Rockwell updates Prefeasibility Study for Saxendrift and Preliminary Assessments for Wouterspan, Niewejaarskraal and Tirisano Projects
VANCOUVER, Aug. 2, 2011 /CNW/ --
VANCOUVER, Aug. 2, 2011 /CNW/ - Rockwell Diamonds Inc. ('Rockwell' or
the 'Company') (TSX: RDI; JSE: RDI; OTCBB: RDIAD) updates the results
of preliminary assessments of its alluvial diamond deposits on its
properties in South Africa.
Rockwell is focused on increasing production to 10,000 carats per month
within five years. The Company has the capacity to deliver this growth,
organically, through the development of its significant resource base,
and is advancing plans to access the capital necessary to meet its
production goals.
Current production of some 2,500 carats of large gem quality diamonds
per month is derived from two operations, the Holpan/Klipdam mine
located in the Northern Cape, and the Saxendrift mine in the Middle
Orange River are of the Northern Cape Province. The Company is in the
final stages of acquiring and redeveloping the Tirisano mine, located
in Ventersdorp in the North West Province, which is slated to come on
stream in the second half of fiscal 2012. It also plans to
re-commission the Wouterspan and Niewejaarskraal projects within the
next two years.
A Prefeasibility Study for Saxendrift and Preliminary assessments for
Tirisano, Wouterspan and Niewejaarskraal were completed and announced
at the Company's recent year end. Results of the Wouterspan study
presented in Rockwell's May 31, 2011 news release were based on
forecasted 10% annual increases in diamond prices as advised by the
South African Diamond Council. Base case results were reported from
the Tirisano and Niewejaarskraal studies, using the average diamond
price received during the last year of mining at these past producers.
The following provides the results of the base case and forecast
increasing price as presented in the preliminary assessments.
The studies were done in South African Rand (ZAR) and US dollars (USD),
and used a conversion rate of 6.8 ZAR:1 USD. Royalties applied in each
case vary according to the profitability of the mining company, subject
to a minimum rate of 0.5% and maximum rate 7.0% for diamonds. The
results presented are for 100% of the projects. Rockwell holds a 74%
interest in the Wouterspan and Niewejaarskraal projects and will also
hold a 74% interest in Tirisano once the project acquisition is
completed. The remaining 26% interests are held by Black Economic
Empowerment partners.
The assessments are preliminary in nature, and include inferred mineral
resources that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to be
categorized as mineral reserves, so there is no certainty that the
preliminary assessment will be realized.
Wouterspan Preliminary Assessment
Rockwell conducted bulk sampling and trial mining activities at
Wouterspan until November 2008 and has retained the property on care
and maintenance since that time. The preliminary assessment of the
project was done based on the indicated and inferred mineral resources
at 30 November 2010. The diamond value used for the resource estimate
and the base case for the preliminary assessment is the average
received for 5,500 carats of diamonds sold from the adjacent
Saxendrift mine (USD2,029 per carat) during fiscal 2010.
Planned excavation of the diamondiferous gravels is by hydraulic
excavator followed by transport of gravel to the plant site in mine
haul trucks. Processing will be by a high-volume, low-cost plant,
comprised of 8 (or 12) 18-foot rotary pan plants. Trial-mining is also
planned to investigate the efficiency of sending selected size
fractions to selected pans, namely 2-6mm, -6-12mm and 12-32mm, which
is expected to greatly improve the recovery efficiencies of the pans.
The mine plan has been developed in two phases - phase 1, comprising
plant throughput of 180,000 cubic metres per month, for a period of
some 24 months, followed by phase 2, to achieve at throughput at some
340,000 cubic metres per month. The key parameters and result of the
base case and the case based on forecast increases in gem-quality
alluvial diamonds are tabulated below:
___________________________________________________________________
| Wouterspan Preliminary Assessment |
| Key Parameters |
|___________________________________________________________________|
| Indicated resources| 5,025,500 m(3)|
|______________________________|____________________________________|
| Inferred resources| 37,774,000 m(3)|
|______________________________|____________________________________|
| Average Grade| 0.7 ct/100m(3)|
|______________________________|____________________________________|
| Average sales value| USD 2,029/ct|
|______________________________|____________________________________|
|Proposed monthly throughput | 340,000 m(3)|
|______________________________|____________________________________|
|Proposed mine life | 11 years|
|______________________________|____________________________________|
|Operating Costs | ZAR 45/m(3)|
|______________________________|____________________________________|
|Mining Royalties | Variable *|
|______________________________|____________________________________|
|Capital required to bring mine| ZAR 122,000,000|
|into production | |
|______________________________|____________________________________|
|Earthmoving fleet budget | N/A|
|______________________________|____________________________________|
|Tax | 28%|
|______________________________|____________________________________|
| Key Results |
|___________________________________________________________________|
| | Base Case |10% Price Escalation|
|______________________________|_______________|____________________|
|Internal Rate of Return (IRR) | 101%| 135%|
|______________________________|_______________|____________________|
|Net Present Value (NPV) at | | |
|discount values of: | | |
|______________________________|_______________|____________________|
| 15%|ZAR 482,000,000| ZAR 1,199,000,000|
|______________________________|_______________|____________________|
| 20%|ZAR 363,000,000| ZAR 885,000,000|
|______________________________|_______________|____________________|
| 25%|ZAR 279,000,000| ZAR 667,000,000|
|______________________________|_______________|____________________|
The NPV at the 20% discount rate in US dollars is 53 million for the
base case and US 130 million using the escalated diamond prices.
