JOHANNESBURG (miningweekly.com) – Dual-listed diamond miner Rockwell Diamonds has entered a R284-million conditional agreement to acquire certain alluvial diamond properties and associated plant and equipment from Bondeo 140 CC, which it expects will drive its processing capacity above its 500 000 m3 a month target.
“We know the geology of the area, so these new assets offer economies of scale with the potential to reduce the volatility of our quarterly production results,” CEO James Campbell said.
The assets are contiguous to Rockwell’s existing properties and will significantly enlarge its operating and resource base, thus, “more than doubling [Rockwell’s] processing capacity”, while leveraging the company’s growth in the Middle Orange River (MOR) region, in South Africa.
Campbell saw the acquisition as a “long, but worthwhile haul”, with talks to acquire the property already under way in 2012. “Like most things in life, the harder you work at something, the more valuable it becomes at the end of the day,” he quipped in a telephone interview with Mining Weekly on Tuesday.
The acquisition consideration comprised R120-million for mineral rights and three fit-for-purpose processing plants payable on the closing date in the second quarter of this year. “[We are acquiring] three operating mines, none of which are more than one year old. The plants use modern technology, like our own [plants],” Campbell noted.
The remaining R164-million, allocated to earthmoving fleet and other associated equipment, involved the payment of R38.6-million to the sellers over ten months in equal instalments, while the balance related to equipment leases and hire purchases that were intended to be refinanced on similar terms with South African financial institutions and current mobile fleet and equipment supply partners.
The transaction was subject to conditions precedent, including customary regulatory approvals and Rockwell completing financing on or before March 31. Campbell pointed out that the company hoped to conclude the deal before the end of April.
“We are delighted to have concluded this agreement as it represents an exciting growth platform for Rockwell. Our executive and operational management have demonstrated their alluvial diamond production expertise during Rockwell’s corporate turnaround and have the capacity to take on these additional assets.
“We have reviewed a number of consolidation opportunities and the transaction [has] met all our strategic criteria,” he added.
Campbell noted that the acquisition would give Rockwell the opportunity to allocate its financial, human and intellectual capital more efficiently across a broader resource base.
“We have a long-standing working relationship with the sellers of the assets which we are acquiring, who initially brought this opportunity to the table, and we have agreed to work together to find additional opportunities that might benefit both parties,” he stated.
Asked if there were any conditions regarding the retrenchment or retention of employees, Campbell revealed that just under 300 workers were currently employed at the properties, but that the matter was a “going concern”.
“When we look at our portfolio and have concluded the fundraising, there may be some changes. There may even be some expansion,” he added.