ockwell posts solid OMNts with significant increases in ... · Company oistratkoWOTLPNROLN ievel Itilds viewIfsle oeoughton. Cnr. Carse ldwriCBoundary oIeugbstateIghannesburgION

Company oegistration ko.W O00TL0PNR8OLN0 www.rockwelldiamonds.com ievel 0I tilds viewI fsle of eoughton. Cnr. Carse l’dowrie C Boundary odI eoughton bstateI gohannesburgI ON98 ml Box P0NN eoughtonI pouth AfricaI O04N TelW HOT E0FNN 4840 8P0 caxW HOT E0FNN 48N TO4T TpuW oaf l gpbW oaf

oockwell posts solid OMN4 results with significant increases in revenue and operating profits on the back of delivering two new mines as part of its focused jiddle lrange oiver strategy

jay OOI OMN4I gohannesburgI pouth Africa JJ oockwell aiamonds fncK E"oockwell" or the "Coméany"F

EqpuWoafX gpbWoafF announces results for the year ended cebruary OUI OMN4K

ciscal OMN4 results

Currency values are éresented in Canadian dollarsI unless otherwise indicatedK

ceatures of ciscal OM14:

· oevenue increased 3VB year-on-year to A4RKO millionI comprising A4NKN million from diamond sales and

beneficiation income of A4KN millionK

· peventh successive quarter of dollar denominated revenue growth reported in fourth quarterK

· lverall volume of gravel processed and carat production from all Company-owned properties up O8B and

OTB year-on-yearI respectivelyK

· lperating profit before amortization and depreciation of ASKM millionI up from ANKN million in prior yearK

· deneral and administration expenses declined OVB to A4K4 millionK

· Cash and cash equivalents of ANK3 million after capital investments of A8KT million in new processing capacityK

· ket cash flow from operating activities of AOKS millionI before investment in new plantK

· fnventory of OITRO carats carried forward Eincludes NIN8N carats on royalty mining contractsFK

· qhe current ‘beneficiation pipeline’ of more than SIMMM carats provides additional future revenue potentialK

· oeturns from royalty mining contracts deliver net royalties of ANKO million from five qirisano contracts and

wwemkuil contract Eceased in third quarterFK

· ket loss for the year narrowed to ANMK4 million compared to a loss of AN3K8 million in the prior yearI after non

cash charges of ANMKN million for foreign exchange and depreciationK

Commenting on the fiscal OMN4 performance of oockwellI games CampbellI Cbl and mresident said:

“lur fiscal OMN4 results are beginning to reflect the operational turnaround of the Company and its core focus on

the jiddle lrange oiver E“jlo”F oegion of pouth AfricaK lur revenue increased 3VB year-on-year to A4RKN

millionI underpinned by a ROB increase in diamond salesK qhese improvements have been consistent each

quarter over the last two yearsI as we have now reported seven consecutive quarters of dollar denominated

revenue growthK oockwell reported an operating margin before amortization and depreciation of ASKM millionI

compared to ANKN million in the prior yearK bconomies of scale as a result of operating exclusively in the jlo also

emergedI as production costs for the year increased ORB to A3VKO millionI against the ROB improvement in the

value of diamond salesK te believe that the implementation of our earthmoving vehicle upgrade programme

should unlock further benefits as we improve the fleet overall utilization to match our production capacity and

Company oegistration ko.W O00TL0PNR8OLN0 www.rockwelldiamonds.com ievel 0I tilds viewI fsle of eoughton. Cnr. Carse l’dowrie C Boundary odI eoughton bstateI gohannesburgI ON98 ml Box P0NN eoughtonI pouth AfricaI O04N TelW HOT E0FNN 4840 8P0 caxW HOT E0FNN 48N TO4T TpuW oaf gpbW oaf

renew the equipment to lower our maintenance expenses while improving availabilitiesK bqually pleasing is the

positive cash flow from normal operations of A3KT million Eprior to working capital movementsFK”

“crom an operational perspectiveI these results also show that our jlo focus has gained tractionK auring fiscal

OMN4I we delivered two new minesI namely paxendrift eill Complex E“peC”F and kiewejaarskraalI both funded

internally from cash reserves and this more than doubled our jlo production capacity to 34MIMMMm3 per monthK

eaving met our short-term target to have three producing mines in the jloI our production profile is now more

flexible and sustainableK te are pleased tooI that diamond quality and the frequency of larger stones has

improved as anticipatedK qhis included the recovery of NO stones between RM carats and NMM carats and five plus