Niewejaarskraal Preliminary Assessment
No processing has taken place on Niewejaarskraal since Rockwell acquired
the project in 2006. The mineral resources were re-estimated in 2008,
and remain unchanged as at November 30, 2010. During FY2010, Rockwell
sold 5,500 carats of diamonds from the adjacent Saxendrift mine on the
open market for USD2,029 per carat, and this value was applied to
estimate resources and the base case.
Niewejaarskraal is located in the same area as Saxendrift and
Wouterspan, so the geology is similar and similar mining methods are
expected to be employed. There is an existing processing plant on
Niewejaarskraal, but it will need to be completely re-furbished and
upgraded prior to re-commissioning. A processing plant like at
Wouterspan above is planned. The mine plan has been developed to run
at some 340,000 cubic metres per month. The key parameters and result
of the base case and the case based on forecast increases in
gem-quality alluvial diamonds are tabulated below:
___________________________________________________________________
| Niewejaarskraal Preliminary Assessment |
| Key Parameters |
|___________________________________________________________________|
| Inferred Resources| 20,630,000 m(3)|
|______________________________|____________________________________|
| Average Grade| 0.84 ct/100 m(3)|
|______________________________|____________________________________|
|Average sales value | USD 2,029/ct|
|______________________________|____________________________________|
|Proposed monthly throughput | 340,000 m(3)|
|______________________________|____________________________________|
|Proposed mine life (inferred | 6 years|
|resources) | |
|______________________________|____________________________________|
|Operating Costs | ZAR 45/m(3)|
|______________________________|____________________________________|
|Mining Royalties | 0.5-7%|
|______________________________|____________________________________|
|Capital required to bring mine| ZAR 130,000,000|
|into production | |
|______________________________|____________________________________|
|Earthmoving fleet budget | N/A|
|______________________________|____________________________________|
|Tax | 28%|
|______________________________|____________________________________|
| Key Results |
|___________________________________________________________________|
| | Base Case |10% Price Escalation|
|______________________________|_______________|____________________|
|IRR | 123%| 183%|
|______________________________|_______________|____________________|
|NPV at discount values of: | | |
|______________________________|_______________|____________________|
| 15%|ZAR 450,000,000| ZAR 1,067,000,000|
|______________________________|_______________|____________________|
| 20%|ZAR 369,000,000| ZAR869,000,000|
|______________________________|_______________|____________________|
| 25%|ZAR 304,000,000| ZAR715,000,000|
|______________________________|_______________|____________________|
The NPV at the 20% discount rate in US dollars is 54 million for the
base case and US 128 million using the escalated diamond prices.
Tirisano Preliminary Assessment
The Tirisano Project, a past producer that has been on care and
maintenance since 2008, is currently being acquired by Rockwell. The
acquisition will be complete once the mining rights have been ceded to
Rockwell.
Tirisano occurs in a karst environment. Gravel deposition is related to
periodic subsidence which has taken place since, at least, the Mesozoic
period, resulting in a build-up of a very thick sequence. The
diamondiferous deposits range from thin tabular horizons to thick ( 60
metres) units, infilling palaeokarst hollows and sinkholes. The
preferred extraction method is open cast mining.
Rockwell commissioned mineralogical and metallurgical studies to
determine the most effective methods for processing clay-rich gravels
within the sequence that can cause recovery inefficiencies. The
processing facility, currently under construction, consists of eight
16-foot rotary pans with a front end designed to break down the clay
units. Since no diamonds have recently been sold from the Tirisano
mine, the early 2008 value of USD606 carat has been applied for the
base case; however, diamond sales values from the district are in the
USD700 per carat range, and can be expected during 2011. A throughput
of 180,000 cubic metres per month is planned. The key parameters and
result of the base case and the case based on forecast increases in
gem-quality alluvial diamonds are tabulated below:
___________________________________________________________________
| Tirisano Preliminary Assessment |
| Key Parameters |
|___________________________________________________________________|
| Indicated Resources| 25,279,800 m(3)|
|______________________________|____________________________________|
| Inferred Resources| 15,334,000 m(3)|
|______________________________|____________________________________|
| Average Grade| 2.37 ct/100m(3)|
|______________________________|____________________________________|
|Average sales value | USD 606/ct|
|______________________________|____________________________________|
|Proposed monthly throughput | 180,000 m(3)|
|______________________________|____________________________________|
|Proposed mine life | 18.8 years|
|______________________________|____________________________________|
|Operating Costs | ZAR 49/m(3)|
|______________________________|____________________________________|
|Mining Royalties | 0.5-7%|
|______________________________|____________________________________|
|Capital required to bring mine| ZAR 73,000,000|
|into production | |
|______________________________|____________________________________|
|Earthmoving fleet budget | N/A|
|______________________________|____________________________________|
|Tax | 28%|
|______________________________|____________________________________|
| Key Results |
|___________________________________________________________________|
| | Base Case |10% Price Escalation|
|______________________________|_______________|____________________|
|IRR | 59%| 81%|
|______________________________|_______________|____________________|
|NPV at discount values of: | | |
|______________________________|_______________|____________________|
| 15%|ZAR 226,000,000| ZAR 1,084,000,000|
|______________________________|_______________|____________________|
| 20%|ZAR 153,000,000| ZAR 645,000,000|
|______________________________|_______________|____________________|
| 25%|ZAR 105,000,000| ZAR 406,000,000|
|______________________________|_______________|____________________|
The NPV at the 20% discount rate in US dollars is 22.5 million for the
base case and US 95 million using the escalated diamond prices.
