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Rockwell gets boost from quarterly production figures

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Shares of Rockwell Diamonds (TSE:RDI) (JSE:RDI) jumped Monday after the company announced record quarterly carat production in the third quarter, as part of a production and sales update.

For the three months to November 30, the company told investors that volume production from its three Middle Orange River mines increased by 65% due to the commissioning of new mining infrastructure at Saxendrift Hill complex and Niewejaarskraal during the first half of fiscal 2014, while average grade rose 27%. 

Total volumes of gravel processed by the company during the third quarter of fiscal 2014 were 1.03 million cubic metres, up 33% from the same period in the prior year. Carat production jumped 54%. 

Total carat sales from its properties improved by 50% to 6.06 million carats, as sales more than doubled from its Middle Orange River operations. The value of total sales jumped 45% to US$10.7 million -- its sixth consecutive quarter of U.S. dollar denominated growth.

"We are pleased that our production and sales figures for the third quarter show that our strategy to focus on the Middle Orange River region is bearing fruit," said president and CEO James Campbell. 

"We more than doubled our carat production and sales from these properties while the value of sales increased almost threefold to US$7.8 million and the average price per carat increased 24%."

Rockwell has also recently discovered five rough diamonds exceeding 115 carats at its Middle Orange River mines since the end of August, the largest of which was 287 carats. 

The company has a mid-term target to increase its monthly production volumes to 500,000 cubic metres and increase its recovery of large diamonds. 

Its flagship mine is the Saxendrift Mine, in the Middle Orange River, where it has recently built two new internally funded mines, namely the Saxendrift Hill Complex, which came into production in the first quarter of fiscal 2014 and the Niewejaarskraal Mine, which is in production ramp up. Rockwell also has a pipeline of earlier stage properties.

Separately, the company said it has also concluded an agreement that will see a new Black Economic Empowerment partner acquire a 30% stake in the Middle Orange operations, replacing Africa Vanguard Resources. The total price tag is US$7.3 million, which will be paid in two tranches, with an initial payment of $1.7 million to be made once regulatory approvals are received. The company is required to have a BEE partner in the region under South African law. 

Rockwell climbed 9% to 42.5 Canadian cents Monday afternoon.

Quick facts: Rockwell Diamonds Inc

Price: 0.06 CAD

TSX:RDI
Market: TSX
Market Cap: $3.3 m
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