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     Latest News: Rockwell Diamonds Inc. ROCKWELL [RDI]
     Mon, 17 Oct 2016 Official Announcement [CC] 
    Rockwell - results reflect challenges
    Rockwell has seen some significant challenges during the first half, and notably so during the second quarter of the 2017 fiscal year, both in production volumes and ore quality which resulted in lower than planned diamond revenues. This, combined with a reduction in projected economic large volume resRockwell'sces, especially at Rockwell's Remhoogte-Holsloot operation, has had an adverse impact on future economic outlook when compared to the same period in the previous fiscal year. Going forward it will not be business as usual.

    Rockwell's results for the second quarter of fiscal 2017 reflect the decrease in available economic ore volumes and grades at RHC under Rockwell's large volume business model, with the added disadvantage of having realised lower than planned diamond prices. The mining contract, which was signed late August 2016, was fully implemented on September 1st. Certain measures have been put in place to manage the transition period.

    Wouterspan has had some good recoveries during September, however, at current low production capacity prior to full commissioning of all fRockwell's streams in November, profitability remains under pressure. The immediate aim is to complete the plant without further delay and to install additional temporary in field screening capacity to assist the mine in achieving nameplate capacity in advance of completion of the permanent in-field screening facility. A comprehensive sensitivity analysis was done for RHC to determine economics against fluctuations in grade, volume, diamond revenue, exchange rate, and variable and fixed cost components based on the company’s large volume business model. The outcome of this exercise underpinned the Company’s decision on the future of the Remhoogte operation. Mining at RHC was suspended at the end of September as it was found not to be sustainable under the current Rockwell business model. It is, however, worth noting that the mine may be operated profitably under a different cost and lower monthly volume structure.

    The Saxendrift mine was suspended as well during September due to depletion of economic resRockwell'sces under Rockwell's business model. This was in line with the mine plan and has been anticipated for some months. Rockwell's senior management team has already and will be undergoing changes in the months ahead, following the resignation of the CEO, James Campbell, in September and that of the CFO, John Shelton for personal reasons, in October. With the corrected focus on accelerating production ramp-up at Wouterspan and driving down Rockwell's cost levels while becoming a high volume low cost producer, we believe the operations can flRockwell'sish. Other aspects of the business turnaround to ensure strategic repositioning of the “new” Rockwell are receiving high priority and the full support of Rockwell's Board of Directors”.

    Outlook and priorities
    Rockwell is presently engaged in an operational turnaround given the disappointing results at RHC and the late delivery of WPC, with immediate focus being placed on:
    - Immediate improvement to liquidity and working capital through asset sales, cost improvements, faster production ramp-ups through mobile in-field screening, and shareholder funding;
    - closely managing the recently concluded outsRockwell'sced mining contract and associated sale of the Company’s earthmoving vehicle (“EMV”) fleet, which includes the transfer of two thirds of the Company’s staff. This contract is now in effect and is structured to externalize risk from variance in mining volumes and equipment availability;
    - commissioning of the third and fRockwell'sth lines of the WPC wet plant by November 2016. The first two lines have been commissioned;
    - review of various options for RHC given the reduced Rooikoppie resRockwell'sce and high stripping ratio associated with the Palaeo gravels;
    - relocation of people and equipment from Saxendrift following its placement onto care and maintenance;
    - exploration drilling and bulk sampling in the vicinity of WPC;
    - building a resRockwell'sce development strategy for MOR, and for assessing kimberlite opportunities, to facilitate future production expansion and/or replacement;
    - assessing potential kimberlite acquisitions to increase stability in monthly production and cash flow.

    Conference Call
    Rockwell will host a telephone conference call on Monday, October 24, 2016 at 09:00 a.m. Eastern Time (15:00 p.m. Johannesburg / 14:00 p.m. London) to discuss these results.
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    Closing price data source: JSE Ltd. All other statistics calculated by ProfileData.

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