[miningmx.com] – ROCKWELL Diamonds was considering the possibility of doubling its current one million tonne/year mining rate target, and may consider equity financing a transaction to achieve that goal.
Speaking at the Joburg Indaba conference on October 9, James Campbell, CEO of Rockwell Diamonds, said capital raising was on the horizon, but the preference was to issue shares rather than raising debt.
“We are looking at the possibility of getting to two million tonnes per month possibly through an acquisition, but we are not considering debt finance [in getting there],” said Campbell whose company digs for alluvial diamonds from the Middle Orange River.
“Wouterspan is our fourth mine being targeted, but it may be built in a phased manner. We will try steer as far as can from debt unless absolutely necessary,” he said.
Rockwell announced disappointing second quarter results in which it increased revenue for a ninth successive quarter, but registered a $1.5m net loss compared to a maiden $300,000 profit in the previous (first) quarter.
It explained the decline as having had exceptional revenue from its beneficiation activities in the first quarter without which the first quarter would have been a $2.4m loss. Nonetheless, the results tend to suggests Rockwell’s turnaround strategy, undertaken by Campbell three years ago, is still a work in progress.
Commenting in its second quarter results announcement today, the company said a 30% black economic empowerment (BEE) deal with African Renaissance Holdings had lapsed as certain conditions had not been met.
In terms of another transaction to replace the African Renaissance Holdings deal, a newly created special purpose vehicle for BEE purposes would buy 30% of Rockwell’s Middle Orange River operations for $7.2m. The deal was vendor-financed, Campbell said in notes to the firms’ second quarter figures.
The special purpose vehicle would comprise an employee trust (30%) and a company called MIH Newco (70%), established by Rockwell’s human resources manager, Richard Mhlontlo, and Oupa Sekhukhune, a Limpopo province businessman with 15 years in the diamond business.
“Richard Mhlontlo has played an instrumental role in the turnaround of Rockwell during the last three years,” said Campbell.
“This relationship may also result in other alluvial diamond assets being vended into Rockwell, contributing to the long-term growth plans of the company,” he said.
