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1 GSSA Diamond Symposium: September 2014|
DIAMOND VALUE MANAGEMENT:
UNDERPINNING THE TURNAROUND
GSSA KIMBERLEY DIAMOND SYMPOSIUM
10-13 SEPTEMBER 2014
2 GSSA Diamond Symposium: September 2014|
AGENDA
• Growth strategy
• Diamond Value Management (‘DVM’):
• Mineral Resource Management (‘MRM’)
• Earthmoving Renewal Plan
• Fit for purpose technologies
• Economic metallurgy
• Shareholder Value Management
• Conclusion
Three high quality +100 carat stones recovered from
Saxendrift in May, July & August 2014
103 carats + 35 carats
104 carats
117 carats
3 GSSA Diamond Symposium: September 2014|
STRATEGY
116 carats SHC August 2013
4 GSSA Diamond Symposium: September 2014|
PROPERTIES:
MIDDLE ORANGE RIVER PROJECT LOCATION MAP
5 GSSA Diamond Symposium: September 2014|
* Indicative quarterly revenue and +50 carat stone production based on technical reports
THE RATIONALE:
WHY THE 500,000M3 P.M. QUALITY PROCESSED GRAVEL TARGET?
PAST (Actual) CURRENT (Actual) FUTURE (Plan)
MINES
QUARTERLY
REVENUE*
# +50 CARAT
STONES PER
YEAR* 5 17 25
110,000m3 340,000m3 500,000m3
MONTHLY
MOR
THROUGHPUT
Saxendrift
110,000m3 / month
Saxendrift
160,000m3 / month
SHC
80,000m3 / month
Niewejaarskraal
100,000m3 / month
Saxendrift
160,000m3 / month
SHC
80,000m3 / month
Niewejaarskraal
100,000m3 / month
Wouterspan
(phased) 150,000m3
/ month
Time
Rev
enu
e
Time
Rev
enu
e
Time
Rev
enu
e
6 GSSA Diamond Symposium: September 2014|
IMPACT OF MOR STRATEGY:
HIGHER AVERAGE VALUE PER CARAT AND GROWING QUARTERLY REVENUE (US$)
Holpan on C&M Klipdam sold
Number of
MOR mines
Acquired Jasper
1 2 3
5
6
7
8
9
10
11
12
13
14
15
1000
1200
1400
1600
1800
2000
2200
2400
2600
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
F2011 F2012 F2013 F2014 F2015
Rev
enu
e (i
ncl
. ben
efic
iati
on
(U
S$m
)
Ave
rag
e va
lue
per
car
at (
US
$)
7 GSSA Diamond Symposium: September 2014|
IMPLEMENTATION OF DVM THROUGHOUT THE BUSINESS
High quality MOR production: 116 carats, 37 carats and 33 carats August 2013
8 GSSA Diamond Symposium: September 2014|
DIAMOND VALUE MANAGEMENT:
IMPACTS EVERY PART OF ROCKWELL’S BUSINESS D
iam
ond
Val
ue M
anag
emen
t Dis
cipl
ines
Operations Management
Mining
Mineral Resource
Management
Earthmoving
Renewal Plan
Processing
Fit-for-purpose
Technologies
Metallurgy
Funding Shareholder Value
management
Marketing Beneficiation
Joint Venture
Five +115 carat stones: Recovered from MOR
(August – November 2013)
9 GSSA Diamond Symposium: September 2014|
OPERATING DISCIPLINES
First step in entrenching DVM across all operations
♦ Introduce greater disciplines & professionalism from top ~ down
♦ Strengthen Rockwell’s pool of skills, especially in the technical area
♦ Bolstered executive management and appointed high caliber non-
executive directors
Board actively engaged and involved in Company matters
♦ Supports leadership team with robust and constructive debate
Culture of accountability now “business as usual”: Regular
interaction between operational heads and executive
management:
♦ Weekly Executive Committee meetings
♦ Monthly Business Reviews
♦ Monthly Technical Reviews on site per mine, attended by operational
heads and executive management
OPERATING
10 GSSA Diamond Symposium: September 2014|
MINERAL RESOURCE MANAGEMENT:
LARGE STONE PLOTS
Large stone plot:
+40ct/-10ct on higher/lower elevation respectively
MINING
ANALYTIC REVIEW OF THE RESOURCE
Monthly trend shows detail of trend due larger sample sizes
- DSFD shows absence of +5ct
- Highlighted by kinks in the grade plot
Used in
conjunction
with a gravel
rating scheme
(Prof de Wit &
Dr Ward)
11 GSSA Diamond Symposium: September 2014|
EARTHMOVING RENEWAL PLAN AT SAXENDRIFT AND SHC
Challenge: Address sub-optimal mining volumes due to aging earthmoving fleet
Conducted full investigation of future requirements
♦ Addressing low availabilities and mounting maintenance costs
Implemented capital investment neutral strategy
♦ Two year, fully managed, maintenance-included lease agreement with Eqstra Holdings Limited
♦ Provides sufficient new earthmoving fleet: 85% guarantee on availability
♦ Existing fleet of Komatsu dozers and excavators underwent mid-life rebuilds
♦ Expected cost saving at cash operating level ranging 12% - 17% (mining and processing at full capacity)