NMM carat rough diamonds in fiscal OMN4I the largest of which was a O8T carat stoneI the biggest stone recovered

in recorded history in the regionK qhe second phase of the kiewejaarskraal mine was commissioned on schedule

at the end of fiscal OMN4 and its diamond production performance is improvingK At paxendriftI the plant continues

to operate consistentlyK lnce we implement the barthmoving sehicle E“bjs”F renewal planI the plant utilization

should improve furtherK”

“iooking forwardI we remain firmly focussed on our medium term target to process RMMIMMMm3 per month of

quality gravelsK te are conducting contiguous exploration of existing resources at the paxendrift bxtension

property to increase the current life of mineI further leveraging our invested mining infrastructure at paxendriftK te

also have a focused exploration and trial mining programme at peC to maximize the resource potential and

develop contiguous areasK jining at kiewejaarskraalI where the processing rate approached the monthly

nameplate capacity of NMMIMMMm3 at fiscal year-endI is aimed at upgrading the inferred resource to the indicated

levelK At the same timeI we continue to review our options to bring the touterspan property to fruitionI with a

preference for an internally funded and phased approachK”

oeview of fiscal OMN4 delivery on strategy

oockwell’s fiscal OMN4 results reflect the benefits of the strategy to grow its jlo éroduction footérint with a midJ

term target to increase monthly éroduction volumes of quality gravel érocessed to RMMIMMMmPK eigher diamond

valuesI better efficiencies and greater economies of scale can be achieved in this region to deliver more

consistent quarterly earnings at a more éredictable mining costK

auring fiscal OMN4I oockwell achieved further érogress against a number of strategic milestonesW

· qhe shortJterm goal of delivering three éroducing oéerations in the region was met with the commissioning of

peC and kiewejaarskraalI bringing the total monthly érocessing caéacity to P4MIMMMmPNK

· oesources mined from the paxendriftI paxendrift bxtensionI peC and kiewejaarskraal mining rights all have

multiéle mining facesI éroviding éroduction diversification and mining flexibilityK

· cive rough diamonds exceeding NNR carats were recovered in the jlo in fiscal OMN4I the largest of which

was OUT caratsK

N qhis comprises of paxendrift ENSMIMMMm3 L month at a Rmm bottom cut-off size E“BClp”FFI peC E8MIMMMm3 L month at a Rmm BClpF and kiewejaarskraal ENMMIMMMm3 L month at a Smm BClpFK


· qhe three mines in the jlo were all in full éroduction by the fourth quarterK qhe average stone size in the

quarter increased NPVB to 4KS caratsI ué from OKM carats in the érior year when oockwell had only one jlo

oéeration in éroductionK qhe anticiéated rate of recovery of large diamonds also materializedI with four rough

diamonds in the élus RMJcarat category being éroduced in the fourth quarterI coméared to two in coméarable

éeriod of the érevious yearK

· solumes érocessed from oockwell’s three jlo mines were ué 4SB yearJonJyearI yielding a NOB increase in

average grade and carat éroduction ué SPB in the region from a year agoK

· Carat éroduction at the paxendrift érocessing élant increased NOB to VIPPU caratsI deséite a NMB decline in

volumes of gravel érocessedK fts mine life has been extendedI at higher overall grades after integrating the

newly acquired paxendrift bxtension éroéerty into the paxendrift mine élanK

· qhe éroduction ramé ué at peCI the new internally funded Bulk uJray érocessing élantI was coméleted and

PIPSP carats were recoveredI of which OIV4R carats were sold at an average value of rpAOITUN éer caratK

· qhe Bulk uJray technology at paxendrift eill Comélex delivered a grade imérovement of more than 4MB

coméared to the traditional paxendrift éan élantI shown by érocessing paxendrift bxtension gravels in éarallel

though both élantsK

· qhe lossmaking hliédam mine was sold in Aéril OMNP and the éroceeds were reinvested in a new érocessing

