JOHANNESBURG (miningweekly.com) – South Africa-focused miner Rockwell Diamonds was in a better position than expected at the end of the second quarter of the 2014 financial year, mostly owing to the recovery of two diamonds of more than 100 ct each during the three-month period, Rockwell CEO James Campbell said on Friday.
He told Mining Weekly Online that he was satisfied with the group’s results for the quarter, especially taking into account Rockwell’s decision to build the Saxendrift Hill and Niewejaarskraal mines from working capital.
“We made a bold decision to build the mines, depending on the income of the sale of the Klipdam operation and on the Saxendrift mine meeting its targets to meet our finance requirements,” he explained.
Rockwell narrowed its losses and increased its revenues by 33% year-on-year during the three months ended August 31.
The diamond miner recorded a total comprehensive loss of C$1.33-million for the three months ended August 31, compared with a loss of C$4.17-million in the quarter ended August 2012.
Rockwell’s revenues increased to C$9.9-million for the quarter under review, compared with C$7.4-million in the prior comparative quarter.
Diamond sales accounted for C$8.6-million and beneficiation for C$1.3-million of the overall revenue, with sales revenues up 24% and beneficiation revenues 185% year-on-year.
Further, the company reported that, having eliminated the impact of its lossmaking Tirisano and Klipdam operations, it had recorded a gross profit after amortisation and deprecation of C$1.3-million, compared with a gross loss of C$1.7-million in the prior comparative period.
Rockwell also reported an operating profit of C$2.5-million and positive cash flow from operations of C$3.6-million for the quarter.
“From a financial perspective, the results are starting to reflect the decisions taken during the course of our corporate turnaround and have equipped us to achieve our objective to be a midtier diamond mining company,” Campbell commented.
The overall volume of gravel processed and diamonds produced from its own operations, including royalty mining contracts, increased by 26% and 46% year-on-year, respectively.
Monthly carat production from the company’s own operations in July and August was at its highest level since the strategic review that took place at the start of fiscal 2012, Campbell added.
“The steady improvement in our operating results is a direct result of our decision to exit our lossmaking operations and focus our resources on growing our footprint in the Middle Orange River region,” he said.
Campbell further stated that Rockwell had delivered on a number of strategic milestones towards its initial objective of processing 500 000 m3 a month of quality gravels.
Volumes processed from Rockwell’s Saxendrift and Saxendrift Hill Complex increased 32% year-on-year, and 42% overall, including the commissioning volumes of gravel processed at the Niewejaarskraal project.
Meanwhile, production at Saxendrift, which comprised the traditional Saxendrift as well as the higher-grade Saxendrift extension gravels, achieved a 41% grade production, with second-quarter carat production having increased by 35% to 2 543 ct.
The new Saxendrift Hill Complex mine achieved an average value of C$3 636/ct related to the sale of several high-valued diamonds. Revenue from second-quarter diamond sales of C$2-million exceeded the capital investment cost.
Campbell further added that Rockwell had successfully concluded wage negotiations with the National Union of Mineworkers during September without any industrial action having taken place.
Over the next quarter, the diamond miner would aim to successfully ramp up production at the Niewejaarskraal operation, while also focusing on maintaining or improving the cost profile of its Saxendrift and Saxendrift Hill operations, Campbell said.
He added that the company would also start looking at additional opportunities that would allow the company to expand its portfolio of diamond projects.
“We are considering an expansion of the Niewejaarskraal mine and would also like to start working on the Wouterspan project, for which we published a preliminary economic study earlier this year,” Campbell said, adding that the company was also considering external opportunities for expansion.
Meanwhile, Rockwell was aiming to reach its goal of 500 000 m3 a month of processed gravel that would lead to more stability in the company’s earnings.
“Whether this target will be met will depend on the plans we put together regarding the second phase of Niewejaarskraal and that of Wouterspan. We hope to start work on those during the course of next year,” he concluded.