TORONTO (miningweekly.com) – JSE- and TSX-listed Rockwell Diamonds posted a fourth-quarter loss of C$3.6-million, owing to its having taken decisive action at its loss-making operations to bring about a corporate turnaround, which resulted in impairments totalling C$5.4-million in the quarter ended February 28.
Rockwell’s total revenue of C$9.1-million improved by 11% year-on-year, while the company reported 19% year-on-year revenue growth from diamond sales, excluding beneficiation, to C$7.2-million, underpinned by a 55% increase in carat sales from its operations in South Africa's Middle Orange River operations, a region that is critical to its production growth strategy.
Fourth-quarter diamond production was down 5% year-on-year to 3 854 ct, owing to a 6% decline in the volume of gravel processed, including the impact of placing Tirisano on care and maintenance during the period.
Despite the total carats sold being down 8% to 5 308 ct, a better overall product mix resulted in a 30% increase in the average price per carat to $1 355.
During the period, the consolidated average total cash cost increased to $12.39/m3 from a total average cash cost of $10.37/m3. This increase was attributable to phasing Tirisano into care and maintenance and technical optimisation programmes at Klipdam. Higher fuel, maintenance and labour costs also had an impact across all operations.
"Although the fourth quarter was challenging, we have taken decisive action at our loss-making operations, putting us on a sounder footing for fiscal 2014. We delivered good revenue growth, but our financial performance was impacted by the full costs of retrenchments and care-and-maintenance processes for Tirisano,” CEO James Campbell said.
At Klipdam, volumes increased according to plan, but diamond recovery was disappointing, resulting in a loss. Campbell pointed out the legacy operational issues were now addressed, and the company could now focus on its cash generating operations in the Middle Orange River region.
The ramp-up of production at the Saxendrift Hill complex was on track and Rockwell said it was making good progress with the construction of the new processing facility at Niewejaarskraal - both of these projects are funded internally.
Campbell said once these three mines were in operation, the company would have reached the halfway mark of increasing production at the Middle Orange River operations to 500 000 m3/m in the medium term.
Further, Rockwell expected a recovery in rough diamond prices for smaller diamonds of between 5% and 10% during 2013. In the market for the larger diamonds that make up most of Rockwell's production profile, demand continued to outstrip supply. Rockwell also noted an increasing attendance at its monthly tenders, and this was interpreted as a positive indicator of rough diamond demand and price.
Rockwell had carried over an inventory of 1 248 ct into the first quarter of the 2014 financial year, which, together with the beneficiation pipeline that comprised about 4 000 ct, provided further potential for valued-added downstream revenues, through its beneficiation joint venture with the Steinmetz Diamond Group.