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Rockwell record quarterly carat production
Rockwell announces its quarterly production and sales update for the three months ended November 30, 2013: Middle Orange River ("MOR") growth strategy makes progress with 111% increase in carat production along with an all-time record quarterly carat production for the Company. Total volumes of gravel processed and carat production from Company properties(i) increased by 33% and 54% respectively. Total carat sales from Company properties improved by 50% with carat sales from MOR operations up by 101%.
Revenues from diamond sales (excluding beneficiation) increased for the sixth consecutive quarter. Sales revenues from own operations (excluding royalty mining) up 97%. The Company reported a 33% increase in third quarter volumes of gravel processed to 1 034 966m3, of which 763 332m3 was mined from its own Middle Orange River operations(ii) and the balance from royalty mining contractors operating at Tirisano. Total carat production grew 54%, made up of 5 153 carats from own operations and 3 995 carats from contractors.
Total carat sales from Company properties for the quarter increased 50% to 6 066 carats at an average price of USD1 764 per carat, translating into 45% growth in total revenue to USD10.7 million compared to the prior year's third quarter (excluding beneficiation). Rockwell’s MOR operations delivered a 117% increase in carat sales, which together with a 24% increase in average carat value to USD2 198 from that region translated into a 169% increase in value of sales to USD7.8 million. The value of sales from Tirisano mining contractors amounts to USD2.9 million, of which 12.5% or USD357 500 accrues to the Company.
Volume production from Rockwell’s three MOR mines, key to Rockwell's organic growth focus, increased by 65% due to the commissioning of new mining infrastructure at Saxendrift Hill Complex and Niewejaarskraal (currently in ramp up) during the first half of fiscal 2014. The average grade improved 27%, underpinning the substantial improvement in MOR carat production from a year ago. These results confirm Rockwell’s strategic focus on its MOR operations, as the Company delivers on milestones towards its mid term target to increase monthly production volumes to 500 000m3 to smooth its production profile and increase the recovery of large diamonds. At the same time, the results of the royalty mining contractor agreements at Tirisano have increased again, with consistent recoveries at this property and enabling the Company to continue assessing the future options of some of its non-core assets.
Rockwell concludes new BEE Partnership for its Middle Orange Operations
Rockwell also announced that it has concluded an agreement with a well established black investment company ("new BEE partner"), to acquire a 30% equity stake in the Company's Middle Orange operations(iii), replacing Africa Vanguard Resources ("AVR") as its BEE partner in the region, as required by South African law, under the Black Economic Empowerment ("BEE") legislative provisions, subject to some conditions precedent.
As announced in March 2012, the Company agreed to unwind its agreement with AVR and subsequently entered into discussions with other groupings that indicated their interest to partner with Rockwell in a value creating transaction. These discussions culminated in the agreement with its new BEE partner, which was established in the early 1990's and has a successful investment track record in both listed and unlisted entities in sectors including mining, diamonds and related services whose investment approach is to engage with its investee companies at a strategic level to unlock value. The identity of the new BEE partner will be communicated to the market once the conditions precedent, including the Section 102 transfer, have been finalized.
Under the terms of the agreements and subject to the fulfilment of the suspensive conditions, Rockwell’s new BEE partner will acquire 30% of Rockwell's Middle Orange River operations. The total acquisition consideration of ZAR72.6 million (USD7.3 million) will be paid in two tranches with an initial payment of R17.3 million (USD1.7 million) which will be settled once the various regulatory approvals have been achieved. A vendor loan has been raised for the balance of the purchase price, to be settled on or before February 28, 2018 at a fixed interest rate of 9.0% per annum.
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