STRATEGIC VISION IS UNFOLDING: MIDDLE ORANGE RIVER OPERATIONS' GROWTH PLAN - INTERNATIONAL ROADSHOW JUNE 2014
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STRATEGIC VISION IS UNFOLDING:
MIDDLE ORANGE RIVER OPERATIONS’
GROWTH PLAN
INTERNATIONAL ROADSHOW JUNE 2014
June 2014 | 1
FIVE +100-CT POLISHED DIAMONDS PRODUCED WORLDWIDE IN 2013:
TWO WERE ROCKWELL DIAMONDS
FROM:
287-carat commercial
colour (tinted white),
makeable recovered from
Saxendrift Extension in
November 2013
TO:
Cushion cut 109 carats in
progress + 26.33 carat
round K VVS2 stones
produced (in progress)
FROM:
160 carat typical MOR
yellow recovered from
SHC in September 2013
TO:
Cushion cut 109 carats
vivid yellow
June 2014 | 2
AGENDA
• Company
• Capital structure and shareholding
• Leadership team
• Rockwell’s diamond pipeline
• Beneficiation joint venture
• Diamond market overview
• Strategy STOP PRESS!
Large stones recovered from
• Key milestones
Saxendrift (29/30 May 2014)
• Middle Orange River (‘MOR’) strategy
• Operations
• Properties: Overview of operations
• Future
• Analysis of Diamond Value Management impacts
• Growth plans and strategy
103 carats 56 carats
• Conclusion
June 2014 | 3
COMPANY
70 carats Saxendrift Extension August 2013
June 2014 | 4
CAPITAL STRUCTURE AND SHAREHOLDING
Share price (24 May 2014) C$0.30 / ZAR3.30 Top shareholders
Diacore
Market Capitalization (24 May 2014) C$14.5m / ZAR176.6m Other 19%
37%
Cash balances (28 Feb. 2014) (C$1.8m)
Debt C$8.6m Conus
10%
Craton
Shares outstanding 53,523,244 Capital Africa
1% Vanguard
Warrants - Wells Resources
Capital 8%
Options ($0.48-9.45) 4,836,431 1% Godia
7%
Convertible Debt (~$0.16) C$2.0m / 12,235,686 Mark Middle East Earth
Bristow Management Investors Resources
Fully Diluted 70,595,361 2% 2% 6% 7%
Comparative share price performance
2.5
Rockwell (TSX)
2.0 Rockwell (JSE)
HSBC Global Mining Diamonds Index
1.5
1.0
0.5
-
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14
June 2014 | 5
EXPERIENCED LEADERSHIP
Group Technical Manager
Glenn Norton,
Board of Directors: BSc (Hons)
Dr Mark Bristow (Chairman) CFO
Stephen Dietrich Gerhard Jacobs,
Willem Jacobs BAcc, MBA
Geological, mineral resource
Richard Linnell management, production and technical
Richard Menell experience in alluvial diamond deposits,
Johan van’t Hof Mining and corporate experience with diamond and coal exploration. Qualified
junior and senior mining companies person and Pr.Sci.Nat.
with operations in SA, Australia and
Canada. Knowledge of public listed
President and CEO mining Companies. Diamond Marketing & Sales
James Campbell, Manager
BSc (Hons ) ARSM, Jeffrey Brenner
MBA (Dunelm)
Seasoned diamond executive with A leading international diamantaire and
career spanning over 20 years at specialist in valuation, marketing and
De Beers and 4 years as Managing sales of rough diamond production from
Director of African Diamonds plc.
alluvial deposits.
FIMMM, C.Eng, C.Sci and Pr.Sci.Nat. Group HR/IR Manager
Richard Mhlontlo,
Nat Dip (HR Management
& Development) Corporate Development
Stéphanie Leclercq
BSc, CFA
Dr Kurt Petersen,
Ph.D. (Stellenbosch) Extensive HR & Industrial Relations
management experience including
organizational and structural design 15 yrs in investor relations and
initiatives as well as strategy corporate development. Worked as a
Expert in economic diamond metallurgy, development and implementation. sell side analyst and in-house IRO
contracted to Rockwell.
across various industry sectors.
