JOHANNESBURG (miningweekly.com) – TSX- and JSE-listed diamond producer Rockwell Diamonds posted a loss of C$4,1-million in the three months ended May, compared with a net loss of C$0,8-million recorded in the corresponding period for 2008.
The first-quarter loss was owing to the continued weakness in the diamond market, which started in the fourth quarter of the 2009 financial year, along with the ongoing global credit crisis, which caused a collapse in the demand and prices of diamonds.
During the three-month period, Rockwell realised diamond sales of C$3,9-million compared with C$7,3-million a year earlier. This decrease was as a result of diamond prices still remaining about 50% below those achieved prior to November 2008.
Average diamond price received by Rockwell increased to $555/ct, up 75% from the low of $318/ct obtained in the previous quarter.
The company said that the average price a carat received at recent monthly tenders demonstrated strengthening prices, namely $531/ct in March, $585/ct in May, $700/ct in June and $835/ct in July.
It noted that operations at the Holpan and Klipdam mines were impacted by heavy seasonal rainfall and operations at Saxendrift were impacted by irregularities in the electrical supply from South African electricity supplier Eskom.
Operations at the Wouterspan property were still in care-and-maintenance in order to preserve Rockwell’s cash reserves.
“Rockwell continues to review market conditions and, subject to the diamond market showing higher and sustainable diamond prices going forward, intends to recommi ssion the Niewejaarskraal mine, located on a high level terrace to the west of its Saxendrift operation, and to modernise and recommission the Wouterspan operation,” the company said in a statement.
Rockwell said that despite the fact that it had investigated other potential diamond acquisitions which would provide accretive value, it was unlikely that these acquisition opportunities would be pursued, unless an exceptional opportunity should appear, until such time as current financial and diamond market conditions improved.
“Rockwell’s priority is to maintain flexibility and resourcefulness to overcome the challenges of the world economic crisis and the concomitant significant decline in international diamond prices. In this respect, the company continues to manage costs, leverage diamond sales, and increase production to maximise revenues at its operations.”