JOHANNESBURG (miningweekly.com) - JSE- and TSX-listed Rockwell Diamonds has a long-term vision to become a gemstone producer of about 10 000 ct/m, said president and CEO John Bristow, announcing the company's first quarter results.

The Vancouver-based company, which owns mines in South Africa, reported production of 7 368 ct for the three months ended May 31, 2010, compared with 4 022 ct for the same period last year.

Bristow said that production at its Holpan, Klipdam and Saxendrift operations and the Klipdam extension bulk-sampling project in South Africa, steadily increased during the quarter, and was significantly boosted by expanding capacity at its Saxendrift plant.

The company was also proceeding with the design and reengineering of the Wouterspan processing plant to build a high-volume low-cost mining and processing operation, that would ensure greater throughput capacity and lower operating costs.

Simultaneously, Rockwell aimed to fast track the acquisition of the Tirisano project to provide additional carat production in place of production from Wouterspan.

Bristow said that the company would continue to implement initiatives to improve its operating and costs structures in all parts of its business, which would form the foundation for Rockwell's growth and acquisition plans.

In March, the company signed a term sheet to buy 74% of the Tirisano or Blue Gum diamond operation near Ventersdorp, in North West province, from Etruscan Diamonds R33,5-million ($4,65-million), payable in Rockwell shares.

However, the completion of the acquisition was still subject to a number of conditions including: the South African Mining Ministry's consent, securities regulatory approvals including TSX, satisfactory due diligence and project development financing and electricity negotiations.

Bristow said that the higher grade of the Tirisano deposits, compared to the low grades of Rockwell's Northern Cape operations, and large volume resources would facilitate high production rates and greater consistency of carat production, thereby smoothing the company's revenue stream.

Rockwell sold 4 927 ct during the quarter at an average price f $1 611/ct amounting to the generation of about $7,9-million, plus $0,3-million from beneficiation profit share for the quarter.

Overall, an operating profit of $2,5-million was realised for the period.

Bristow said that diamond prices received for rough diamonds during the quarter's tender sale were comparable to those achieved during 2008, indicating that the diamond business has improved over the past 18-months. Other evidence of this recovery included an increasing demand for larger stones.

Further, Bristow pointed out that polished diamond prices had also improved, although the increase in price of polished stones on a percentage basis was still less than for rough diamonds.

"The retail sector has shown a year-on-year increase in trade but has not yet fully recovered. Margins on polished stones are still small because of high rough diamond prices.

"Yet credit terms have improved from the exceptionally high terms offered to the industry prior to the credit crisis in late 2008, and this should increase the purchasing power of the retail sector," concluded Bristow.