JOHANNESBURG (miningweekly.com) – JSE- and TSX-listed Rockwell Diamonds on Wednesday announced a 19% increase in revenue from diamond sales, before any sales from beneficiation, for the fourth quarter of the 2013 fiscal year compared with the same period last year.
The company reported that total proceeds of $7.2-million were recorded from the sale of 5 308 ct at an average price of $1 355/ct compared with $6-million for the same period in the 2012 fiscal year.
Total sales declined by 8% quarter-on-quarter to 5 308 ct; however, a better overall product mix led to a 30% increase in the average price per carat compared with a year ago, the company stated.
Rockwell president and CEO James Campbell told Mining Weekly Online that he was pleased with the results for the fourth quarter. “Rockwell is aiming for a steady improvement in revenue growth and the results prove that this is taking place.”
He explained that the 19% increase in sales was mainly owing to the improved production at the company’s Middle Orange River operations, an increase in the number of larger diamonds mined and the diamond market remaining steady.
Campbell noted that he was exceptionally pleased that the diamond market had remained steady, as conditions have been volatile in the past.
Carats sold from Rockwell’s Saxendrift operation in the Northern Cape, including tailings processed, increased by 55% to 2 862 ct during the period. At an average price of $1 634/ct, this resulted in a 24% increase in revenue from diamond sales to $4.7-million.
The value of sales from Saxendrift amounted to $4.2-million, underpinned by better diamond production during the quarter, and resulting in a 32% increase in carats sold to 2 440 ct. While the average price per carat at $1 738 was 15% lower than in the same period last year, Rockwell stated that this was largely in line with industry-wide diamond pricing trends.
Meanwhile, sales of diamonds recovered from Saxendrift tailings by the bulk X-ray plant generated total proceeds of $436 882 through the sale of 422 ct recovered mainly from the coarse recovery tailings of the previous operator that mined using older technologies. In December 2012, this plant was relocated to the Saxendrift Hill Complex that is currently in production ramp-up.
“We are pleased that our Middle Orange River operations continued to deliver good results for the fourth quarter with a 55% increase in carat sales and a 24% improvement in revenues from diamond sales. This area represents the future growth of the company,” Campbell commented.
Meanwhile, sales from Rockwell’s Tirisano operation, which was placed on care and maintenance in December last year, totalled 291 ct at an average value of $676/ct.
Diamonds recovered on the Tirisano property from royalty mining contracts generated total proceeds of $403 818 during the fourth quarter, at an average price per carat of $695 from the sale of 581 ct. A 12.5% royalty from these revenues accrues to Rockwell, and was used to offset the cost of care and maintenance activities at the operation.
Further, Rockwell stated that, although the number of carats sold from its Klipdam operation, located 45 km from Kimberley, declined for the quarter to 1 574 ct, the value of sales increased by 14% as a result of a material rise in the average price per carat to $1 217, owing to the combination of the sale of an exceptional 73.52 ct fancy yellow diamond and a number of stones exceeding 10 ct.
Subsequent to year-end, Rockwell accepted an unsolicited offer to sell the mine and stated that it intends to reinvest the $2.5-million cash proceeds from this sale to bring its Niewejaarskraal mine into production with the expectation of generating higher returns.
“We are making tangible progress towards developing other properties in the region in order to deliver on our medium-term strategic objective of producing 10 000 ct a month. Having eliminated our loss-making operations, namely Tirisano and Klipdam, we are better placed to start delivering positive returns,” Campbell said.
“We hope to mine our first diamond at Niewejaarskraal by the end of June this year, after which the operation will be ramped up using a three-phased approach.”
The first phase, which Rockwell aims to have in full production by the end of August, entails ramping up production to 50 000 m3 a month, while the second phase, which should be completed by the end of the next financial year, will see production increase to 100 000 m3 a month, Campbell explained.
He added that Rockwell was optimistic that rough diamond prices would show single-digit price increases for smaller diamonds as the market continued to recover in the 2013 calendar year.
“Rockwell is seeing indications of improving sentiment among buyers, as evidenced by attendance at our monthly tenders, which continues to increase. Of particular relevance to Rockwell, is the continued interest by higher net-worth individuals in high-valued diamonds, both for their investment and fashion appeal.
“With the majority of our diamond production profile falling into the high-valued gem category, where demand outstrips supply, we are particularly well positioned to benefit,” Campbell concluded.