Rockwell Announces Fiscal 2009 Results
Rockwell Diamonds Inc. (“Rockwell” or the “Company”) (TSX: RDI; JSE: RDI; OTCBB: RDIAF) announces financial results for the twelve months ending February 28, 2009. Dollar amounts are in Canadian currency unless otherwise indicated.
Rockwell is focused on growth by mining and developing alluvial diamond deposits. The Company has established a significant presence in alluvial deposits which have consistently yielded high value gemstone diamonds. Plus 2-carat gemstones comprise more than 65% of the Company’s production and are of exceptional quality.
During fiscal 2009, Rockwell operated three alluvial diamond mines – Holpan, Klipdam and Wouterspan – and successfully built and commissioned a new plant at Saxendrift, bringing its fourth operation into production. The Company was granted and was ceded the mining right for the Niewejaarskraal project, located on a high level terrace similar to Saxendrift in the Middle Orange River area. Niewejaarskraal is a past producer of large gemstones and has substantial additional mineral resources. Rockwell also acquired some 12,254 hectares in additional prospecting permits, a number of which are adjacent to its existing operations.
The diamond market was significantly impacted by the world financial crisis. In the latter part of the fiscal year, market demand decreased as retailers resisted committing their limited capital towards polished diamond inventory. Banks were not lending money to retailers to purchase new stock until their debt had been reduced. This had an immediate effect on the retailers’ ability to purchase rough diamonds, causing rough diamond prices to decline, on average, by about 50%.
In response, Rockwell reviewed all of its operations and took measures to streamline activities and reduce costs. The Company extended its normal year-end holiday shutdown from one to two months during the fourth quarter. The Holpan, Kilpdam and Saxendrift mines resumed operations in early February 2009 but Wouterspan continues to be held on care and maintenance.
The Company also reviewed its diamond sales procedures. It did not hold any diamond tenders between November 2008 and February 2009, looking for some improvement in prices prior to resuming sales. Also during this time, Rockwell sold some diamonds directly into the market at spot prices.
According to some market experts, prices for rough diamonds bottomed out in April 2009 and increased by 15-20% in May. Rockwell began to receive higher prices in March. The average price per carat received from tender in February was US$318.32 per carat, which increased to US$531.43 per carat in March and US$584.69 per carat in May.