June 2014 | 6
ROCKWELL’S DIAMOND PIPELINE: THE STORY OF THE ALANA ~
AN EXCEPTIONAL GEM QUALITY DIAMOND RECOVERED AT SHC
Exploration pitting at Mining the gravels
SHC: A method used to
Large boulders act as
evaluate the quality of Liberating the gravels
trap sites
SOLD – MARCH 2014!! gravel to be mined
The 109 carat Alana stone:
Fancy yellow, no visual
flaws and octahedral shape James Campbell (CEO) and
Wikus de Winnaar (GM: MOR
Operations) at a trench such
as the one where the Alana
was eventually found
The people on the team
Loading and hauling the
gravel
At the cutting factory the stone was
analyzed in 3D to identify the best Looking for the Penelope Mohale (Mining
cuts and value for recovery from the Geologist) and Mulalo
stone
Alana
Ndwammbi (Mining
Manager: SHC):
Responsible for geology
Selling the and mining when the Alana
Finding the was recovered.
Alana (March Alana (August
2014) 2013)
Locating the right mining area
Location of the Alana
Large stone plots :
Used to determine
Recovering the
Polishing the Alana
the possible location
The SHC processing plant: Gravel is Alana of large stones
The Alana: 169 carats screened and prepped before (September
(13 September 2013) processing through the Bulk X-ray 2013)
sorters
Mining the gravels Geological daily report: Description of the gravel
containing the Alana
Mulalo
examines Mining Observations
Mining continued on the Eastern portion of the block. Please note that there is still a lot of stockpile on the pad (from previous day). Most of the stockpile from the pit has been tipped at the back of the BV pad
stockpile and a small portion has been tipped in front of the pad. One dozer operational in the pit.
the pit the Geology Observations
Gravel description
Calcretisation Bedrock Description
day
GMx % Sand % Clast Types Clast Sizes
Pebble - Qtzites, VL, BIF, Mining continues on the Eastern portion of the block. Most of
Block B6/C6 43% Yes Dwyka the Upper coarse gravel is included with the gravel. There is
Chert, Jasper, basalt, zeolite
still high percentage of basalts and zeolites in the matrix. The
Cobble - BIF, Qtzites, Chert, BIF percentage still high within the basal gravel with boulders
55-60% 45-60 42%
before
VL observed in the gravel. There is an increase in amount of
BIF, VL, Quartzite, Chert granites observed in the gravel in the boulder size range.
Boulder -quartzite and VL, Slightly Quartzite’s and VL boulders is still high within the block with
, basalt, zeolite,
+15% Calcretisation
Jasper, granite granites most of the boulders being rounded. Overall gravel still
indicates a high energy system. Grade is expected to
slight sand increase.
the
dilution from Liberation: Good liberation
upper gravel Clast
(sand matrix) shapes Clasts Ave
observed ranged from R Size Largest size
discovery
to SA. 3 3.0-3.2 VL, Quartzite
!
June 2014 | 7
BENEFICIATION JOINT VENTURE:
CONTINUES TO ADD SIGNIFICANT VALUE
77 ct makeable, 145 ct makeable, old 105 ct Type II A, Middle 169 ct yellow, 128 ct yellow, Middle
Saxendrift Extension Saxendrift tailings Orange Saxendrift Hill Complex Orange
(2012) (2012) (2009) (2013) (2011)
ROUGH
37 ct J color round 30 ct stone being 35 ct D color internally
brilliant, VS2 polished. Additional flawless 109 ct vivid yellow 81 ct vivid yellow
pieces to be polished Sold for $230,000/ct
POLISHED
BENEFI-
+34% on initial rough Currently being +62% on initial rough +61% on initial rough
CIATION Not yet sold
sale price polished sale price sale price
VALUE ADD
Diacore profit share agreement (>2.8 carat stones)
• Additional revenue channel: Market related prices for diamonds sold into JV + 50% profit share
• 10% revenue uplift in F2014: US$4.1m
June 2014 | 8
DIAMOND MARKET
116 carats SHC August 2013
June 2014 | 9
POSITIVE FUNDAMENTALS:
DEMAND FOR ROUGH + POLISHED DIAMONDS EXPECTED TO RISE
Positive Long Term Fundamentals: Polished and rough diamond demand • Rough demand: Expected to grow between
(actual and forecast) ($bn) 4.2% and 5.1% p.a. until 2023 (Bain & Co.)
