Rockwell Diamonds: Business Rescue Filing Stays Asset Liquidation

Mining and Exploration
18/04/2017 11:14

South African junior miner Rockwell Diamonds has managed to temporarily stay an interim liquidation by applying for business rescue while it waits for a hearing in the Kimberley High Court regarding the order, currently scheduled for April 19. A judge in Kimberley, South Africa issued an interim liquidation order against three subsidiaries of Rockwell: Rockwell Resources RSA, HC van Wyk Diamonds Ltd and Saxendrift Mine. The liquidation order was brought by a former contractor to the company, C-Rock Mining, and was granted on March 23, although Rockwell said that its argument was not heard by the court: "The interim order was issued after a short hearing where none of the Company’s rebuttal evidence was considered by the court." The company writes, "The effect of a business rescue filing is that any liquidation order is automatically stayed."

Having retained hold of its assets for now, Rockwell argues it has a business plan supported by 96% of the dollar value of company creditors. Rockwell believes this support should be a significant factor in likely restructuring options. Their business plan comprised the provision of a  USD $8M in loan capital, completing the Wouterspan plant with such proceeds, a focus on cost reduction, efficiency improvements, the sale of certain redundant assets, the pay down of all creditors under ZAR50,000 ($3,750) and the purchase of all recent plant and mine supplies on a cash only basis. "The implementation of this business plan is well advanced despite the frustrating intervention by C-Rock Mining," the company writes. “The company remains persuaded that its case for dismissal of the liquidation application is sound, and after a full hearing it believes it should prevail and C-Rock Mining’s actions will be shown to be spurious and without foundation,” they add in a statement.