Rockwell still thumped by market collapse

[] — ROCKWELL Diamonds reduced its losses to $7m for the 12 months to end-February from $13m for its 2009 financial year, and increased production to 24,916 carats (2009 – 17,503 carats).

According to CEO John Bristow , the main reason for the continued losses was the collapse of the diamond market and “the precipitous decline in diamond prices’ that started in the fourth quarter of fiscal 2009.

Rockwell reported a drop in sales revenues to $26.8m ($33.1m) despite the higher sales volumes.

Bristow said diamond prices gradually recovered over the course of the financial year reaching $1,090 per carat in July, $1,434/carat in November and $1,154/carat in the January/February tender.

He said lower prices received in January/February as well as August were related to lower grade mixes of stones sold.

Bristow said: “Income generated in November 2009 was sufficient to cover all the third-quarter costs and significant arrear creditors, including R11.4m for outstanding royalties.

“The November income resulted in a third-quarter operating profit. The operating profit in the fourth quarter covered the cost of operations.’

Following the raising of about $16.6m through a private placement and rights offer, Rockwell is now looking at further acquisitions starting with the Tirisano operation. It has agreed to buy this for not more than R33.5m, payable in Rockwell shares.

Bristow said: “We are proceeding cautiously with expansion and acquisition plans, mindful of the economic challenges and legacies of the recession in 2010 and are considering our options to fund and develop proposed new growth projects.’

The writer owns shares in Rockwell Diamonds.