Rockwell unveils Recapitalization Plan and Bridge Loan to spearhead growth strategy

VANCOUVER, June 10, 2011 /CNW/ --
VANCOUVER, June 10, 2011 /CNW/ - Rockwell Diamonds Inc. ('Rockwell' or
the 'Company') (TSX: RDI; JSE: RDI, OTCBB: RDIAF) announces a strategic
refinancing plan and that it has entered into an agreement with Daboll
Consultants Ltd., an affiliate of the Steinmetz  Diamond Group
('Steinmetz'), to borrow $2 million under a convertible bridge loan
('Loan').

The loan bears interest at a rate of 5% p.a. and is unsecured. If the
Loan is not repaid after 12 months it will become convertible into
common shares of the Company at $0.0375 per share. Although Daboll is
currently an insider of Rockwell, the Loan is exempt from the minority
shareholder approval and valuation requirements under Canadian
securities policy 61-101 because it represents under 25% of Rockwell's
current capitalization. However, unless shareholder approval of the
Loan is obtained, conversion of the Loan is limited under TSX rules to
a maximum of 52.48 million shares or 10% of Rockwell's currently issued
share capital of 524.5 million shares.

Rockwell has a long standing partnership with Steinmetz, formalized in
October 2007 through a marketing agreement focused on adding value to
selected large and special high value stones. The arrangement pays
Rockwell 90% of the prevailing rough diamond price, with the other 10%
being on risk. It also provides for the Company to participate in 50%
of the downstream added value from polishing and marketing.

Rockwell also updated the market today on its latest diamond tender
sales which amounts to a total of 4,779 carats being sold in the first
quarter of fiscal 2012 for $7.8 million. Over the same period, the
Company realized additional revenues of $1.0 million from its profit
share arrangement with Steinmetz, based on 974 carats beneficiated.

With regard to the value unlocked by this partnership, James Campbell,
the newly appointed CEO of Rockwell highlighted the significance of its
downstream value added initiatives through the partnership with
Steinmetz. 'While this is integral to the Company's diamond value
management strategy, it is also a demonstrable step forward in
Rockwell's contribution to the South African government's agenda,
encouraging mining companies to support local beneficiation.'

'We hold Rockwell in high regard, both as a strategic partner and
supplier of high value stones to Steinmetz. We also view this Loan as a
strategic investment,' says Ori Temkin, Managing Director, Steinmetz.
'By providing this convertible loan, we are showing both our confidence
in Rockwell and the importance of this long term partnership to our
organization.'

'We are particularly excited to have concluded this bridging Loan which
enables us to continue with two of our key projects as well as
continued optimization of our production profile', said Campbell.

Planned Private Placement

The Loan is an integral step in the planned recapitalization that will
see the Company seek to raise up to $35 million in new financings over
the coming months in a combination of potential private, shareholder
and public placements, the terms of which have not been determined or
agreed at this time. The Company is working with financial
intermediaries internationally with a view to developing its final
objectives. Discussions are underway with a number of interested
investors. It is possible that the recapitalization will require
shareholders' approval, including approval to terminate the 2008
shareholder rights plan.  If so, this will be sought in conjunction
with the annual meeting tentatively scheduled for early August.

'A recent strategic review enabled our leadership team to identify the
deliverables in order to achieve our target to increase the Company's
production profile to 10,000 carats per month within six years. We
continue to focus on optimizing our existing operations, while also
prioritizing initiatives to unlock value from our pipeline of high
potential projects,' explains Campbell. 'Investing the proceeds from
the placement in the ongoing development of the Tirisano mine and a new
plant at Wouterspan is key to delivering on our strategic plan and the
consequential unlocking of shareholder value.'

Share consolidation

As part of the Company's recapitalization, the board has approved a 15:1
share consolidation (or reverse-split) which is likely to be effected
before the shareholders meeting.

The Daboll loan has received conditional TSX acceptance and will be
closed shortly.

Further announcements are expected to be made in the near future about
the refinancing.

About Rockwell Diamonds:

Rockwell is engaged in the business of operating and developing alluvial
diamond deposits, with a goal to become a mid-tier diamond mining
company.  The Company has three existing operations, which it is
progressively optimizing, two development projects and a pipeline of
earlier stage properties with future development potential. Rockwell is
also at an advanced stage of completing the acquisition of the Tirisano
property.

Rockwell also evaluates merger and acquisition opportunities which have
the potential to expand its mineral resources and  production profile
and would provide accretive value to the Company.

About Steinmetz Diamond Group:

'Creators of the world finest diamonds', With seven decades of expertise
and heritage in the diamond industry, the company has a diversified
interest in the diamond business - providing rough and polished
diamonds to our customers around the world, cutting and polishing rough
diamonds in Botswana, South Africa, Namibia and New York.

Steinmetz is known for its leadership in rare and exceptional diamonds
as well as creation of unique high-end jewelry.

Some of the famous diamonds crafted by Steinmetz are the 203.04 carats,
De Beers Millennium Star and the magnificent Steinmetz Pink - 59.60
carats, flawless fancy vivid pink diamond.

The group marketing arm has been innovative and creative through special
exhibitions at the Smithsonian in Washington as well as 'Diamonds' at
the Natural History museum in London. Steinmetz is a proud sponsor of
Formula 1 team Vodafone McLaren Mercedes and holds annually the Monaco
GP Flawless Engineering Weekend.

The main administrative offices are based in Geneva, Switzerland with a
global presence in Antwerp, Tel Aviv, London, New York, Chicago, Dubai,
Mumbai, Hong Kong, Johannesburg, Gaborone and Windhoek.

For more information, visit www.steinmetzdiamonds.com

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 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; 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. In particular there can be
no assurance that refinancing funds will be available to Rockwell on
acceptable terms or any terms at all.

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.

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For further information on Rockwell and its operations in South Africa, please contact