Rockwell reports Q2 2018 results, excludes breakeven-but-bankrupt South African affiliates

17th October 2017 By: Henry Lazenby - Creamer Media Deputy Editor: North America

Rockwell reports Q2 2018 results, excludes breakeven-but-bankrupt South African affiliates

Rockwell Diamonds' Niewejaarskraal operation in better days
Photo by: Rockwell Diamonds

VANCOUVER ( – Canadian alluvial diamond miner Rockwell Diamonds, which had its origins within Vancouver-based mining house Hunter Dickenson, has reported a noncash comprehensive income of C$23.2-million for the second quarter ended August 31.

The result is based almost entirely on the reversal of foreign currency reserves regarding operations in South Africa, and certain stock-based compensation reserves that were unwound. However, it excluded the company’s three South Africa-based subsidiaries Rockwell Resources, HC van Wyk Diamonds and Saxendrift Mine, over which the company no longer has control.

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 placed in interim liquidation, at a time when Rockwell was executing a turnaround strategy.

However, willing buyer Ascot Diamonds has stepped forward with two proposed rescue transactions – one for the distressed affiliates in South Africa and another for the group’s two subsidiaries in Cayman Islands. But the deals have been thwarted by the court-appointed business rescue practitioners (BRPs) Metis Strategy Advisors, which filed an untimely motion to place the affiliates into provisional liquidation, placing pressure on negotiations, resulting in the deal falling through.

Surprisingly, Rockwell reported that despite the fact that only 25% of the planned volumes were actually processed and, including the additional burden of the BRPs and their legal adviser’s fees, operations were on cash breakeven in August.

The three subsidiaries were again placed in provisional liquidation on September 22 by the BRPs and their legal counsel Werksmans, in spite of receiving the formal offer from Ascot Diamonds.

The return date for hearing on the liquidation order is November 3, by which date the provisional liquidators, Honey's of Bloemfontein, will ask the Kimberley High Court either to proceed with full liquidation or to keep the subsidiaries in provisional liquidation pending the successful outcome of the transaction with Ascot Diamonds.

Ascot's offer to also buy Rockwell's Cayman companies is conditional on a successful buyout of the three South African subsidiaries. To the extent that the second offer does proceed, Rockwell will approach creditors and shareholders for approval.

Rockwell separately reported that while the Wouterspan mine was operational under management of the BRPs, it produced a total of 408 ct, reflecting a significantly improved grade of 0.72 carats per hundred cubic metres, with the average price per carat soaring 200% in August to $2 685/ct, compared with $899/ct in July.

Revenues from diamond sales in the period totalled $1.25-million.