élant to bring kiewejaarskraal back into éroductionK

· A NMMIMMMmP éer month élant was coméleted at kiewejaarskraalI comérising a ajp Edense media

seéarationFI an in field screen and Bulk uJray system and the throughéut reached nameélate caéacity by

fiscal yearJendK

· A fleet renewal érogramme to renew the Coméany’s aging fleet is now aééroved and underwayK qhis will

imérove earthmoving availabilities and thereby facilitate higher mining volumes at paxendrift to better utilize

the invested érocessing caéacityK

· qhe royalty mining contractor strategyI imélemented in the érior yearI enabled the Coméany to generate

éositive returns from éroéerties that it does not wish to mine itselfK salue of sales amounts to rpAVK4 millionI

with rpANKO million in royalties accruing to the ComéanyK

· qhe Coméany reéorted a gross érofit Eafter amortization and deéreciationF of ASKM milllion coméared to a ANKN

million a year agoK


ciscal OM14 merformance pummary

qhe Coméany’s overall éroduction and sales resultsI which are made in the market in rpA for the year areW

mroduction pales and inventories

solume EmPF Carats mroduction

costs EAF salue of

pales ErpAF pales

EcaratsF

Average value ErpA L

caratF

fnventory EcaratsF

lwn operations OISSOIVMN N4IOOO PVIOMMI4POG OVIRPMIRV4 NPITUO OIN4P NIRTN Contractors’ mining NIMVUINSN NPIRR4 J VI44VINOT NOI4VM TRS NINUN

Total: Company properties PITSNIMSO OTITTS PVIOMMI4PO PUIVTVITON OSIOTO NI4U4 OITRO

G fncludes ramp up costs at paxendrift eill Complex and kiewejaarskraal as well as modifications and other improvements to

these two new minesK

cor fiscal OMN4I érocessed gravel volumes from Coméany éroéerties increased OUB to PITSNIMSOmP comérising

OISSOIVMNmP from oockwell’s own oéerationsI and the remainder érocessed by the royalty mining contractorsK

oockwell achieved a SB grade imérovement across the Coméany’s éroéerties to MKT4 caratsLNMMmPI resulting in a

OTB increase in total carat éroductionI including N4IOOO carats from own oéerations and NPIRR4 carats from

contractorsK

aiamond sales from own oéerations declined OPB to NPITUO caratsI reflecting the transition of the éroduction

érofile into the jlo that included the sale of hliédam and termination of mining at the qirisano éroéertyK qhe five

royalty mining contractors who subsequently started oéerating at qirisano sold a total of NOI4VM carats during the

yearI resulting in a OTB increase in carat sales from ComéanyJowned éroéertiesK qhe value of sales from own

éroéerties was ué P4B to rpAOVKR million while the average carat value rose TPB to rpAOIN4PI demonstrating

immediate benefits of the strategy to focus on the jlo as several largeI high value stones were sold into the

beneficiation joint venture with aiacoreK qhe value of sales from ComéanyJowned éroéerties iméroved 4PB to

rpAPVKM millionK

kotable metrics of fiscal OMN4 éroduction coméared to the coméarable érior year éeriod are as followsW

solume EmPF

Change E%F Carats Change

E%F kotable observations

paxendrift NIRVTIVUV JNM VIPPU HNO

fméact of mining at paxendrift bxtension Elonger hauling distanceFI lower earthmoving equiément availabilities and maintaining slightly lower érocessing rate to oétimize élant efficiencies

paxendrift eill Complex SVTINMO J PIPSP J mrocessing élant reached full caéacity Emonthly

érocessing rate of UMIMMMmP at a HRmm BClpFK

kiewejaarskraal PMNIRMU J VUS J

Commissioning commenced in guly OMNPI reaching full caéacity by fiscal year endK Area mined necessitated blasting and drillingI iméacting gradesK

Contractors* NIMVUINSN J NPIRR4 J cive contractors oéerating on at qirisano


kotable metrics of fiscal OMN4 sales versus the coméarable érior year éeriod are as followsW

Carats Change E%F

oevenue ErpA

millionsF Change

E%F mrice per

carat ErpAF

Change E%F kotable observations

paxendrift VIMRV HNS NVKV HPO OINV4 HN4 fncreased revenue off the back of higher carat sales and increased carat value

paxendrift eill Complex OIV4R J UKO J OITUN J

oevenue growth driven by increasing éroduction and high average carat value

kiewejaarskraal T4T J MKU J NINMT J

Carat sales and values reflect érocess of éroduction ramé ué

Contractors* NOI4VM J VK4 J TRS JO Consistent éerformance from five contractors oéerating at qirisano