Saxendrift Prefeasibility Study
The Saxendrift property is located on the south bank of the Orange River
in the Herbert district of the Northern Cape Province, some 50 km
southwest of Douglas.
During 2009/2010 trial-mining was initiated on Saxendrift as part of a
study to determine what portion of the gravel resource could be
converted to a reserve. Operational parameters and operating costs
were determined both during the bulk-sampling and trial-mining phases
on Saxendrift, and from Rockwell's experience on its other operations.
It is believed that the detail and accuracy of this study is at a
pre-feasibility level.
The mine plan involves continued mining on the Saxendrift A terrace
during 2011/2012 while detailed exploration is undertaken on the C
terrace. The preferred method of mining the alluvial gravels is
strip-mining in a shallow, opencast operation. The processing plant,
which was commissioned in late 2008, is comprised of four scrubbers
followed by four 18 ft rotary pan-plants and has a design
plant-throughput of 800 tonnes per hour. With an expected annual
treatment of 1,800,000 cubic metres some 9,000 carats of diamonds are
expected to be recovered through a bank of ten FlowSort machines and an
electronic grease table, as well as final hand-sort in a glove-box
under secure conditions.
The life-of-mine, based on these reserves, at the proposed rate of
mining of 150,000 cubic metres per month is estimated at 2.7 years. If
the indicated resources are included, with the same parameters as the
reserves, then the LoM could be expected to be extended by an
additional 0.98 years.
A discounted cash flow ('DCF') was developed on the basis of the
reserves only as tabulated below. Since all of the capital has already
been spent, no additional Capital expenditures have been budgeted for
the outstanding life of mine. This is a change from the results
reported in the Company's May 31 2011 news release. It also accounts
for the lack of IRR value here. Operating costs have been budgeted at
R7.5M/month. The 10% annual escalation in the diamond price has been
used for this study.
__________________________________________________________________
| Saxendrift Prefeasibility Study |
| Key Parameters |
|__________________________________________________________________|
|Volume of gravel | Cubic Metres|
|____________________________________________|_____________________|
| Probable Reserve| 4,859,900|
|____________________________________________|_____________________|
|Average Grade | 0.5ct/100m(3)|
|____________________________________________|_____________________|
|Average sales value (2011) | USD2,029/ct|
|____________________________________________|_____________________|
|Proposed monthly throughput | 150,000m(3)|
|____________________________________________|_____________________|
|Proposed mine life (reserves only) | 2.7|
|____________________________________________|_____________________|
|Mining Costs (2011) | ZAR43/m(3)|
|____________________________________________|_____________________|
|Mining Royalties | 0.5-7%|
|____________________________________________|_____________________|
|Capex required to bring mine into production| *No future Capex|
|____________________________________________|_____________________|
|Earthmoving fleet budget | N/A|
|____________________________________________|_____________________|
|Tax | 28%|
|____________________________________________|_____________________|
| Key Results |
|__________________________________________________________________|
|IRR | Cannot be calculated|
| | since no Capex is|
| | budgeted for the|
| |proposed life-of-mine|
|____________________________________________|_____________________|
|NPV (reserves only) | |
|____________________________________________|_____________________|
| 10%| ZAR85,000,000|
| 16%| ZAR72,000,000|
| 19%| ZAR 67,000,000|
|____________________________________________|_____________________|
The NPV at 16% in USD is 10.4 million.
The opportunity exists, through further planned work to convert the
remaining Indicated Resources to Probable Reserves over the short term
and the Inferred Resources to higher categories over the longer term
that has excellent potential to extend the mine life of the project.
Dr. T.R. Marshall, Pr. Sci. Nat., is the independent qualified person
who has reviewed and approved the contents of this release. Further
details of the studies are provided in revised technical reports which
are filed on the Company's profile at www.sedar.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 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.
Information Concerning Estimates of Indicated and Inferred Resources
This news release 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.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2011/02/c8717.html
For further information on Rockwell and its operations in South Africa, please contact
| James Campbell | President and CEO | |||||||||
| Stéphanie Leclercq | Investor Relations | 27 (0)83 307 7587 |