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     Latest News: Rockwell Diamonds Inc. ROCKWELL [RDI]
     Tue, 26 Apr 2016 Official Announcement [CC] 
    Rockwell - querterly production & sales update
    Rockwell announced its quarterly production and sales update for the three months ended February 29, 2016:

    Salient features
    - Strategy - Rockwell continues to pursue its medium term target to process 500,000m 3 of gravel per month in the Middle Orange River (“MOR”). The imminent end of Company directed mining at Saxendrift has necessitated that an official restructuring process be initiated in terms of Section 189 of the South African Labour Relations Act. The approved recommissioning of operations at Wouterspan is expected to absorb a large proportion of the Saxendrift workforce and equipment. The construction and commissioning of additional in- field screening capacity at the Remhoogte - Holsloot Complex (“RHC”) is on track and are designed to increase processing capacity at RHC up to 180,000m3 of gravel per month.
    - Volumes – MOR gravel processed was 1% down quarter-on-quarter due to lower production volumes at RHC and Saxendrift during the rainy season and over the December closure. These were chiefly offset by higher contractor production volumes. Gravels processed were 40% down year-on-year owing to the changed operational profile, with new production from RHC only partly compensating for the drop in volumes following the sale of Tirisano, the suspension of activities at Niewejaarskraal and the depletion of resources at Saxendrift.
    - Grade – overall, grades were up both quarter-on-quarter and year-on-year. RHC recorded significantly higher grades of 1.12 cphm3, compared to 0.64 cphm3 in the previous quarter, but on slightly lower volumes.
    - MOR carat sales were up 22% quarter-on-quarter to 4,925 carats, and the value of these goods increased 34% to USD7.1 million (excluding beneficiation).
    - Average carat price realized from the Company’s MOR projects improved by 9% quarter-on-quarter, to USD1,448 per carat.
    - Rough diamond inventory - 490 carats (including royalty contract miners’ inventory) were carried over into the first quarter of fiscal year 2017.
    - Operational focus remains on addressing throughput bottlenecks and a review of mining efficiencies, costs and reliability of the fleet.
    - Safety – Rockwell continues to strive for zero harm on all of its operations. At the end of the fourth quarter the Company had achieved 379,162 lost time injury free hours (“LTIFH”) at its MOR operations.

    Strategic review
    During the fourth quarter of fiscal year 2016 the Company implemented a number of the decisions that had arisen from the strategic and operational review of the business conducted in late 2015. Specifically, the following steps have been taken:
    - Saxendrift operations – Company directed operations continue to wind down; a change in the operational parameters has allowed closure to be postponed beyond the planned end of February to May 2016.
    - Saxendrift royalty mining contracts - the second of the three-year royalty mining contracts entered into by the Company commenced post February 2016. The Company is assessing further royalty proposals to continue to extract further value from the Saxendrift property. All diamonds recovered by royalty miners at Saxendrift will be sold by the Company through its sales system and 10% of gross sales will be retained by the Company as a royalty.
    - Start-up of Wouterspan - the recommissioning of Wouterspan and redeployment of existing processing and mining equipment from other operations began early in 2017FY Q1 as planned. Work on the construction of the processing plant is on schedule to deliver a plant and IFS capable of processing 200,000m 3 per month by September 2016, with ramp-up commencing late May 2016. A second phase, to further increase the plant throughput to 400,000 m3, is under consideration.
    - Exploration is advancing on the neighbouring properties surrounding Wouterspan, where 4,300 hectares have been mapped, 1,700 pits have been dug and a further potential 2,200 pits will be dug.
    - Detailed pitting and drilling to outline the gravel extent on Remhoogte and Holsloot continues.
    - Closure of Head Office - Rockwell’s Johannesburg corporate office has been closed, staffing reduced and key senior Company executives have relocated to the MOR on a full-time basis.
    - Corporate structure - operational reporting structures have been streamlined; mine management is now directly accountable for all mine operations, reporting to the CEO who is based full-time in the MOR.

    The Company-wide Section 189 consultation process has come to an end early in Q1 FY2017, with formal notices soon to be served to affected employees. Every effort has been made to redeploy employees wherever possible and mitigate the impact of retrenchments.

    Production review
    - RHC: This recently acquired operation contributed to a 25% grade improvement in the MOR. Fourth quarter volumes processed were down 7% from the third quarter, while grade improved by 75% to 1.12 cphm3. A total of 2,854 carats were recovered in the quarter (including 12 plus 20-carat stones). An average stone size of 4.17 ct/stn was achieved at a bottom cut-off of 5 mm.
    - Saxendrift: The volume of gravel processed was down 5% from the third quarter, whilst the reported grade of 0.33 cphm3 was down 18% from 0.40 cphm3 in the third quarter. Quarterly carat production dropped by 22% to 1,584 carats. Notable recoveries included 9 plus 20-carat stones. An average stone size of 4.69ct/stn was achieved at 5mm bottom cut-off.
    - Royalty contractor mining: A total of 276 carats were recovered in Q4 by royalty mining contractors processing Wouterspan recovery tailings and Saxendrift BHC tailings. Recoveries featured 3 stones above 20 carats, including a 73-carat stone.

    Sales review
    - Saxendrift: Diamond sales declined 71% year-on-year to USD2.6 million. A total of 1,820 carats were sold, down 9% quarter-on-quarter, and corresponding to an average value per carat of USD1,456, up 39% from the third quarter. The substantial value increase can be ascribed to the change in composition of the middlings, with better quality gravels being mined. RHC: Diamond sales amounted to USD4.3 million for the quarter from the sale of 2,912 carats. The recorded average value per carat was USD1,475 per carat, down 6% from the third quarter. This remains below historical values due to a combination of the processing of sub-threshold volumes for the recovery of larger diamonds, as well as lower global diamond prices.
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