New fleet design to facilitate more efficient mining configuration
♦ Monthly mining volumes of 260,000m3 including overburden
MINING
Anticipated benefits emerging
♦ Saxendrift volumes up in July
2014: 185,758m3
♦ Saxendrift unit cost down to
$6.99/m3 [Q1: $10.10/m3]
12 GSSA Diamond Symposium: September 2014|
PROCESSING DVM:
FIT-FOR-PURPOSE TECHNOLOGIES
PROCESSING
Address high sand content in gravel + ability to process wet gravels
Saxendrift IFS (Nov 2011):
♦ Throughput volumes up 30% (incl. contops and increased BCOS)
♦ Enhanced pan plant efficiency and greater mining flexibility
Niewejaarskraal IFS (Feb 2014)
♦ Doubled capacity: Removal of oversize / undersize material before further processing
IFS becoming core to Rockwell’s processing model
♦ Meeting budgeted throughputs at lower costs
In field screen (IFS)
Bulk X-Ray
Pilot project at Saxendrift (2012):
♦ High throughput Bourevestnik (BV) sorter + BV single particle sorter
♦ Recovered 1,903cts from old tailings, incl. 145-ct + 76-ct stone
Completion of pilot: equipment relocated to SHC
♦ Pioneered in full production environment by Rockwell in SA i.e. for concentration +
recovery mode
13 GSSA Diamond Symposium: September 2014|
METALLURGY DVM
DVM in processing environment
♦ Implemented by Dr Kurt Petersen, diamond metallurgy consultant
Findings used to optimise production profile.
Bottom cut off size (‘BCOS’) adjusted to +6mm.
♦ Eliminated costly recovery of low value, small diamonds:
♦ Impact of handling and processing gravels containing small diamonds
♦ Improved productivity in processing environment
Continuous monitoring of processing plants
♦ Regular testing of various steps of each processing environment to
capture further efficiencies
♦ Awareness of production of quality tons entrenched in production
teams
PROCESSING
-20
0
20
40
60
80
100
(Rev
enue
- C
osts
), R
/m3
Business Categories
Cumulative
Per Business
Current production (+5mm bcos): 50% of carats <6 cts
Historic (“pre-DVM”) production (+3mm bcos): 10% of carat
production <5mm
Minimal contribution from smaller sizes (incl. handling/
processing cost)
Smaller sizes detract from economically effective utilization
0%10%20%30%40%50%60%70%80%90%
100%
0 20 40 60 80 100Cum
ulat
ive
Car
ats
+ G
rade
(%
)
Carat Size (Carats)
Carats Revenue
14 GSSA Diamond Symposium: September 2014|
SHAREHOLDER VALUE MANAGEMENT
Constant engagement during turnaround
♦ Regular updates of material issues
Steadily overcame historical reputational issues
♦ Progress recognized by investors, incl. resolution of corporate legacy issues and consistent performance
♦ Extending production profile through well-considered investments + recycling available resources
Rockwell developed assets without shareholder dilution
♦ Development of two new internally funded mines at SHC and Niewejaarskraal
♦ Increased MOR processing capacity from 160,000m3 to 340,000m3 p.m. towards 500,000m3 goal
Comparative share price performance
0.5
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.3
2.5
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14
Rockwell (TSX)
Rockwell (JSE)
HSBC Global Mining Diamonds Index
FUNDING
15 GSSA Diamond Symposium: September 2014|
SHAREHOLDER VALUE MANAGEMENT:
TWO NEW INTERNALLY FUNDED MINES
Saxendrift Hill Complex: Two Bulk X-ray and single particle sorters
♦ Two month payback on US$2.5m capex
♦ Production ramp up completed in August 2013: Total capacity of
80,000m3 p.m.*
♦ High quality diamonds produced since commissioning: Including three
+100 carat stones
Niewejaarskraal: Production ramp up 10 weeks after Board approval
♦ Phase 1a (50,000m3/month): US$2.5m capex funded from Klipdam sale
♦ Phase 1b (100,000m3/month): Incl. IFS and rental Bulk X-ray
♦ Contract mining: CML operations
♦ Majority of employees opted to transfer from Klipdam after sale
* (@5mm bcos)
FUNDING
16 GSSA Diamond Symposium: September 2014|
UNIQUE BENEFICIATION JOINT VENTURE
JV with Diacore: Global leader in cutting, polishing and marketing investment diamonds
♦ Diacore: Right to purchase >2.8ct stones at market value
♦ Rockwell: Equal profit share on sale of polished diamonds
15% - 20% leverage on Rockwell revenue from profit share
♦ Additional revenue on rare, investment stones ranges up to 60%
MARKETING
ROUGH
77 ct makeable,
Saxendrift Ext.