G Contractors refers to carats from gravel processed by independent royalty contractors and sold through the Company’s

tender processK cinal carat sales from hlipdam in fiscal OMN4 not shownK

auring fiscal OMN4I the average total cash cost Eincluding rehabilitation and royaltiesF for all the oéerationsI was

rpANNKNLmP coméared to a total cash cost of rpANMKOLmP in the érior yearK qhe increase is largely due to the

exéected higher unit costs incurred at peC and kiewejaarskraal during éroduction ramé ué éeriod at these new

minesK ln a éro forma basis for continuing oéerations Eexcluding kiewejaarskraal and peC ramé uésFI the total

cash cost Eincluding rehabilitation and royalty costsF amounted to rpANMKV L mPK

Average cash oéerating costs and revenues for oockwell’s own oéerations in rpA during the éeriod areW

oevenueLmP ErpAF

jining cash costLmP ErpAF

Comments

paxendrift rpANOK4 rpANMKV rnit cost iméacted by longer hauling distance as a result of mining paxendrift bxtensionI higher bjs maintenance costs and lower volumes érocessedK

paxendrift eill Complex rpANNKT rpANMKM

Continued high quality diamond recoveries suééorting unit revenuesK rnit cost declined in line with increase in volumes érocessedK

kiewejaarskraal rpAOKT rpAOPKS

rnit revenues iméacted by lower carat values during commissioning éhaseK cirst quarter of exéensed costs iméacted by lower volumes during final ramé ué and coméletion of second commissioning éhaseK

kormal oéerations éroduced cash flow of APKT million Eérior to working caéital movementsF and after working

caéital movements of ANKN million and investments amounting to AUKT million in éroéerty élant and equiément

Emainly kiewejaarskraal élantFI the Coméany reéorted a net cash out flow of A4KR million for the yearK At yearJendI

the Coméany had made teméorary use of its overdraft facilities in the amount of ANKT millionI due to the timing of

cash flows from diamond sales which were received shortly after the year endK


drowth projects

oockwell continues to make érogress towards its strategy to increase éroduction from and extend the mine life of

its jlo éroéertiesW

· Contiguous exéloration of existing resources at the paxendrift bxtension éroéerty is under way to increase the

current life of mine and to enable the Coméany to leverage the fixed assets of paxendriftK

· A focused exéloration and trial mining érogramme is underway at peC to ensure the resource éotential is

maximised and to develoé contiguous areasK

· qhrough trial miningOI the kiewejaarskraal inferred resource will be uégraded to the fndicated level with the

eventual declaration of érobable reservesK

· qhe Coméany continues to review the oétions to bring the touterséan éroéerty to account following the

coméletion of a éreliminary economic assessment in the first quarter of OMNP that reflected viable economicsK

oockwell is also achieving its secondary strategy to leverage the value of certain éroéerties that it does not wish

to mine due to size or other reasonsK cive royalty contract miners oéerated at qirisano during the year with the

érojected monthly mining volumes at qirisano now being OMMIMMMmPK qhe royalty mining contractor agreement at

hwartelséanI which commenced construction in the fourth quarter of fiscal OMN4I is in the érocess of being

converted into a joint venture mining arrangementK

qhe Coméany continues to evaluate consolidation oééortunities in the southern Africa diamond sector that are

value accretiveK A strict set of criteria are aéélied to evaluate the éotential acquisitions in order to leverage the

Coméany’s éroduction exéertise towards its goal to become a midJtier diamond éroducerK

jarket rpdate

qowards the end of fiscal OMN4 rough diamond demand increasedI as retailers continued reélenishing their

éolished stockK molished diamond sales were buoyantI éarticularly during the aecember festive seasonI driven

largely by discounting among retailers to drive demand for jewelleryK As a resultI éolished diamond inventories

across the industry were deéletedI leading to increased liquidity and higher éolished éricesK aecember rough

diamond sales were in line with historic and sales by major rough diamond éroducers in ganuary and cebruary

