Rockwell posts double-digit losses for Q3

JOHANNESBURG (miningweekly.com) – Following another tough quarter of losses and muted sales during the three months to November, TSX- and JSE-listed Rockwell Diamonds aims to fully implement its corporate restructuring programme and deliver the anticipated cost benefits during the final quarter of the 2016 financial year.

Tough operating conditions resulted in significant losses during the third quarter of the financial year, with losses for the period widening from C$4.75-million in the third quarter of 2014 to C$9.3-million in the period under review.

The company’s basic loss a share and headline loss a share more than doubled from a respective 8.96c and 8.87c apiece in the corresponding period in 2014 to 17.13c and 17.14c respectively in the three months to November 2015.

Revenue from the sale of diamonds plunged to C$6.9-million in the third quarter from C$17.4-million in the third quarter of the prior year following a reduction in carats sold and a decrease in US dollar-based revenue.

Rockwell’s third-quarter performance was significantly affected by underperformance in volumes processed owing to a plant shutdown and in-field screen throughput problems, in addition to continued weakness in global diamond pricing.

With a negatively impacted balance sheet and limited ability to invest in increased processing capacity, Rockwell aimed to restructure and reduce costs to manage the transition from end-of-life operations to new projects and operations and place the company on sustainable footing, said CEO and president James Campbell.

The change in direction would result in a delayering of management, downsizing of the workforce, the closure of the Johannesburg corporate office, the relocation of senior executives to the Middle Orange River (MOR) on a full-time basis and the closure of the Saxendrift operations in February.

“We have secured two royalty mining contractors to continue generating cash from this property and both will be in production by fiscal year-end,” he pointed out.

Rockwell was currently developing the Wouterspan project, where construction had started on a new processing facility to recommission operations in 2016.

The company had its eye on processing 500 000 m3 a month, starting with a total future monthly throughput target after commissioning of 200 000 m3.

“At Remhoogte/Holsloot, we believe we are now on track to begin processing volumes as high as 180 000 m3 a month, having now increased the in-field screening capacity. Ongoing exploration is also high on the agenda to identify new economically viable resources,” Campbell said.

Further, as part of rebuilding its operational footprint in the MOR, exploration and development activities had been focused on prioritising the portfolio with near-term prospects and partnership opportunities with royalty miners on selected properties.