[miningmx.com] — TSX and JSE-listed Rockwell Diamonds returned to operating profitability in the year to end-February, but production fell short of internal management targets.
Rockwell made an operating profit of C$4m (previous financial year – C$3.6m loss) but reported an overall loss of $5.1m (C$7m loss). Despite this, Rockwell improved its balance sheet with net cash holdings rising to C$2.9m at year-end (C$1.8m).
Director and acting CEO Mark Bristow said C$12.4m was invested to buy equipment and mineral properties, while debt repayments of C$3.3m left the company “virtually debt free’.
Bristow – who is also the CEO of gold producer Randgold Resources – has been acting CEO since December, when former CEO John Bristow resigned.
Former African Diamonds MD James Campbell has been appointed the new, full-time CEO of Rockwell and will take over from Bristow on June 1.
Revenues rose sharply in the fourth quarter of financial 2011, reflecting the continued improvement in rough diamond prices. However, diamond production dropped to 3,711 carats for the quarter from 4,996 carats in the comparable quarter of 2010.
The reasons for this include flooding at the Saxendrift mine in January combined with high levels of rainfall throughout the rainy season, which hit productivity on all operations.
Grade at Saxendrift was adversely affected by dilution from “large sand lenses’ in the production area, while commissioning of the in-pit de-sanding plant was delayed.
Bristow said the adjacent Holpan and Klipdam operations are to be rationalised, with both mines’ resources processed through the Klipdam plant at a lower cost. Holpan was put on care and maintenance in May 2010.
Rockwell’s future growth is now being planned on development of the Tirisano and Wouterspan operations, where management wants to begin the second phase of the Tirisano development along with the simultaneous construction of a high-volume production plant at Wouterspan.
Bristow notes that “in order to fund these developments, the company will seek additional financing in the capital markets’.
He does not specify the amount of funding to be raised, but it’s understood Rockwell is looking to raise around C$35m through a private placement. The current market capitalisation of the company is C$26.2m .
The first production stream of the four stream plant being built at Tirisano started operating in April and is processing surface ore dumps left by the previous mine owners.
Bristow said commercial production will start on upon completion of the remaining conditions precedent to the acquisition of Tirisano.
These are restructuring the senior debt initially provided by the Industrial Development Corporation for the development of the mine, and obtaining Section 11 consent from the department of mineral resources for the cession of the mining rights.
