ROCKWELL Diamonds has applied for business rescue in an effort to keep an interim liquidation at bay whilst it waits for a hearing in the Kimberley High Court regarding the order, currently scheduled for April 19.
The liquidation order was brought by a former contractor to the company, C-Rock Mining, and was granted on March 23, although Rockwell said that its argument was not heard by the court. The impact of the application for business rescue is that it will stay the interim liquidation order.
The diamond miner has, in the meantime, been able to keep its assets out of the hands of liquidators following certain filings it made which included evidence of a business plan supported by 96% of the firm’s dollar creditors.
The plan involves using a $8m loan – approved in November – to commission its Wouterspan plant as well as a cost reduction drive, efficiency improvements, the sale of redundant assets, and the pay down of creditors to whom the company owes less than R50,000 each.
Trading in Rockwell Diamonds shares was suspended on March 27 following the interim liquidation order which was against Rockwell’s three South African subsidiaries: Rockwell Resources RSA, HC van Wyk Diamonds, and Saxendrift Mine.
C-Rock’s contention is that it is owed monies relating to disputed invoices, reimbursement for tax penalties and other construction costs owed to it. It last year unsuccessfully launched a spoliation order against Rockwell.
The liquidation case against Rockwell was scheduled for June 22, but the company said it was able to bring this forward to April 12. However, the matter could not be heard as the Kimberly High Court was in recess while the presiding judge recused herself owing to a conflict of interest.
As a result, the hearing will not be held on April 19.
“The company remains persuaded that its case for dismissal of the liquidation application is sound, and after a full hearing it believes it should prevail and C-Rock Mining’s actions will be shown to be spurious and without foundation,” the company said in a statement.
Rockwell mines for alluvial diamonds in the Northern Cape province of South Africa. Its key asset is Wouterspan which is designed to process 200,000 cubic metres of gravels a month. The gravels are then screened for rough diamonds.
A number of its other assets, including the Saxendrift mine, were sold in an effort to cut debt and slash the firm’s rehabilitation liabilities.