[miningmx.com] – STRIKES, operational complexities, and a slower-than-anticipated recovery in the price of small diamonds combined to force Rockwell Diamonds to place its 700 carat per month (cpm) Tirisano mine near Ventersdorp on care and maintenance.
James Campbell, CEO of Rockwell Diamonds, said a study would weigh up a ‘fit for purpose’ plant suited to local conditions when the mine reopened. This would be the second mine Rockwell Diamonds had ‘restructured’ in the last three months.
In October, the company said it was outsourcing mining of its 800 cpm Klipdam alluvial diamond mine to a contractor. The sale of Klipdam’s yellow machinery would ameliorate its high cost base.
Campbell said in a telephonic interview that shifting to outsourcing mining at the company’s other operations was worth considering as the improvement in recoveries at Klipdam had been “a revelation”.
Placing Tirisano on care and maintenance was not quite a company-saving initiative, but with cash burn still at R3m per month (following a reduction in costs in the first half of the year when cash burn totalled R7m/month), Campbell said it had become unsustainable.
“I wish I had moved earlier than this,” said Campbell who added that financing of the company’s project pipeline would be unaffected by Tirisano’s losses.
“We have a new project, Saxendrift Hill, which has been funded out of working capital and is 90% funded,” he said. He declined to disclose Rockwell Diamonds’ cash position but there was no need to approach the capital markets for project finance.
Some 90 employees would be retrenched at Tirisano, although efforts would be made to redeploy workers at operations elsewhere within the company.
Efforts were also underway to make Mogope Minerals, effectively a trust that represents the economic interests of Tirisano’s nearby community, to work more closely with Rockwell management. Currently, Mogope Minerals is unwilling to contribute to the mine’s working capital demands which would require redemption of trust shares.
UNPROTECTED STRIKES
Campbell said Tirisano had last week been affected by a second unprotected strike in the last four months which related to wage demands. This was despite the fact the mine was loss-making, he said.
“Rockwell is committed to providing jobs in areas that are impacted by high unemployment rates and we are disappointed that these decisions will result in inevitable job losses at the mine,” said Campbell in a statement to the JSE.
Percy Takunda, an analyst for Imara SP Reid described the mothballing as “… a very unfortunate outcome for a company that was committed to significant investment and development in a marginal and otherwise derelict location”.
He added that not enough support was offered to junior producers who “… didn’t have the balance sheets to sustain unintended stoppages, be it safety or labour related”.