40 • Rough and polished demand: Expected to
Polished diamond demand: correlate long-term
35
Value of the diamond content • Clear long-term trend: Increasing demand
Deviation from in the jewellery retail sales
Polished
30 the long term CAGR (2003-12): 4.8% • Short term deviations from trend line
demand
trend anticipated: Both up and down
Rough diamond demand (Bain
25
& Co. base case)
CAGR (2012-23): 5.1%
20 World diamond exploration spend ($m)
Rough diamond demand (Bain
15 Rough & Co. lower case)
demand CAGR (2012-23): 4.2%
CAGR
26%
CAGR
-64%
10
980-9901,010-1,020
855-895
Trendline for the polished
5 demand based on 2003-2012 610-620
470-480
data 365-375
320-330 315-325
0 195-205 230-240
2003
2005
2006
2007
2008
2009
2010
2011
2012
2013F
2014F
2015F
2016F
2017F
2018F
2019F
2020F
2021F
2022F
2023F
2004
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: DMM Advisory Group Analysis, IDEX, Tacy, Bain & Co. Source: NBF Research; Metals Economic Group
June 2014 | 10POSITIVE FUNDAMENTALS:
PRODUCERS BEST POSITIONED TO BENEFIT FROM SUPPLY DEFICIT
Average operating margins in the diamond pipeline 2012 (%)
20%
16-20%
18%
16% Highest margin
14% in the pipeline
12%
10% 4-14%
8%
6% 2-5% 3-5%
4% 1-3% 1-4%
2%
0%
Diamond producers Rough diamond Diamond Polished diamond Diamond jewellery Diamond jewellery
trading manufacturing trading manufacturing retail
(cutting and
polishing)
Sequence in the diamond pipeline
Source: DMM Advisory Group Analysis, Bain & Co.
June 2014 | 11STRATEGY
287 carats Saxendrift Extension November 2013
June 2014 | 12THE RATIONALE:
WHY THE 500,000M3 P.M. QUALITY PROCESSED GRAVEL TARGET?
PAST (Actual) CURRENT (Actual) FUTURE (Plan)
Saxendrift Saxendrift SHC Saxendrift SHC
MINES 110,000m3 / month 160,000m3 / month 80,000m3 / month 160,000m3 / month 80,000m3 / month
Wouterspan
Niewejaarskraal Niewejaarskraal
(phased)
100,000m3 / month 100,000m3 / month
150,000m3 / month
MONTHLY
MOR 110,000m3 340,000m3 500,000m3
THROUGHPUT
Revenue
Revenue
Revenue
QUARTERLY
REVENUE*
Time Time Time
# +50 CARAT
STONES PER
YEAR*
5 17 25
* Indicative quarterly revenue and +50 carat stone production based on technical reports
June 2014 | 13CORPORATE TURNAROUND:
STRATEGIC MILESTONES
F2012 F2013
Q1 Q2 Q3 Q4 Q1 Q2
• AVR BEE
Q4 F2011: • New CEO • Saxendrift:
partnership
• Recapitaliza IFS + BV • Contops
STRATEGIC tion ($7.5m Projects implemented:
unwound • SHC:
• Holpan on
REVIEW • Jasper Construction
C&M PP + $6.5m approved Saxendrift +
acquired commenced
sale of • Board Klipdam
• Bulk X-ray:
assets) strengthened
Pilot start-up
F2013 F2014
Q3 Q4 Q1 Q2 Q3 Q4
• Completed NJK
• Holpan / Klipdam / • Recovery of 287
• Tirisano: C&M + • Recovery of four phase II
• Klipdam: Erf 2004: Sold carat stone in
Royalty mining +100 carat stones • EMV renewal plan:
Rightsizing • Wouterspan: PEA MOR
• SHC: Production in MOR Implementation
• Bulk X-ray: Pilot completed • New BEE
ramp up started • NJK Phase I phase
completed • Niewejaarskraal: partnership
commenced • New BEE partner
