VANCOUVER , Feb. 20, 2017 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX:RDI; JSE:RDI) announces that it has concluded the sale transaction entered into with Nelesco 318 Proprietary Limited ("Nelesco") for certain assets, the assumption of ZAR70M (CAD $7.0M ) in rehabilitation liabilities, the transfer of 100 employees and a cash consideration of ZAR45M (CAD $4.5M ) as announced in December 2016 . The first of three payments, ZAR20M (CAD $2.0M ), was settled after the fulfillment of certain suspensive conditions, as agreed. The second payment tranche is ZAR15M (CAD $1.5M ) and is due on completion of the registration of the Saxendrift farm in the name of Nelesco, and the balance of ZAR10M (CAD $1.0M ) upon approval of the Section 11 transfer of the mineral properties to the name of Nelesco as well as the consent of the Takeover Regulation Panel of South Africa . In the press release of December 22, 2016 the expected impairment of book value was CAD$1,25M which is now restated as CAD$ 8,55M on completion of the transaction.
Nelesco has in the meanwhile completed site establishment and commenced its mining operations. Until the Section 11 transfer is received, all operations will be on a contract mining basis with a royalty payable to the Company of 2.5% of revenue from diamonds recovered from properties covered by the transaction. Nelesco will be responsible for any related rehabilitation liabilities.
'As regards our repositioning plan we are not in the home stretch yet, says the CEO Tjaart Willemse but we are on the move and gaining traction towards realizing the "new Rockwell" goals. Not only have we reduced our liabilities and earned some much needed cash, but we have recovered our operations and regained focus. We have a clear strategy, which is to get our Wouterspan Mine up to full production and to see first production from our new Stofdraai Mine by July. We are also in discussion with an interested party to conduct bulk sampling at the Daniels Alluvials project with a view on developing the site as a Joint Venture. We have a focused management team and the recent appointment of a Company Secretary will provide needed support for our corporate affairs.
We still have to overcome some remaining challenges, mainly the pending liquidation application lodged by our erstwhile mining contractor and the fact that we are behind on revenue due to inefficiencies in the half completed plant. Completion of the final stage of the treatment plant in March will see overall improved processing efficiencies and the ability to generate revenue sustainably.
I am positive about the future and with the continued support from our shareholders and employees we can "make the grade" and see the new Rockwell deliver.'
About Rockwell Diamonds:
Rockwell is engaged in the business of operating and developing alluvial diamond deposits. The Company also evaluates consolidation opportunities that have the potential to expand its mineral resources and production profile and provide accretive value to the Company.
Rockwell is known for producing large, high quality gemstones comprising a major portion of its diamond recoveries. This is enhanced through a beneficiation joint venture that enables Rockwell to participate in the profits on the sale of the polished and certain re-traded diamonds, which are not beneficiated.
Rockwell has set a strategic goal to become a mid-tier diamond production company. In pursuit of this goal the Company has embarked on a strategy to grow its Middle Orange River ("MOR") operational base and minimise production and recovery volatility by setting a medium term target to process 500,000m3 of gravels per month from its MOR operations.
Rockwell's common shares trade on the Toronto Stock Exchange and the JSE Limited under the symbol "RDI".
No regulatory authority has approved or disapproved the information contained in this news release. Forward Looking Statements
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.
Factors that could cause actual results to differ materially from those in forward-looking statements include uncertainties and costs related to the transaction and the ability of each party to satisfy the conditions precedent in a timely manner or at all, exploration and development activities, such as those related to determining whether mineral resources exist on a property; uncertainties related to expected production rates, timing of production and cash and total costs of production and milling; uncertainties related to the ability to obtain necessary licenses, permits, electricity, surface rights and title for development projects; operating and technical difficulties in connection with mining development activities; uncertainties related to the accuracy of our mineral resource estimates and our estimates of future production and future cash and total costs of production and diminishing quantities or grades of mineral resources; uncertainties related to unexpected judicial or regulatory procedures or changes in, and the effects of, the laws, regulations and government policies affecting our mining operations; changes in general economic conditions, the financial markets and the demand and market price for mineral commodities such as diesel fuel, steel, concrete, electricity, and other forms of energy, mining equipment, and fluctuations in exchange rates, particularly with respect to the value of the US dollar, Canadian dollar and South African Rand; changes in accounting policies and methods that we use to report our financial condition, including uncertainties associated with critical accounting assumptions and estimates; environmental issues and liabilities associated with mining and processing; geopolitical uncertainty and political and economic instability in countries in which we operate; and labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in which we operate our mines, or environmental hazards, industrial accidents or other events or occurrences, including third party interference that interrupt operation of our mines or development projects.
For further information on Rockwell, Investors should review Rockwell's home jurisdiction filings that are available at www.sedar.com.
SOURCE Rockwell Diamonds Inc.
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