Tirisano placed on care and maintenance amid persistent industrial action and to preserve cash resources

VANCOUVER, Dec. 12, 2012 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) announces its decision to place its operations at the Tirisano Mine on care and maintenance following persistent industrial relations issues and ongoing losses incurred by the mine. The term 'care and maintenance' is used when a mine has stopped production and is temporarily closed for technical, environmental, financial or labour relations reasons (Minerals Act, 1991).

The Tirisano Mine, last week, was impacted by a second unprotected (illegal) strike within a period of four months. It has also been subjected to persistent industrial relations issues relating to pay increases despite the fact that the mine has continued to operate at a loss and these issues being dealt with in full compliance to the Labour Relations Act ("LRA") of South Africa.

The mine's challenges have been exacerbated by operational complexities as well as a slower than anticipated recovery in the price of smaller diamonds that make up much of Tirisano's production profile, that led to the persistent poor financial performance. The burden of these losses has been carried entirely by Rockwell whose black economic empowerment ("BEE") partner at the mine, Mogopa Minerals, has been unable to contribute any funding since the mine's inception.

Accordingly, the board of directors has approved a decision to place the mine on care and maintenance in order to preserve the cash resources of the Company. Rockwell remains confident in the resources of the property and, as such, a detailed metallurgical study is planned at Tirisano while the mine is on care and maintenance to design a fit for purpose plant that is specific to local conditions. Royalty mining revenues will be used to offset the care and maintenance costs. With the addition of further royalty mining contracts, Rockwell anticipates a cash neutral position with regard to these costs.

"The decision to place Tirisano on care and maintenance has not been taken lightly and was only made once all possible avenues were explored to operate profitably using the existing infrastructure," says James Campbell, CEO, Rockwell Diamonds. "Rockwell is committed to providing jobs in areas that are impacted by high unemployment rates and we are disappointed that these decisions will result in inevitable job losses at the mine; however, the financial position of the Company has to be our main priority. We are also working with Mogopa Minerals to secure funding to enable them to meet their financial obligations in relation to Tirisano."

With regards to the future, Campbell explained "Our planned metallurgical studies at the mine are aimed at designing a fit for purpose operation that will create value for all stakeholders in the future. As a team, we have also dedicated significant management time to turning the mine around, which has now been freed up to focus on our high potential projects in the Middle Orange River region that are the growth engine of the Company."

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 production 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 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.

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 of 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 as 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 home jurisdiction filings that are available at www.sedar.com.

SOURCE Rockwell Diamonds Inc.