[miningmx.com] — BARELY a year after raising some C$17m (about R120m) Rockwell Diamonds is planning to raise up to a further C$9.3m (about R65m) to fund its growth.
That’s despite management stating the C$17m previously raised was way in excess of what they were looking for at the time.
The need for the extra capital and the underperformance of Rockwell in meeting internal management production targets probably account for the lacklustre performance of the share over the past year.
They could also be linked to the abrupt departure of former CEO John Bristow who announced his resignation on December 15 but remains a consultant to the company while a replacement is sought.
No reason for his departure was provided at the time and chairman David Copeland did not provide any explanation on Monday’s investor conference call.
The main market for Rockwell shares is in Toronto where the stock began trading in 2010 at around 8 Canadian cents but spent almost the entire year trading in a tight range around 6 Canadian cents.
On January 6 last year, after Rockwell had raised an initial C$7.4m, Bristow commented, “these funds provide the basis on which we can strengthen our balance sheet, modernise and recommission the processing plant at Wouterspan, take advantage of increasing diamond prices and recommence our growth plans.’
On February 3, when Rockwell decided to go for a capital raising of up to C$17m, Bristow commented, “we are most encouraged that investor interest and support for Rockwell has proved far greater than we originally projected which we attribute to strengthening of rough diamond prices, improving financial market conditions and strong support for our prospects and plans.’
Under close questioning from former diamond analyst James Allan – now a partner in consulting firm AllanHochreiter – Rockwell executives said most of the funds raised had been used to settle outstanding debt on Rockwell’s “yellow fleet’ – the earthmoving equipment needed to run the alluvial mines.
They said some C$2.6m had been spent on care and maintenance at the mothballed Tirisano mine while another C$1.5m had been spent on initial work at Wouterspan.
COO Graham Chamberlain said the capital estimates for Wouterspan still “needed to be refined’ but about R35m may be needed to complete the second phase of the planned expansion and a further R30m could be needed to pay for the required “yellow fleet’.
He said there were various financing options on the “yellow fleet’ which may not require Rockwell to buy the equipment outright.
Rockwell lost C$2.4m in the nine months to end-November bringing its total accumulated losses at that date to C$51.5m.
The directors said the company was still viewed as a “going concern’ because it had “sufficient working capital and reserves to maintain operations through breakeven point and sufficient cash and working capital to fund the continuing losses until then.’
No indication was given as to when Rockwell expected to reach breakeven and Miningmx was unable to question Copeland on this because the conference call operator did not acknowledge our repeated requests.
This has happened on other Rockwell conference calls. The explanation provided previously by the company’s Canadian investor relations and media representative was that calls by financial media were blocked to allow more time for questions from analysts and fund managers.
