Fiscal 2014 results
Currency values are presented in Canadian dollars, unless otherwise indicated.
Features of Fiscal 2014:
•Revenue increased 39% year-on-year to
Commenting on the fiscal 2014 performance of Rockwell,
"Our fiscal 2014 results are beginning to reflect the operational turnaround of the Company and its core focus on the
"From an operational perspective, these results also show that our MOR focus has gained traction. During fiscal 2014, we delivered two new mines, namely
"Looking forward, we remain firmly focussed on our medium term target to process 500,000m3 per month of quality gravels. We are conducting contiguous exploration of existing resources at the Saxendrift Extension property to increase the current life of mine, further leveraging our invested mining infrastructure at Saxendrift. We also have a focused exploration and trial mining programme at SHC to maximize the resource potential and develop contiguous areas. Mining at Niewejaarskraal, where the processing rate approached the monthly nameplate capacity of 100,000m3 at fiscal year-end, is aimed at upgrading the inferred resource to the indicated level. At the same time, we continue to review our options to bring the Wouterspan property to fruition, with a preference for an internally funded and phased approach."
Review of fiscal 2014 delivery on strategy
Rockwell's fiscal 2014 results reflect the benefits of the strategy to grow its MOR production footprint with a mid-term target to increase monthly production volumes of quality gravel processed to 500,000m3. Higher diamond values, better efficiencies and greater economies of scale can be achieved in this region to deliver more consistent quarterly earnings at a more predictable mining cost.
During fiscal 2014, Rockwell achieved further progress against a number of strategic milestones:
•The short-term goal of delivering three producing operations in the region was met with the commissioning of SHC and Niewejaarskraal, bringing the total monthly processing capacity to 340,000m31. •Resources mined from the Saxendrift, Saxendrift Extension, SHC and Niewejaarskraal mining rights all have multiple mining faces, providing production diversification and mining flexibility. •Five rough diamonds exceeding 115 carats were recovered in the MOR in fiscal 2014, the largest of which was 287 carats. •The three mines in the MOR were all in full production by the fourth quarter. The average stone size in the quarter increased 139% to 4.6 carats, up from 2.0 carats in the prior year when Rockwell had only one MOR operation in production. The anticipated rate of recovery of large diamonds also materialized, with four rough diamonds in the plus 50-carat category being produced in the fourth quarter, compared to two in comparable period of the previous year. •Volumes processed from Rockwell's three MOR mines were up 46% year-on-year, yielding a 12% increase in average grade and carat production up 63% in the region from a year ago. •Carat production at the Saxendrift processing plant increased 12% to 9,338 carats, despite a 10% decline in volumes of gravel processed. Its mine life has been extended, at higher overall grades after integrating the newly acquired Saxendrift Extension property into the Saxendrift mine plan. •The production ramp up at SHC, the new internally funded Bulk X-ray processing plant, was completed and 3,363 carats were recovered, of which 2,945 carats were sold at an average value of
1 This comprises of Saxendrift (160,000m3 / month at a 5mm bottom cut-off size ("BCOS")), SHC (80,000m3 / month at a 5mm BCOS) and Niewejaarskraal (100,000m3 / month at a 6mm BCOS).
Fiscal 2014 Performance Summary
The Company's overall production and sales results, which are made in the market in US$ for the year are:
Sales and inventories
Total: Company properties
* Includes ramp up costs at
For fiscal 2014, processed gravel volumes from Company properties increased 28% to 3,761,062m3 comprising 2,662,901m3 from Rockwell's own operations, and the remainder processed by the royalty mining contractors. Rockwell achieved a 6% grade improvement across the Company's properties to 0.74 carats/100m3, resulting in a 27% increase in total carat production, including 14,222 carats from own operations and 13,554 carats from contractors.
