JOHANNESBURG (miningweekly.com) – Dual-listed Rockwell Diamonds has suspended mine production activities and work to complete the Wouterspan wet plant as some of its subsidiaries face a liquidation bid by mining contractor C-Rock Mining Limited (CML).
Rockwell on Friday reported that the implementation of a mining agreement with HC Van Wyk Diamonds (HCVW) and CML, as well as other related agreements among HCVW, the Saxendrift mine (the subsidiaries) and CML, have not proceeded.
As a result, the subsidiaries have given notice to CML that the various agreements have been terminated. The subsidiaries are now engaged in a dispute over these agreements.
In response to Rockwell’s position, CML applied for a spoliation order against the subsidiaries on November 7 and followed this up with applications for provisional liquidation of the subsidiaries on November 22 and 23.
Rockwell has set down the spoliation application for final determination on November 25, in Kimberley. The application for liquidation will be heard in the normal course of business. Rockwell considers the order to be without foundation and it will be vigorously defended.
The applications for liquidation arose from alleged claims pursuant to certain contracts that are in dispute. Rockwell’s position is also founded, in part, on the results of a substantial forensic review recently completed by an independent forensic auditor in Johannesburg, which identified several instances of irregular transactions, unsupported transactions and irregular approvals, involving CML and a former senior Rockwell employee.
TURNAROUND
Meanwhile, Rockwell on Friday also announced that it has completed the formulation of its turnaround plan.
As part of its turnaround strategy, dual-listed Rockwell Diamonds will accelerate the ramp-up of its Wouterspan plant, near Douglas, in the Northern Cape, to a full production volume of 200 000 m3 a month.
The miner, which was currently facing a liquidation application, said in a statement on Friday that it would also embark on a material reduction in cash-operating and off-mine costs, while increasing production volumes in the first quarter of its 2018 financial year by another 60 000 m3 a month by relocating the Holsloot plant to Wouterspan North, where additional Rooikoppie gravels have been delineated.
Rockwell also believes it can cut costs by reducing the overall operation’s footprint through the disposal of any assets that do not fit the business model.
The miner was also proceeding with attempts to sell its Remhoogte/Holsloot and Saxendrift mines, it stated.
Further, Rockwell is in the process of securing adequate and timeous cash investment to facilitate the procurement of capital items and supplement cash flow for the first five months.
To date, commitments for $8-million have been secured by means of additional funding on similar terms to the current loans.
This plan will enable Rockwell to perform the necessary upgrades to equipment and infrastructure, enabling it to implement its turnaround plan.