OMN4 were strongK qhe oéen market was extremely active with increased attendance at tenders couéled and

higher érices driven by séeculation in the secondary market and demand from factories to reélenish their work

loadK

oockwell continues to suééort downstream beneficiation of its rough diamonds by backing local pouth African

manufacturing coméaniesK qhe benefits of the gs with aiacore achieved continued success with some

exceétional results on certain large diamonds recovered by oockwell aiamondsK aemand for high value

O Because the kiewejaarskraal mine is currently extracting diamonds from an inferred resourceI the Company is required under the rule of the kf 43-NMNI to refer to the mining operations as trial miningK


investment diamonds among high net worth individuals as well as institutional and érivate investors seeking

alternate investment oétions has been strongI as evidence by results at various auction housesK mrices of

investment diamonds continue to break records and based on historical éerformance these are exéected to

continue outéerformingK oockwell’s érimary revenueI through consistent éroduction of high volumes of quality

gravelsI is from investment tyée diamondsK AccordinglyI its éolished éroduct is in the most secure éroduct range

with reséect érice volatilityK

lutlook

qhe current focus areas for the business are as followsW

· oockwell continues to focus on managing its oéerating costsK

· At paxendriftI which élant is oéerating consistentlyI the Coméany’s focus is to comélete the

imélementation of the earthmoving vehicle E‘bjs’F fleet renewal exercise which will imérove equiément

availabilities to enable the mine to oéerate at nameélate caéacityI while an oétion to increase the élant

caéacity is also being reviewedK

· At peCI continuous exéloration work and trial mining is ongoing to increase this resourceK Although the

Bulk uJray recovery system continues to éerform on élanI first quarter gravel throughéut at the érocessing

élant was iméacted by mechanical failures associated with the front end of second hand equiémentI

which is being addressed as a high ériorityK

· At kiewejaarskraal the focus is on consolidating the oéerations now that the second éhase of the

NMMIMMMmP éer month élantI has been coméletedK

oockwell carried over an inventory of OITRO carats Eincluding NINUN contractor owned caratsF into the new fiscal

yearK qhisI together with a beneficiation éiéeline comérising more than SIMMM caratsI érovides further éotential for

valuedJadded downstream revenuesK oockwell continues to beneficiate the vast majority of its diamonds in pouth

AfricaK qhe sale of a NMV éolished vivid yellow éolished diamond will be reflected in the first quarter beneficiation

income and with the jlo focusI the outlook for the beneficiation revenue trend is éositiveK

Conference Call:

oockwell will host a teleéhone conference call on cridayI jay OPI OMN4 at NMWMM aKmK bastern qime E4WMM éKmK

gohannesburgF to discuss these resultsK qhe conference call may be accessed as followsW

Country Access kumber

Canada EqollJcreeF N URR 4UN RPSO

rpA EqollF N 4NO PNT SMSM

rpA EqollJcreeF N URR 4UN RPSO

pouth Africa EqollJcreeF M UMM OMM S4U

pouth Africa – aurban MPN UNO TSMM


pouth Africa – gohannesburg MNN RPR PSMM

pouth Africa J gohannesburg Alternate MNM OMN SUMM

rh EqollJcreeF MUMU NSO 4MSN

rh Alternative EqollJcreeF M UMM VNT TM4O

lther Countries Efntl qollF HOT NN RPR PSMM

A transcriét of the audio webcast will be available on the ComéanyDs websiteW wwwKrockwelldiamondsKcomK qhe

conference call will be archived for later élayback until midnight EbqF jay OUI OMN4 and can be accessed by

dialling the relevant number in the table below and using the éass code PNMNT#K

Country Access kumber

pouth Africa EqelkomF MNN PMR OMPM

rpA and Canada Eqoll creeF N URR 4UN RPSP

lther Countries Efntl qollF HOT NN PMR OMPM

rh EqollJcreeF M UMU OP4 STTN

cor further detailsI see the oockwell’s comélete financial results and janagement aiscussion and Analysis

éosted on the website and on the ComéanyDs érofile at www.sedar.comK qhese include additional details on