(2012)
145 ct makeable,
Saxendrift tailings
(2012)
105 ct Type II A,
Middle Orange
(2009)
169 ct yellow,
SHC
(2013)
128 ct yellow,
Middle Orange
(2011)
287 ct
Saxendrift Ext.
(2013)
POLISHED
37 ct J color round
brilliant, VS2
30 ct + others being
polished
35 ct D color
internally flawless
Sold for
$230,000/ct
109 ct vivid yellow
81 ct vivid yellow
109 ct cushion cut
+ 26 ct in progress
BENEFI-
CIATION
+34% on initial
rough
sale price
Currently being
polished
+62% on initial
rough
sale price
+61% on initial
rough
sale price
+37% on initial
rough
sale price
Not yet sold
17 GSSA Diamond Symposium: September 2014|
CONCLUSION
287 carats Saxendrift Extension November 2013
18 GSSA Diamond Symposium: September 2014|
DIAMOND VALUE MANAGEMENT STRATEGY:
RECENT HIGHLIGHTS AND WAY FORWARD
Rockwell on track with corporate turnaround
♦ Delivered two new internally funded mines
♦ Pioneered Bulk X-ray technology in production environment in SA
♦ Exited lossmaking operations at Klipdam and Tirisano (royalty mining model)
♦ Implementing EMV renewal plan to replace aging plant in MOR
Financials reflecting benefits of DVM strategy (Q1 F2015)
♦ Higher carat production and increased stone size
♦ First net profit reported since turnaround initiated: +$345,000
♦ Eight successive quarters of dollar denominated revenue growth
♦ Five successive quarters with positive operating profit growth*
♦ Positive net cash flow from operating activities
Next milestones
♦ Reach mid-term target of 500,000m3 p.m. of quality processed gravels in MOR
› Upgrade capacity at Niewejaarskraal
› New mine at Wouterspan: phased approach
♦ Continue evaluating accretive consolidation opportunities in Southern Africa
* (excl. inventory movements)
19 GSSA Diamond Symposium: September 2014|
THANK YOU!
Bulk X-ray pilot project: 145 carats D-color recovered from old recovery tailings October 2012
20 GSSA Diamond Symposium: September 2014|
FORWARD LOOKING STATEMENTS Except for statements of historical fact, this presentation 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 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 if 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 and 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 annual Form 20-F filing with the United States Securities and Exchange Commission
www.sec.com and the Company's home jurisdiction filings that are available at www.sedar.com.
This presentation also uses the terms 'indicated resources' and 'inferred resources'. Rockwell Diamonds Inc. advises investors that although these terms are recognized
and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission
does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In
addition, 'inferred resources' have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility
or pre-feasibility studies, or economic studies except for Preliminary Assessment as defined under 43-101. Investors are cautioned not to assume that part or all of an
inferred resource exists, or is economically or legally mineable.
The securities of Rockwell being offered have not been, nor will be, registered under the U.S. Securities Act and may not be offered or sold within the United States or to,
or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This information does not constitute
an offer or sale of securities in the United States. Prior to making any investment decision, investors should consult a professional advisor.
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