JOHANNESBURG (miningweekly.com) – JSE- and TSX-listed Rockwell Diamonds on Wednesday placed its Tirisano mine, in the North West province, on care and maintenance, owing to “persistent industrial relations issues” and ongoing losses incurred by the mine.
CEO James Campbell said that labour difficulties, including the impact of a second illegal strike within four months, as well as operational complexities and slower-than-anticipated recovery in the price of smaller diamonds required the company to suspend the operations in order to preserve cash.
Tirisano had accounted for the bulk of Rockwell’s August-quarter loss of C$2.4-million, with commissioning costs of C$500 000 and C$1.3-million in lost production.
The suspension, which would affect 92 employees, most of whom would be retrenched, followed the implementation of a turnaround strategy intended to reduce the operating cost structure of the mine and resulted in the retrenchment of 111 miners.
The diamond producer, which maintained confidence in the resources of Tirisano, would use its royalty mining revenues from the property to offset care-and-maintenance costs, while the group embarked on a scoping study of the region, Campbell told Mining Weekly Online.
Rockwell Diamond’s conclusion, earlier this year, of four royalty mining contracts allowing small-scale operators to mine certain areas of its Tirisano and Klipdam properties deemed unsuitable for its high-volume operating model, would generate revenue to support the suspended mine.
The first contractor started production at Tirisano in August, which covered about half of the care-and-maintenance costs, with another expected to start operations early next year, which would push the mine into a cash neutral position.
Meanwhile, the company planned to undertake a detailed metallurgical study and design a fit-for-purpose plant and reveal the most efficient extraction method for the mine’s local environment.
The concept would be tabled with the board in March, following which a preliminary report would be compiled.
Meanwhile, with the Tirisano mine suspended, Campbell said Rockwell could turn its focus and cash resources to improving and driving the efficiency of mining operations at its Saxendrift mine, near the Middle Orange river, in the Northern Cape, and its Klipdam mine.
In October, Rockwell embarked on a restructuring programme at Klipdam, to mitigate costs as the mine neared its end-of-life, and appointed contract miner CML Operations to replace in-house mining.
Campbell said that within six weeks, the mine had returned to its nameplate production capacity. The company planned to expand production capacity by 50% by mid-2013.
Further, he noted that the new $2-million processing plant at Saxendrift Hill was expected to be complete by January 2013, ramping up to full production by April.
The project was expected to add a monthly production capacity of 100 000 m3 and produce high-quality gemstones.