Rockwell Diamonds Falters in Q3 Under “Malicious Litigation”

Mining and Exploration
18/01/2017 08:43

Rockwell Diamonds may have set an all-time record for the length of a press release title - "Rockwell’s third quarter results impacted by malicious litigation, however the strategic repositioning programme makes progress as new leadership is appointed and non-core assets along with related liabilities rationalized" - but this might be an intentional ploy to discourage readers from reading any further. In Q3 2017 (for the three months ended November 30, 2016), revenue fell 74% from Q2 2017, from US$10.3 million to US$2.7 million as litigation forced the company to suspend operations at its Wouterspan mine in South Africa.

Rough diamond sales for the quarter totaled US$1.8 million, a 77% free-fall from US$8.1 million in Q2 2017, as the price per carat achieved declined 12.3% from US$1,196 in Q2 to US$1,049 in Q3. On a year-on-year basis, average price increased 3%. After returning to profit in Q1 2017 and suffering a net loss of US$460,000 in Q2, third quarter losses increased to US$4.2 million, though this represents a 41% narrowing of losses from Q3 2016. Rockwell's performance over the last two years has been mercurial.

Commenting on the third quarter financial performance, Tjaart Willemse, Chief Executive Officer said: “Rockwell completed a challenging quarter which commenced with a review of the practices, strategy and business plans and ended with new financing to complete Wouterspan, whilst having to attend to a series of unfounded and malicious legal attacks from its erstwhile mining and construction contractor. On restarting the operations production ramp-up has been slower than anticipated." He adds, "The Company was taken back from being effectively operated by third parties and is now managed by its management – the way it should be," so now, "Rockwell is once again in full control of its business." He concludes: "With the Board having approved an US$8 million funding plan to finance the completion of the business repositioning strategy and related plans, we can now build a foundation on which the Company can return to profits, repay its debts and start delivering real value for all its stakeholders. It has been a tough quarter, but I am confident we have turned the corner on our way back to profitability."