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Rockwell - fourth quarter results update
Salient features
- Rough diamond revenues - declined by 31% to CAD26.1million for FY2017, compared to FY2016 (CAD37.7 million). Quarterly revenues were down 90% compared Q4 FY2016, due to cessation of mining activities at Saxendrift and Remhoogte-Holsloot (“RHC”), with the sole operation, Wouterspan (“WPC”), being in ramp-up phase.
- Loss attributable to owners - CAD(14.5) million for FY2017, compared to CAD(28.3) million for FY2016; for the first three quarters of FY2017 substantial losses were incurred at Saxendrift and RHC, which losses were dramatically reduced by ceasing production at these entities, together with a substantial reduction in the cost base during Q4 FY2017. The two loss*making operations were successfully disposed of in Q4 FY2017, generating much needed cash and reducing overall liabilities with the purchaser absorbing certain staff.
- WPC - wet plant construction was completed as at Q1 FY2018 and de-bottlenecking will take place over the next three months to achieve 240,000m3 per month mined by end of August 2017.
- MOR grades – up 12% for FY2017, compared to FY2016; up 20% for Q4 FY2017, compared to Q4 FY2016, reflecting higher grades recovered at WPC during commissioning.
- Average price per carat – up 4% at USCAD1 645 for FY2017, compared to FY2016; down 9% on Q4 FY2016 (excluding royalty miners). WPC revenues per carat were USD1 888 since commissioning began at the end of August 2016.
- Exploration – delineation pitting in progress at Stofdraai (adjacent to WPC); possibility of bulk sampling being investigated.
- Litigation and Business Rescue – the company’s subsidiaries prevailed in a spoliation (asset possession) action brought by its former contractor, but suffered an order for provisional liquidation, which was suspended when certain creditors filed for business rescue of these subsidiaries. That order was granted when the court was persuaded that there was a stronger chance of recovery through maintaining operations and implementing the business plan, than liquidation.
- Management and Directors – Mr Johan Oosthuizen is appointed Interim CFO effective June 1, 2017, replacing Mr Patrick Cooke whose term expired. Mr Oupa Sekhukhune is appointed as a company director effective June 1, 2017, replacing Mr Richard Mhlontlo who has resigned.
Financial highlights
Summary for the 12 Months ended February 28, 2017
- Revenue: Rough diamond sales were CAD26.1 million (FY2016: CAD37.7 million), a 31 % decrease. This reduction was due chiefly to a 33% decrease in carat sales (18,976 carats to 12,789 carats) attributable to cessation of mining activities at Saxendrift and Remhoogte.
- Beneficiation revenue earned through the profit share agreement with Diacore amounted to CAD4.4 million, a decrease of 55% over FY2016 (CAD9.6 million). This was contributed to mainly by the decrease in carats produced.
- Gross (loss)/profit before amortization, depreciation and rehabilitation was CAD(3.5) million compared to a gross profit of CAD0.7 million for FY2016. This was the result of significantly reduced sales, offset by production cost savings.
- Net cash position: At February 28, 2017 the Group had cash and cash equivalents of CAD1.7 million and overdrafts of CAD1.2 million, net cash of CAD523,000 (FY2016: CAD1.3 million overdraft). Trade payables were CAD9.3 million (FY2016 CAD5.0 million). The Group has raised loans and borrowings of CAD12.2 million.
Summary for the Fourth Quarter of 2017
- Revenue: The Group reported a 90% decrease in rough diamond revenues at CAD987,000 (Q4 FY2016: CAD10.3 million) and a decrease in beneficiation revenue to CAD69 000 (Q4 FY2016: CAD185 000). Total revenue reduced primarily due to cessation of mining activities at Remhoogte and Saxendrift, with the sole operation, Wouterspan, being in ramp-up phase.
- Loss attributable to owners of the parent of CAD9.0 million (2016: CAD15.0 million) was dramatically reduced by curtailing production at the two loss*making entities and substantial reductions in the cost base.
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