JOHANNESBURG (miningweekly.com) – Dual-listed Rockwell Diamonds’ fourth-quarter operating performance was negatively impacted by lower grades at its Saxendrift operation, lower volumes at its Niewejaarskraal project and a drop in overall carats sold.
“While we achieved revenue growth of 19% to C$17.1-million and our average cash operating cost continued to trend down by 19% to $11.2/m3, operating profit was negatively impacted by lower grades and higher volumes processed,” CEO and president James Campbell said on Friday.
Nonetheless, he noted, the miner was pleased to have recovered two larger than 120 ct rough diamonds at Saxendrift, despite increased stripping ratios and declining average grades, as the mine approached the end of its current economic mine life.
Planning had started for a reduced operation and movement of plant to other Rockwell development properties.
At Niewejaarskraal, the grade remained below plan and the operation’s economic potential was not being achieved with the available processing capacity.
“We, therefore, suspended operations [in April] to allow for a full review of the geological model and rationalisation with the Bondeo operations,” Campbell pointed out.
Exploration work also started on the Lanyonvale farm and technical work on a revised plan for a large bulk sampling operation on the Wouterspan property continued during the quarter.
Rough diamond sales increased by 16% year-on-year to C$15.6-million for the quarter ended February 28, despite a 12% drop in carats sold to 8 467 ct. The average carat price from company-owned properties increased 22%.
The cash cost of sales, before amortisation and depreciation, increased to C$20.2-million, largely owing to increased volumes mined and high costs at Niewejaarskraal, chiefly driven by the high stripping ratio.
A gross loss of C$3.1-million was recorded. Although the carats sold from Rockwell’s Middle Orange River (MOR) operations were stable, with a 14% increase in revenue per carat, these benefits were offset by lower grades, down 23% and higher volumes processed, up 45%, leading to a C$3.8-million increase in production costs.
A total of 1.2-million cubic metres were mined from MOR, up 58% from the prior year, mainly as a result of increased stripping ratios and facilitated by the ongoing optimisation of in-field screening operations, as well as the earthmoving vehicle renewal plan.
In the quarter under review, the diamond market was again dominated by declining polished diamond prices, high rough diamond prices and a lack of financing availability for the industry.
While De Beers’ prices remained stable, open market prices have been substantially lower. Sightholders rejected some 30% of rough diamond allocations, as pricing left minimal margin to be made on these diamonds.
Banks were also not offering financial assistance on lossmaking rough diamonds, with factories shutting down in Southern Africa, India and other cutting centres around the world.
The decline in polished prices persisted, albeit at a much slower pace, with some price stabilisation in certain size categories.
Retail sales increased marginally, particularly during the peak festive trading season, Chinese New Year and other high-profile shopping events.
Lower volumes of polished stones and shortages were becoming an issue, Rockwell noted.
Overall, the industry experienced deflationary pricing owing to diamond and gold price reductions; however, there were some indications that prices had bottomed out.
“As industry liquidity improves and rough prices from primary suppliers are lowered to match open market pricing, the industry will be on a solid footing for a recovery,” the company added.