Out of C&M concluded
announced
MEDIUM TERM GOAL : MOR PRODUCTION VOLUMES >500,000M3/MONTH OF QUALITY GRAVELS
June 2014 | 14PROGRESS ON MOR STRATEGY IN F2014
ACHIEVED SHORT-TERM MULTIPLE MINING FACES PRODUCED FIVE +115CT AVERAGE STONE SIZE LARGE DIAMOND
GOAL ON ALL RESOURCES ROUGH DIAMONDS +139% IN Q4 RECOVERY RATE IN Q4
• Three MOR operations in • Production diversification • Largest was 287 carats • 4.6 carats from three • 4x +50 carat diamonds
production • Mining flexibility mines • Q4 F2013: 2x+50
• Monthly processing • Q4 F2013: 2.0 carats carat diamonds
capacity of 340,000m3 from one MOR mine
VOLUMES PROCESSED +VE RETURNS FROM 20
EFFECTIVENESS OF BULK LOSSMAKING KLIPDAM 100,000M3 P.M. PLANT
ROYALTY MINING
UP 46% X-RAY CONFIRMED MINE SOLD AT NIEWEJAARSKRAAL
STRATEGY
• Average grade up 12% • >40% grade improvement • Proceeds reinvested in a • Commissioned and • Royalties of US$1.2m
• Carat production up 63% processing Saxendrift new processing plant at ramped up
Extension gravels at SHC Niewejaarskraal • DMS , IFS and Bulk X-ray
Bulk X-ray system
• vs Saxendrift pan
plant
June 2014 | 15FISCAL 2014: SALIENT FEATURES
• Revenue (including beneficiation) UP 39% to $45.2m
• Seventh successive quarter of dollar denominated revenue growth reported in Q4
• Overall volume of gravel processed* UP 28%: Carat production* Company-owned properties UP 27%
• Operating profit before amortization and depreciation of $6.0M, up from $1.1m in 2013: G&A expenses DOWN 29% to $4.4m
• Cash and cash equivalents of $1.3M after capital investments of $8.7m in new processing capacity
• Inventory of 2,752 carats carried forward + current ‘beneficiation pipeline’ of more than 6,000 carats
• Net royalties from royalty mining contracts of $1.2M
PRODUCTION SALES AND INVENTORIES
VOLUME CHANGE PRODUCTI CHANGE VALUE OF AVERAGE CHANGE
CHANGE SALES CHANGE VALUE INVENTORY
(MILLION CARATS (%) ON COSTS (%) SALES CHANGE (%) CARATS (US (%)
(%) ( ) (%) (CARATS)
M 3) ($M) (US$) $ / CARAT)
OWN OPERATIONS** 2.7 -8 14,222 -24 39.2 +25 29.5 +34 13,782 -23 2,143 +73 1,571
CONTRACTORS’ MINING 1.1 - 13,554 - - - 9.4 - 12,490 - 756 -2 1,181
TOTAL: COMPANY 3.8 +28 27,776 +27 39.2 +25 10.7 +43 26,272 +27 1,484 +13 2,572
PROPERTIES
** Comprising Saxendrift, SHC and Niewejaarskraal in F2014 (F2013: Saxendrift, Klipdam and Tirisano)
* Company-owned properties
June 2014 | 16OPERATIONS
High quality MOR production: 116 carats, 37 carats and 33 carats August 2013
June 2014 | 17Our operational
PROPERTIES:
footprint
ROCKWELL OPERATIONS AND PROJECT LOCALITIES
Ventersdorp
Middle Orange River
Grade* Processing rate Carat value Life of mine
June 2014 | 18PROPERTIES:
MIDDLE ORANGE RIVER PROJECT LOCATION MAP
June 2014 | 19PROPERTIES:
CURRENT OPERATIONS + DEVELOPMENT OPPORTUNITIES
PROCESSING CARAT LIFE OF
GRADE* (CARATS / STEADY STATE
STATUS OPERATION RATE VALUE* MINE
100M3) UNIT COST
(M /MONTH)
3 (US$) (YEARS)**
SAXENDRIFT +
0.45 - 0.51! 160,000 ! 2,300! 7! US$8.50/m3
SAXENDRIFT EXT.