Diamond sales from own operations declined 23% to 13,782 carats, reflecting the transition of the production profile into the MOR that included the sale of Klipdam and termination of mining at the Tirisano property. The five royalty mining contractors who subsequently started operating at Tirisano sold a total of 12,490 carats during the year, resulting in a 27% increase in carat sales from Company-owned properties. The value of sales from own properties was up 34% to
Notable metrics of fiscal 2014 production compared to the comparable prior year period are as follows:
Impact of mining at Saxendrift Extension (longer
hauling distance), lower earthmoving equipment
availabilities and maintaining slightly lower
processing rate to optimize plant efficiencies
Processing plant reached full capacity (monthly
processing rate of 80,000m3 at a +5mm BCOS).
Commissioning commenced in
full capacity by fiscal year end. Area mined
necessitated blasting and drilling, impacting grades.
Five contractors operating on at Tirisano
Notable metrics of fiscal 2014 sales versus the comparable prior year period are as follows:
Increased revenue off the
back of higher carat sales
and increased carat value
Revenue growth driven by
increasing production and
high average carat value
Carat sales and values
reflect process of
production ramp up
from five contractors
operating at Tirisano
* Contractors refers to carats from gravel processed by independent royalty contractors and sold through the Company's tender process. Final carat sales from Klipdam in fiscal 2014 not shown.
During fiscal 2014, the average total cash cost (including rehabilitation and royalties) for all the operations, was US$11.1/m3 compared to a total cash cost of US$10.2/m3 in the prior year. The increase is largely due to the expected higher unit costs incurred at SHC and Niewejaarskraal during production ramp up period at these new mines. On a pro forma basis for continuing operations (excluding Niewejaarskraal and SHC ramp ups), the total cash cost (including rehabilitation and royalty costs) amounted to
Average cash operating costs and revenues for Rockwell's own operations in US$ during the period are:
Unit cost impacted by longer hauling distance as a result of
mining Saxendrift Extension, higher EMV maintenance costs
and lower volumes processed.
Continued high quality diamond recoveries supporting unit
revenues. Unit cost declined in line with increase in volumes
Unit revenues impacted by lower carat values during
commissioning phase. First quarter of expensed costs
impacted by lower volumes during final ramp up and
completion of second commissioning phase.
Normal operations produced cash flow of
Rockwell continues to make progress towards its strategy to increase production from and extend the mine life of its MOR properties:
•Contiguous exploration of existing resources at the Saxendrift Extension property is under way to increase the current life of mine and to enable the Company to leverage the fixed assets of Saxendrift. •A focused exploration and trial mining programme is underway at SHC to ensure the resource potential is maximised and to develop contiguous areas. •Through trial mining2, the Niewejaarskraal inferred resource will be upgraded to the Indicated level with the eventual declaration of probable reserves. •The Company continues to review the options to bring the Wouterspan property to account following the completion of a preliminary economic assessment in the first quarter of 2013 that reflected viable economics.
Rockwell is also achieving its secondary strategy to leverage the value of certain properties that it does not wish to mine due to size or other reasons. Five royalty contract miners operated at Tirisano during the year with the projected monthly mining volumes at Tirisano now being 200,000m3. The royalty mining contractor agreement at Kwartelspan, which commenced construction in the fourth quarter of fiscal 2014, is in the process of being converted into a joint venture mining arrangement.
The Company continues to evaluate consolidation opportunities in the southern
2 Because the Niewejaarskraal mine is currently extracting diamonds from an inferred resource, the Company is required under the rule of the NI 43-101, to refer to the mining operations as trial mining.
