal 2009, the Company was able to contain costs and show an operating loss of $155,476 for the period ending August 31, 2008. At a consolidated level, the Company showed a loss of $2.2 million for the period. For the six month period to August 2008 Rockwell showed an operating loss of $7,344 and at a consolidated level a loss of $3 million. Good production rates have been achieved since normal operations resumed on September 3, 2008 and this, combined with cost savings implemented by the Company, will yield reduced operating costs and positive financial performance in the third quarter ending November 30, 2008.
The Company ended the quarter with cash reserves of $10.1 million which will be allocated to future expansion of existing operations, and development of brownfields projects already held by the Company.
Overview and Highlights In the three month period ended August 31, 2008: - 4,266.25 carats were produced at the Holpan/Klipdam, Wouterspan and Saxendrift operations which was about 35% under budget due to industrial action; - 5,024.34 carats were sold at an excellent average price of US$1,951.41 per carat; - Revenues from sales were $9.9 million; - Cost of sales and amortization totalled $10.3 million, resulting in an operating loss of $155,476 for the period; - Net general and administrative expenses amounted to $3.2 million, offset by a net tax recovery of $703,167, and the loss on the sale of a discontinued operation of $203,338 resulted in a net loss of $2.2 million or $0.01 per share. In the six months ending August 31, 2008: - The Company re-commissioned an existing small Rotary pan plant at Saxendrift and implemented the fast track construction of the new Saxendrift wet Rotary pan plant - 10,576.83 carats were produced from operations at Holpan/Klipdam, Wouterspan and Saxendrift; - 9,879.61 carats were sold at an average price of US$1,709.31 per carat; - Revenues from sales of $17.4 million, inclusive of revenue received from contract diamond sales of $160,576; - Cost of sales and amortization totalled $17.5 million, resulting in an operating loss of $7,344 for the period; - Net general and administrative expenses amounted to $4.6 million, offset by a net tax recovery of $1.1 million, and the loss on the sale of a discontinued operation of $203,338 resulted in a net loss of $3 million or $0.01 per share; - Diamonds in inventory at August 31, 2008 totalled 1,640.78 carats; - The Company held cash reserves at August 31, 2008 of $10.1 million Results of Operations
In the first half of fiscal 2009, the Company operated three alluvial diamond mines and re-commissioned operations at its fourth site, Saxendrift. During the period, the Company also increased its interest in the Holpan/Klipdam and Wouterspan properties to 74%, with the remaining 26% being held by a Black Economic Empowerment ("BEE") consortium.
Industrial action at the Wouterspan mine during the quarter resulted in operations being curtailed at this operation during late July and the month of August. Wage negotiations for all South African operations were implemented in June 2008. These negotiations reached a deadlock in mid August and were followed by work stoppages and reduced production at the Company's other operations. Negotiations were successfully concluded in late August and full operations were resumed on September 3, 2008.
Production and Sales - Quarter Comparison
The following is a comparison of the current quarter (ending August 31, 2008) with the quarter ending August 31, 2007.
