JOHANNESBURG (miningweekly.com) – TSX- and JSE-listed Rockwell Diamonds would build on the steady increase in production at its three operational diamond mines in South Africa to prove itself as a profitable and sustainable diamond junior, COO Michael Hunt said this week.

He stated that 2012 would be a year of consolidation for Rockwell and that it would focus on resolving and finalising matters that would aid in improving the company’s balance sheet.

These include the resolution of a dispute with black economic-empowerment partner, African Vanguard Resources, which still owed Rockwell some R50-million for a 26% stake in its Saxendrift mine, in the Northern Cape.

“The resolution of this would have a significant impact on our balance sheet and provide us with the resources to focus on other projects,” head of corporate development and investor relations Stéphanie Leclercq told Mining Weekly Online.

Rockwell would also focus on further reducing mining costs at its Klipdam mine, near the Vaal river, and would aim to increase the dollar-per-carat level.

Meanwhile, the bulk X-ray machine, which would enable lower operating costs and increased recovery and security, was being commissioned at Saxendrift, where a proof-of-concept process would commence in April.

Depending on the success of the test results, the board would decide which one of its developmental projects at Wouterspan, Niewejaarskraal, Saxendrift Extension, or the doubling of output at Tirisano in the North West, would be persued first.

CEO James Campbell added that the company was currently looking at ways to finance feasibility studies at the Wouterspan and Niewejaarskraal projects, but that the completion of these studies was dependent on the conclusion of the work on the bulk X-ray machine.

Production at Tirisano was currently below target at 60 000 m³/m, but the targeted 90 000 m³/m was expected to be reached before the next wet season.

Campbell said the Tirisano ramp-up would evidently impact on the company’s profitability in the fourth quarter, as it had, along with the Midamines payment, cost Rockwell dearly, resulting in a gross profit of C$0.6-million in the third quarter.

Rockwell paid a C$1.2-million one-off settlement to Midamines in the September quarter.

Against an industry average rough diamond price of $90/ct for stones smaller than 0.3 ct, Rockwell’s was doing well.

Diamonds from the Tirisano mine achieved an average price of $700/ct, Klipdam achieved $1 100/ct, while Saxensdrift, Wouterspan and Niewejaarskraal stones, on average, sold for $2 000/ct.

Performance at Saxendrift was expected to pick up in the second half of the 2012 financial year with Campbell anticipating that the operation would yield above the current dollar-per-carat level through the improvement of the production process for coarser diamond recovery and increasing volumes.

Bottom cut-off at Saxendrift had been increased to 5 mm since early December.

Campbell added that the company’s beneficiation joint venture with Steinmetz Diamond Group, which beneficiates about 80% of Rockwell’s diamonds bigger than 2.8 ct, was expected to expand.

He pointed out that through the partnership revenue of C$8.5-million was realised in the past three years from 6 183 ct beneficiated and that it added about 30% to the revenue of the stones, a percentage that was also anticipated to grow in the fourth quarter.

Local beneficiation work was under way with 1.50 ct to 2.50 ct rough diamonds to be supplied to a 100% black-owned cutting factory.
 

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