Towards the end of fiscal 2014 rough diamond demand increased, as retailers continued replenishing their polished stock. Polished diamond sales were buoyant, particularly during the December festive season, driven largely by discounting among retailers to drive demand for jewellery. As a result, polished diamond inventories across the industry were depleted, leading to increased liquidity and higher polished prices. December rough diamond sales were in line with historic and sales by major rough diamond producers in January and
Rockwell continues to support downstream beneficiation of its rough diamonds by backing local South African manufacturing companies. The benefits of the JV with Diacore achieved continued success with some exceptional results on certain large diamonds recovered by
The current focus areas for the business are as follows:
•Rockwell continues to focus on managing its operating costs. •At Saxendrift, which plant is operating consistently, the Company's focus is to complete the implementation of the earthmoving vehicle ('EMV') fleet renewal exercise which will improve equipment availabilities to enable the mine to operate at nameplate capacity, while an option to increase the plant capacity is also being reviewed. •At SHC, continuous exploration work and trial mining is ongoing to increase this resource. Although the Bulk X-ray recovery system continues to perform on plan, first quarter gravel throughput at the processing plant was impacted by mechanical failures associated with the front end of second hand equipment, which is being addressed as a high priority. •At Niewejaarskraal the focus is on consolidating the operations now that the second phase of the 100,000m3 per month plant, has been completed.
Rockwell carried over an inventory of 2,752 carats (including 1,181 contractor owned carats) into the new fiscal year. This, together with a beneficiation pipeline comprising more than 6,000 carats, provides further potential for valued-added downstream revenues. Rockwell continues to beneficiate the vast majority of its diamonds in
Rockwell will host a telephone conference call on
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For further details, see the Rockwell's complete financial results and Management Discussion and Analysis posted on the website and on the Company's profile at www.sedar.com. These include additional details on production, sales and revenues for the quarter, as well as comparative results for fiscal 2014.
Rockwell is engaged in the business of developing and operating alluvial diamond mines, with the aim of becoming a mid-tier diamond mining company. At
Rockwell's operations at the
A Preliminary Economic Assessment has been completed on the Wouterspan project, which would provide further expansion of the Company's Middle Orange operations in future. The Group has a pipeline of other projects with further future development potential under consideration and evaluation at present.
In addition to its project work, Rockwell continues to evaluate strategic opportunities through merger and acquisition as they arise, in order to expand its mineral resources and provide new opportunities to develop the additional production.
The Group is establishing a track record of producing large gem quality diamonds, which comprise a significant proportion of its production profile. The diamonds recovered from Rockwell's mines are frequently acquired for investment purposes. The Group has a beneficiation agreement in place which enables it to sell rough diamonds, receive 90% of the fair value sales price at sale and receive the remaining 10% through, and participate in, the retail profit on the sale of its +2.8 carat sized stones after polishing and finishing.
No regulatory authority has approved or disapproved the information contained in this news release.
Forward Looking Statements
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Although the Company 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 uncertainties and costs related to exploration and development activities, such as those related to determining whether mineral resources exist on a property; uncertainties related to expected production rates, timing of production and cash and total costs of production and milling; uncertainties related to the ability to obtain necessary licenses, permits, electricity, surface rights and title for development projects; operating and technical difficulties in connection with mining development activities; uncertainties related to the accuracy of our mineral resource estimates and our estimates of future production and future cash and total costs of production and diminishing quantities or grades of mineral resources; uncertainties related to unexpected judicial or regulatory procedures or changes in, and the effects of, the laws, regulations and government policies affecting our mining operations; changes in general economic conditions, the financial markets and the demand and market price for mineral commodities such as and diesel fuel, steel, concrete, electricity, and other forms of energy, mining equipment, and fluctuations in exchange rates, particularly with respect to the value of the US dollar, Canadian dollar and South African Rand; changes in accounting policies and methods that we use to report our financial condition, including uncertainties associated with critical accounting assumptions and estimates; environmental issues and liabilities associated with mining and processing; geopolitical uncertainty and political and economic instability in countries in which we operate; and labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in which we operate our mines, or environmental hazards, industrial accidents or other events or occurrences, including third party interference that interrupt operation of our mines or development projects.
For further information on Rockwell, Investors should review the Company's home jurisdiction filings that are available at www.sedar.com.