------------------------------------------------------------------------- PRODUCTION ------------------------------------------------------------------------- 3 months ending 3 months ending August 31, 2008 August 31, 2007 ----------------------------------------------------------------- Opera- Volume Average Volume Average tion (cubic Carats grade (cubic Carats grade meters) (carats per meters) (carats per 100 cubic 100 cubic meters) meters) ------------------------------------------------------------------------- Holpan 150,285 774.01 0.52 275,758 2,446.07 0.89 ------------------------------------------------------------------------- Klipdam 210,759 1,622.13 0.77 259,527 2,528.02 0.97 ------------------------------------------------------------------------- Wouter- span 120,829 708.12 0.59 354,492 2,594.59 0.73 ------------------------------------------------------------------------- Makoens- kloof - - - 63,199 237.30 0.38 ------------------------------------------------------------------------- Saxen- drift 84,883 1,161.99 1.37 - - - ------------------------------------------------------------------------- Total 566,756 4,266.25 0.75 952,976 7,805.98 0.82 ------------------------------------------------------------------------- ------------------------------------------------------------------------- SALES, REVENUE AND INVENTORY ------------------------------------------------------------------------- 3 months ending August 31, 2008 ----------------------------------------------------------------- Opera- Sales Value of Average Inventory tion (carats) Sales value (carats) (US$) (US$ per carat) ------------------------------------------------------------------------- Holpan 1,015.39 842,285 829.52 267.65 ------------------------------------------------------------------------- Klipdam 1,898.91 5,294,781 2,788.33 679.31 ------------------------------------------------------------------------- Wouterspan 1,093.56 1,700,432 1,554.95 272.88 ------------------------------------------------------------------------- Makoenskloof - - - - ------------------------------------------------------------------------- Saxendrift 1,016.48 1,967,072 1,935.18 420.94 ------------------------------------------------------------------------- Total 5,024.34 9,804,570 1,951.41 1,640.78 ------------------------------------------------------------------------- ------------------------------------------------------------------------- SALES, REVENUE AND INVENTORY ------------------------------------------------------------------------- 3 months ending August 31, 2007 ----------------------------------------------------------------- Opera- Sales Value of Average Inventory tion (carats) Sales value (carats) (US$) (US$ per carat) ------------------------------------------------------------------------- Holpan 1,469.20 3,149,370 2,143.59 1,382.65 ------------------------------------------------------------------------- Klipdam 1,758.87 5,218,220 2,966.80 1,171.70 ------------------------------------------------------------------------- Wouterspan 1,752.56 4,879,342 2,784.12 991.56 ------------------------------------------------------------------------- Makoenskloof - - - 237.30 ------------------------------------------------------------------------- Saxendrift - - - - ------------------------------------------------------------------------- Total 4,980.63 13,246,932 2,659.69 3,783.21 ------------------------------------------------------------------------- Production and Sales -Six Month Comparison
The following is a comparison of the first six months of fiscal 2009 (ending August 31, 2008) with the six months ending August 31, 2007.
------------------------------------------------------------------------- PRODUCTION ------------------------------------------------------------------------- 6 months ending 6 months ending August 31, 2008 August 31, 2007 ----------------------------------------------------------------- Opera- Volume Average Volume Average tion (cubic Carats grade (cubic Carats grade meters) (carats per meters) (carats per 100 cubic 100 cubic meters) meters) ------------------------------------------------------------------------- Holpan 356,751 2,579.36 0.72 671,933 4,651.83 0.70 ------------------------------------------------------------------------- Klipdam 429,429 4,232.01 0.99 456,468 3,996.34 0.88 ------------------------------------------------------------------------- Wouter- span 363,069 2,328.42 0.64 639,288 4,216.18 0.66 ------------------------------------------------------------------------- Makoens- kloof - - - 63,199 237.3 0.38 ------------------------------------------------------------------------- Saxen- drift 89,484 1,437.04 1.58 - - - ------------------------------------------------------------------------- Total 1,238,733 10,576.83 0.85 1,830,888 13,101.65 0.65 ------------------------------------------------------------------------- ------------------------------------------------------------------------- SALES, REVENUE AND INVENTORY ------------------------------------------------------------------------- 6 months ending August 31, 2008 ----------------------------------------------------------------- Opera- Sales Value of Average Inventory tion (carats) Sales value (carats) (US$) (US$ per carat) ------------------------------------------------------------------------- Holpan 2,589.96 3,471,620 1,340.41 267.65 ------------------------------------------------------------------------- Klipdam 3,912.71 7,744,322 1,979.27 679.31 ------------------------------------------------------------------------- Wouterspan 2,360.46 3,704,334 1,569.33 272.88 ------------------------------------------------------------------------- Makoenskloof - - - - ------------------------------------------------------------------------- Saxendrift 1,016.48 1,967,072 1,935.18 420.94 ------------------------------------------------------------------------- Total 9,879.61 16,887,348 1,709.31 1,640.78 ------------------------------------------------------------------------- ------------------------------------------------------------------------- SALES, REVENUE AND INVENTORY ------------------------------------------------------------------------- 6 months ending August 31, 2007 ----------------------------------------------------------------- Opera- Sales Value of Average Inventory tion (carats) Sales value (carats) (US$) (US$ per carat) ------------------------------------------------------------------------- Holpan 3,647.06 5,064,324 1,388.60 1,382.65 ------------------------------------------------------------------------- Klipdam 3,089.40 6,261,066 2,026.63 1,171.70 ------------------------------------------------------------------------- Wouterspan 3,466.98 7,024,589 2,026.14 991.56 ------------------------------------------------------------------------- Makoenskloof - - - 237.3 ------------------------------------------------------------------------- Saxendrift - - - - ------------------------------------------------------------------------- Total 10,203.44 18,349,979 1,544.12 3,783.21 ------------------------------------------------------------------------- Production Costs
The average operating cost during the quarter ending August 31, 2008 was US$5.62 per tonne which is inclusive of the Saxendrift start-up operation (by excluding Saxendrift, which is currently in a ramp-up phase, it is US$4.65 per tonne), an increase from US$2.96 per tonne in the quarter ending August 31, 2007. The increased cost per tonne is largely due to the loss of production and throughput related to industrial action experienced during this period.
