Rockwell swings to Q2 profit as it rebuilds MOR production profile

TORONTO (miningweekly.com) – South Africa-focused diamond producer Rockwell Diamond Corp is back in the black after it recorded a profit of C$570 000 for the second quarter ended May 31.

The Vancouver-based company said Tuesday that the quarter-on-quarter improvement, from a loss of C$5.1-million in the first quarter, reflected the improved operational performance in the current year, with the impact of restructuring costs and noncash charges for impairments and accelerated depreciation – relating to certain unusable plant and equipment at the Niewejaarskraal (NJK) operation – now a thing of the past.

Rockwell, which is focused on several alluvial-diamond-producing operations in South Africa’s Middle Orange River (MOR) region, reported a 41% increase in rough diamond revenues at C$12.1-million, compared with C$8.3-million in the first quarter, mainly owing to the contribution of new production from the Remhoogte-Holsloot Complex (RHC), and being dogged by a 62% decline in beneficiation revenue to C$400 000.

Total revenues increased by 36% to C$12.5-million, reflecting the substantial changes that had taken place since last year with the acquisition of RHC and the decline in the value of goods from Saxendrift, which came to the end of its economic life as the quality and frequency of exceptional stones from this operation faded.

Compared with the fourth quarter of the 2015/16 financial year, total revenues were up by 20%, reflecting the progressive gains that were being made in terms of productivity on Rockwell’s operations.

“The outlook for the diamond market is stable for the remainder of fiscal 2017, and the underlying fundamentals remain strong,” stated president and CEO James Campbell.

Volumes mined from Rockwell's MOR operations during the quarter totalled 900 000 m³, compared with first-quarter volume of 800 000 m³, a 10% year-on-year improvement as output from RHC compensated for the reduction of operations at Saxendrift and the closure of NJK. Processed gravel was up 32% year-on-year at 800 000 m³, owing to higher volumes processed at RHC.

Rockwell continued to pursue its medium-term target to process 500 000 m³/m of gravel in the MOR. Its immediate focus remained on the construction and commissioning of the plant at Wouterspan plant construction project by August; the optimisation of yield and grade of Makondos, together with the optimisation of the mix of Rooikoppie and Palaeo gravels at RHC; the cost-effective wind-down of Saxendrift by October; and the transition to an outsourced mining contract to externalise mining volumes, cost and equipment risk.

The company added that it continued to evaluate new projects and value-accretive consolidation opportunities.