[miningmx.com] — ROCKWELL Diamonds will assume control of a
potentially lucrative mining asset owned by Sandile Zungu’s African Vanguard
Resources (AVR), bringing an end to the parties’ R60m dispute over an unpaid
empowerment transaction.
Announcing the terms of the deal on Monday, Rockwell CEO James Campbell said the
company would acquire AVR’s Jasper asset, a property contiguous to Rockwell’s
Saxendrift mine in the Northern Cape.
AVR is the BEE partner of Rockwell’s Northern Cape properties. As part of the vendor-
financed BEE deal concluded in 2008, AVR paid an amount of $2.9m to acquire a 26%
interest – but a balance of $7.9m remained outstanding following a crash in the
diamond market.
When Campbell took over as CEO mid-2011, he made the payment of the funds a
priority of the company which had some cash flow issues of its own. At the time, one
of his first actions was to cut back on a proposed fund raising of C$35m to avoid the
further dilution of shareholders. Instead, he raised $6.5m through a sale of assets
and brought in a further $7.8m through a private placement.
“The Rockwell management team has negotiated a settlement which provides for both
parties to deal with their own short-term challenges while simultaneously giving
Rockwell the ability to comply with its BEE objectives and growth plans on a
commercial basis,’ said Rockwell’s Chairman, Mark Bristow.
In terms of the deal, Rockwell would pay AVR an amount of $1.9m in JSE-listed
shares while taking ownership of Jasper. AVR would not be able to trade the shares
for at least a year.
Campbell said preliminary estimates indicate Jasper’s diamond-bearing deposits are
easily accessible from the infrastructure at Saxendrift, which currently has a three-
year life of mine. Previous owners, including AVR, conducted small-scale mining on
the property. It is currently under care and maintenance.
“What is great is that the asset is contiguous to Saxendrift so we know it well,’
Campbell told Miningmx. “We’re going to start immediately with exploration,
but our geologists are quite excited.’
Zungu said the deal proved that AVR remained committed to its investment in
Rockwell. “We’ve done the restructuring and swop because we’ve got long-term
expectations,’ he said. He said AVR expected to retain a 10% holding in Rockwell at
group level.
Rockwell said the deadline for the transaction, which requires regulatory approvals,
was December 31, 2013.
Although the deal wouldn’t add to Rockwell’s cash balance, Campbell said its
resolution was a prerequisite to concluding further BEE deals at group level.
He said future partners would have to arrange for their own finance, as the company
was not prepared to agree to another vendor-financed deal.
