[miningmx.com] — ROCKWELL Diamonds has scaled down its plans to raise C$35.3m in new funds, opting to aim for $20m instead.
Newly appointed CEO James Campbell said on Wednesday the company’s board has decided on the lesser amount to soften the dilution blow on investors who didn’t take part in the capital raising.
He said the group could approach the market again once the envisaged cash injection has started to bear fruit, with Rockwell hopefully finding itself in an improved operational and financial state.
Campbell said the majority of the capex cutbacks would be made at the Wouterspan operations – down from $17.4m to $6.6m. Apart from Wouterspan, the bulk of the money raised ($4.3m) would go towards the development of the Tirisano mine’s second phase, while another $3m would be spend on Tirisano’s creditors.
“It’s a recapitalisation process and some would say it is a relisting,’ said Campbell, adding the group has already secured $10m from an offshore investor at $0.75 per share.
Campbell, who took office on June 1, was keen to emphasise changes in the company’s approach and strategy, saying an emphasis would be place on improved recoveries.
“Rockwell’s woes of the past have been chiefly production related,’ he said. “We’re moving from a culture of moving cubic meters and tonnes to becoming passionate and fanatical about uncovering every diamond.
“We don’t want one diamond not accounted for.’
Campbell has strengthened his management team with the appointment of Michael Hunt as COO, who previously worked at Orapa and De Beers’ The Oakes. Rockwell also contracted diamond metallurgy expert Kurt Peterson.
It’s growth plan sees monthly production increasing from between 2,500 and 4,000 carats (3,711 carats were produced in the quarter to end-March) within the next one to two years, to 10,000 carats per month in six years’ time.
This bulk of the growth was expected to come from Tirisano (around 1,500 carats per month), Wouterspan (around 3,000 carats) and Niewejaarskraal, a development project expected to start production by 2015 (also 3,000 carats per month).
The production growth would translate in annual revenues of between $80m and $100m, said Campbell.
While the world average price for diamonds are $90/carat, Tirisano fetches $700/carat, with Saxendrift and Wouterspan collecting $2,000/carat.
“Our niche is in small numbers of very large, very high quality diamonds,’ Campbell said.
The company is trading at a discount to most of its Toronto Stock Exchange-listed peers. It has a price to net asset value of less than 0.2 times, compared to an average of more than 0.5 times for diamond developers and more than 0.6 times for diamond producers.
On Wednesday, its shares were trading at $0.57, following a 15 to 1 consolidation last week; down from $0.90 at the beginning of the year. It made an operating profit of $4m during the 2011 financial year, but reported an overall loss of $5.1m.
