VANCOUVER (miningweekly.com) – Canadian alluvial diamond miner Rockwell Diamonds remains in the dark as to why business rescue practitioner (BRP) Metis Strategic Advisors had chosen to file a motion in the Kimberley High Court, on Thursday, to place the company's three subsidiaries back in provisional liquidation, when a rescue offer is set to be finalised on Monday.
The TSX- and JSE-quoted company, which operates a portfolio of alluvial diamond mines in South Africa, reported that, following several discussions with three interested parties regarding a rescue transaction, a letter of intent by one party was sent to Metis on Wednesday.
According to Rockwell, the letter informed the BRPs that an offer, worth more than liquidation value, was to be expected, and that they were invited to a meeting to finalise this on Monday.
However, despite being involved in the discussions for several weeks, the BRPs proceeded with a motion on Thursday to liquidate the three subsidiaries. Metis also informed Rockwell on Friday that it would place the operational Wouterspan mine under care and maintenance.
“The company is unclear why the BRPs chose not to wait to file such motion based on the outcome of the final discussions regarding a proposed transaction, when written assurance had been provided that the offer would exceed liquidation value. The company plans to continue the discussions on Monday, and is advised that one BRP has agreed to attend while the other is not available for personal reasons. The company will provide a further update after [the] meeting,” Rockwell advised in a statement.
Rockwell believes that, should a rescue transaction materialise, the liquidation and shuttering of its flagship mine will not be required.
Without the specialised mining acumen required to successfully operate the mine, the BRP-managed Wouterspan mine only eked out a breakeven month in August, before its fees. Key indicators were in line with Rockwell’s overall strategy to ramp up the mine to become a new growth platform in the country.
The Wouterspan grade was 0.77 ct/100 m3 and prices achieved were above plan; however, volumes remained significantly below plan at 77 000 m3, compared with the planned 175 000 m3, and the operations had never reached plan under the BRPs' three months of direction.
An application to have Rockwell’s three subsidiaries placed under South African business rescue, as opposed to liquidation, was granted in May by the court in Kimberley.
Erstwhile mining contractor C-Rock Mining had previously applied to have the three subsidiaries – Rockwell Resources, HC van Wyk Diamonds and Saxendrift Mine – placed in interim liquidation, at a time when Rockwell was executing a turnaround strategy.