The average operating cost over six months was US$4.77 per tonne which includes Saxendrift. Excluding Saxendrift, which is currently in a ramp-up phase, the operating cost decreases to US$4.16 per tonne, an increase from US$3.48 per tonne in the six months ending August 31, 2007.
During the first six months of fiscal 2009, the Company focused on implementing costs savings throughout the business, and most particularly in its mining and processing operations. Sustainable costs savings have been achieved through the revision of mine plans, optimization of mining methods and earth moving fleet, the modernization of processing plant, training, and enhancement of productivity. As a consequence of its optimization programs, the Company was able to re-commission operations at Saxendrift during this six month period without having to resort to additional staff recruitment and the purchase of new earth moving fleet.
Cost savings have been reflected in quarterly operating cash costs which have been relatively flat for the past six quarters, in spite of considerable price increases in steel, fuel and oil, electricity, and labour. The benefits of costs savings implemented by the Company will be apparent in forthcoming quarters.
Profit and Loss
The Company had a loss of $2,249,847 for the three month period ended August 31, 2008 compared to a net profit of $431,209 for the comparable period in the prior year. The net losses during the period was primarily the consequence of industrial action and resultant loss of production experienced by the Company during late July and through August 2008.
At August 31, 2008, the Company had working capital of $4,388,435 compared to working capital of $11,837,132 at May 31, 2008 and held total cash reserves of $10.1 million which will be allocated to future expansion of existing operations, and development of brownfields projects already held by the Company.
Additional details can be found in the Company's Financial Statements and Management's Discussion and Analysis which are filed on http://www.sedar.com/.
------------------------------------------------------------------------- The Company will host a telephone conference call on Thursday, October 16 at 10:00 a.m. Eastern Time (7:00 a.m. Pacific; 4:00 p.m. Johannesburg) to discuss these results. The conference call may be accessed by dialing (877) 591-4959, or (719) 325-4891 internationally. A live and archived audio webcast will also be available at on the Company's website at http://www.rockwelldiamonds.com/. The conference call will be archived for later playback until Friday, October 24, 2008 and can be accessed by dialing (888) 203-1112 in Canada and the United States, or (719) 457-0820 and using the passcode 5716430. ------------------------------------------------------------------------- John Bristow President and CEO No regulatory authority has approved or disapproved the information contained in this news release. Forward Looking Statements
This release includes certain statements that may be deemed "forward-looking statements". Other than statements of historical fact all statements in this release that address future production, reserve or resource potential, exploration drilling, exploitation activities and events or developments that Rockwell expects are forward-looking statements. Although Rockwell believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, changes in and the effect of government policies regarding mining and natural resource exploration and exploitation, availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements. For more information, investors should review Rockwell's annual Form 20-F filing with the United States Securities and Exchange Commission http://www.sec.com/ and Rockwell's home jurisdiction filings that are available at http://www.sedar.com/.
