Rockwell Diamonds in "State of Despair', Says New Management

Mining and Exploration
26/09/2016 16:44

Alluvial diamond miner Rockwell Diamonds, with operations in South Africa, is in a “state of despair”, its incoming chief executive Tjaart Willemse said last week in the release of quarterly results to end-August., adding that the company will implement a comprehensive operational turnaround. The statement from Willemse reads: “From my observations to date on the general health of the business and understanding of the main contributors to its current position, it is clear that the business finds itself in a state of despair for a number of reasons. There has been a general breakdown in controls over a considerable period of time, non-adherence to the procurement policy, amongst others, being very prevalent."

"This," he continues, "coupled with inadequate work planning and the lack of project front-end loading has led to a series of financial management concerns and business risks. Blurred lines of accountability, both within the organisation and between the company and some of its service providers, does not bode well for proper management and control of the business and a perceived lack of a sense of urgency further exacerbates the potential for failure." In an attempt to turn things around for the diamond miner, Rockwell will immediately outsource mining services and sell its earthmoving vehicle (EMV) fleet, saying that the mining services contract is structured to externalise the risk from variance in mining volumes and equipment availability. The five-year agreement with contractor C-Rock Mining entails the transfer of two-thirds of Rockwell’s staff.

As for the results in the second quarter ended August 31, Rockwell mining volumes were 4% lower quarter-on-quarter and 8% lower year-on-year, owing to the planned scaling down of operations at Saxendrift, which was partly offset by a 10% increase in volumes processed at Remhoogte (RHC).  At 4,849 carats, the volume of sales were stable on Q1 2017 and down 9% on Q2 2016. The value of sales, however, decreased 17% from Q1 2017 and 21% from Q2 2016, to US$7.6 million (excluding beneficiation). Total sales (including royalty contractors’ production but excluding beneficiation) were also down by 14% on Q1 2017 and 16% on Q2 2017. The average price per carat declined 16% on Q1 2017 to US$1,560. Still, there were some notable recoveries, namely: 33 +20-carat stones were recovered at RHC (22), Saxendrift (10) and WPC (1), with two stones over 100-cts: 157.99ct and 129.65ct, both from RHC.