Rockwell CEO James Campbell
Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – An increase in carat sales during the third quarter of the 2015 financial year has somewhat offset the lower recovery of large diamonds across the operations of TSX- and JSE-listed Rockwell Diamonds.
Rockwell, which published its results for the three months to November on Tuesday, reported that it achieved a gross diamond revenue increase for the tenth successive quarter, while cutting operating costs by 15%.
A 127% improvement in carat sales to 13 759 ct during the third quarter boosted rough diamond sales 55% to $17.5-million and resulted in a diamond revenue growth of 59% to $18.9-million.
Further, the diamond miner’s cost reduction initiatives continued during the period under review, leading to a 15% decline in consolidated average cash operating costs for the Middle Orange River (MOR) operations to $11.5/m3, Rockwell CEO and president James Campbell commented.
The average total cash cost for all operations for the third quarter was down 35% year-on-year to $12.2/m3.
However, a 35% decline in average carat price and the lower incidence of large diamonds recovered in the quarter under review was reflective of a tough period, Campbell noted.
Rockwell widened its loss, from $380 000 for the three months to November 2013, to $4.75-million for the quarter under review.
The company’s operating loss hiked to $3.2-million in the third quarter of the 2015 financial year, compared with an operating profit of $2.77-million in the corresponding quarter in the previous year.
The headline and basic loss a share also increased from 0.72c in the prior corresponding quarter to 8.87c and 8.96c respectively in the three months to November 2014.
“We are mindful that we need to ensure our ability to profitably process some of the lower-grade resources and are committed to further drive down unit costs,” he said.
Rockwell aimed to shift its focus to processing the remaining Saxendrift Hill Complex (SHC) resource, which closed on January 13, through the Saxendrift plant, while relocating SHC’s assets to the other MOR properties, in particular Niewejaarskraal, where the company planned to expand throughput.
“[The] volatility in diamond recoveries is best addressed by lifting our monthly processing capacity above 500 000 m3,” Campbell explained.
During the fourth quarter, Rockwell would work to enhance the operating economics of Niewejaarskraal and upgrade its inferred resource through trial mining.
The company would also continue to review options to phase its Wouterspan property into production, after the completion of a preliminary economic assessment in May 2014.
The group would further work towards raising the funding for the acquisition of neighbouring MOR alluvial properties and mining capabilities.
“We believe [our recently announced acquisition] will be the game changer we have been searching for,” Campbell said.
Earlier this month, Rockwell entered into a conditional agreement to buy diamond properties and associated plant and equipment from Bondeo for $28.5-million.
The deal, expected to close in the second quarter of the 2015 calendar year, remained subject to conditions precedent, including the conclusion of financing before the end of March.