[miningmx.com] – ROCKWELL Diamonds today unveiled a C$28.5m (R284.2m) deal to buy the mineral resources and plant of a neighbouring diamond miner in the Middle Orange River (MOR) of South Africa’s Northern Cape.
The Toronto- and Johannesburg-listed firm said today it had entered into a conditional agreement to buy the alluvial diamond properties and associated plant and equipment of privately-held company Bondeo 140 CC.
Rockwell Diamonds CEO, James Campbell, said the new assets “… offer economies of scale, with the potential to reduce the volatility of our quarterly production results and take us above our target of processing 500,000 cubic metres per month”.
Rockwell produced a C$345,000 first quarter profit in July which was an early sign that Campbell’s three-year turnaround strategy at the company was bearing fruit. However, this performance was followed by a C$1.5m net loss for the following second quarter.
It was at those results, though, that Campbell announced conclusion of a new empowerment deal and alluded to growth by acquisition. The announcement today suggests Rockwell has gained some strategic momentum.
Rockwell said the assets in question were contiguous to its existing properties and would significantly enlarge its operating and resource base. It added that the proposed sellers would work with it in seeking out other opportunities.
The deal consideration comprises C$12m (R120m) for the mineral rights and three fit-for-purpose processing plants to be funded by an issue of shares, and C$16.5m (R164m) for earth-moving fleet and other associated equipment, funded through debt.
Campbell has said in the past that the firm would not consider debt finance, but with the shares in the company having more than halved in the past six months, he said today it was a question “of just getting on with it”.
The Middle Orange River is in South Africa’s Northern Cape province where Rockwell has built two new mines, the Saxendrift and Niewejaarskraal operations.
It is planning the phased development of another mine, Wouterspan whilst Saxendrift, mined by two previous owners in the past, was in its twilight years.
“You get some volatility in its performance as its life of mine ends, but still some fabulous diamonds,” he said.