éroductionI sales and revenues for the quarterI as well as coméarative results for fiscal OMN4K

cor further information on oockwell and its oéerations in pouth AfricaI élease contactW

games Camébell Cbl and mresident HOT EMFUP 4RT PTO4

ptééhanie ieclercq fnvestor oelations HOT EMFUP PMT TRUT

About oockwell aiamonds:

oockwell is engaged in the business of develoéing and oéerating alluvial diamond minesI with the aim of becoming a midJtier

diamond mining coméanyK At cebruary OUI OMN4I the droué had three existing mines in oéerationI namely paxendriftI

paxendrift eill Comélex and kiewejaarskraalK All three mines are located in the jiddle lrange oiver regionK

oockwell’s oéerations at the qirisano jine are on care and maintenanceK ooyalty mining agreements are in élace at qirisano

whereby indeéendent contractors Eor royalty minersF mine for own risk and rewardI with the Coméany receiving a NOKRB

royalty income based on the carats recovered and sold through the Coméany’s tender érocessK

A mreliminary bconomic Assessment has been coméleted on the touterséan érojectI which would érovide further exéansion

of the Coméany’s jiddle lrange oéerations in futureK qhe droué has a éiéeline of other érojects with further future

develoément éotential under consideration and evaluation at éresentK

fn addition to its éroject workI oockwell continues to evaluate strategic oééortunities through merger and acquisition as they

ariseI in order to exéand its mineral resources and érovide new oééortunities to develoé the additional éroductionK

qhe droué is establishing a track record of éroducing large gem quality diamondsI which comérise a significant éroéortion of

its éroduction érofileK qhe diamonds recovered from oockwell’s mines are frequently acquired for investment éuréosesK qhe

http://www.sedar.com/


droué has a beneficiation agreement in élace which enables it to sell rough diamondsI receive VMB of the fair value sales

érice at sale and receive the remaining NMB throughI and éarticiéate inI the retail érofit on the sale of its HOKU carat sized

stones after éolishing and finishingK

ko regulatory authority has aééroved or disaééroved the information contained in this news releaseK

corward iooking ptatements

bxceét for statements of historical factI this news release contains certain "forwardJlooking information" within the meaning of aéélicable

securities lawK corwardJlooking information is frequently characterized by words such as "élan"I "exéect"I "éroject"I "intend"I "believe"I

"anticiéate"I "estimate" and other similar wordsI or statements that certain events or conditions "may" or "will" occurK Although the Coméany

believes the exéectations exéressed in such forwardJlooking statements are based on reasonable assumétionsI such statements are not

guarantees of future éerformance and actual results or develoéments may differ materially from those in the forwardJlooking statementsK

cactors that could cause actual results to differ materially from those in forwardJlooking statements include uncertainties and costs related to

exéloration and develoément activitiesI such as those related to determining whether mineral resources exist on a éroéertyX uncertainties

related to exéected éroduction ratesI timing of éroduction and cash and total costs of éroduction and millingX uncertainties related to the ability

to obtain necessary licensesI éermitsI electricityI surface rights and title for develoément érojectsX oéerating and technical difficulties in

connection with mining develoément activitiesX uncertainties related to the accuracy of our mineral resource estimates and our estimates of

future éroduction and future cash and total costs of éroduction and diminishing quantities or grades of mineral resourcesX uncertainties related

to unexéected judicial or regulatory érocedures or changes inI and the effects ofI the lawsI regulations and government éolicies affecting our

mining oéerationsX changes in general economic conditionsI the financial markets and the demand and market érice for mineral commodities

such as and diesel fuelI steelI concreteI electricityI and other forms of energyI mining equiémentI and fluctuations in exchange ratesI

éarticularly with reséect to the value of the rp dollarI Canadian dollar and pouth African oandX changes in accounting éolicies and methods

that we use to reéort our financial conditionI including uncertainties associated with critical accounting assumétions and estimatesX

environmental issues and liabilities associated with mining and érocessingX geoéolitical uncertainty and éolitical and economic instability in

countries in which we oéerateX and labour strikesI work stoééagesI or other interruétions toI or difficulties inI the eméloyment of labour in

markets in which we oéerate our minesI or environmental hazardsI industrial accidents or other events or occurrencesI including third éarty

interference that interruét oéeration of our mines or develoément érojectsK

cor further information on oockwellI fnvestors should review the Coméany’s home jurisdiction filings that are available at wwwKsedarKcomK

Documents

ockwell posts solid OMNts with significant increases in ... · Company oistratkoWOTLPNROLN ievel Itilds viewIfsle oeoughton. Cnr. Carse ldwriCBoundary oIeugbstateIghannesburgION