IN SAXENDRIFT HILL
0.51! 80,000! 2,400! 1.5! US$7.50/m3
PRODUCTION COMPLEX
NIEWEJAARSKRAAL 0.6! 100,000! 2,600! >10! US$9.50/m3
JV IN RAMP
KWARTELSPAN 0.76 36,000 2,400 1.5 "!
UP
WOUTERSPAN:
EVALUATION 0.62! 350,000! 2,300! >10! "!
PEA COMPLETED
ZWEMKUIL &
1.35! -! 2,000! "! "!
SURROUNDING FARMS
TIRISANO:
ROYALTY
5x ROYALTY MINING 0.45 - 0.63! 160,000 ! 668! >18! "!
MINING
CONTRACTS
* Based on the Company’s approved internal budgets for F2015
** LOM based on NI43-101 report, excludes any future exploration potential
June 2014 | 20PROPERTIES:
SAXENDRIFT* PERFORMING CONSISTENTLY
Revenue/m3: US$12.4 in F2014
♦ Average price per carat: US$2,194: up 14%
♦ 9,059 carats sold: up 16%
♦ $19.9m revenue from diamond sales: up 32%
Mining cash cost/m3 : US10.9 in F2014
♦ Longer hauling distance: Mining Saxendrift Extension
♦ Higher EMV maintenance costs
Production volumes down 10%: Carat production up 12%to 9,338 carats
♦ Higher grades at Saxendrift Extension
♦ Lower earthmoving availabilities
♦ Slightly lower processing rate to increase plant efficiency
EMV fleet renewal programme in progress:
♦ To address low earthmoving availabilities and aging fleet
Way forward:
♦ Contract signed with Eqstra: Managed maintenance lease on second hand
equipment
♦ Continued focus on managing unit costs
♦ Complete EMV renewal plan
♦ Reviewing plant capacity: Increase to ±180,000m3 per month off EMV
improvements
* Including Saxendrift Extension
June 2014 | 21FLEET OPTIMIZATION PLAN AT SAXENDRIFT / SHC:
IMPROVE THROUGHPUT AND REDUCE MAINTENANCE EXPENSES
Challenge
• Escalating vehicle maintenance costs and inadequate fleet availabilities
• Declining overall plant utilization (OPU)
Objective
• Improve earthmoving availabilities to increase mining volumes
• Reduce maintenance costs
• Sweat invested processing capacity
Investigation
• Review of status quo with expert consultant (Kenn Smart)
• Fleet unmatched to current and future mining requirements
• Reorganization of maintenance and asset management practices
Implementation
• Eqstra selected as EMV provider
• Reviewing financing options
• Managed maintenance lease proposal preferred:
• Guaranteed availability ! No upfront capex ! 10-15% maintenance cost reduction
• First mid-life rebuild of equipment underway
June 2014 | 22PROPERTIES:
SAXENDRIFT HILL COMPLEX OPERATIONS GAINING MOMENTUM
Revenue/m3: US$11.7 in F2014
♦ Average price per carat: US$2,781
♦ 2,945 carats sold: High quality diamond recoveries
♦ $8.2m revenue from diamond sales
Mining cash cost/m3: US$10.0 in F2014
Production volumes reached nameplate capacity
♦ Impacted by earthmoving availabilities: 697,102m3 processed in F2014
♦ Managed processing rate to optimize plant efficiency
Fit-for-purpose plant design: Internally funded ($1.4m)
♦ Carat production on plan: 3,363 carats in F2014 80,000m3/month capacity (@5mm bcos)
2 x Bulk X-ray + single particle sorters
Way forward Lower environmental impact: Less water + power
2-month payback: Revenue from first 2months’ production
♦ Address mechanical failures in front end: Impact on Q1 F2015 production
♦ Contiguous exploration at Saxendrift Extension
♦ Reviewing redeployment of plant: 1.5yr Mine Life
* Refer to Appendix for detailed technical information
June 2014 | 23PROPERTIES:
NIEWEJAARSKRAAL: NEW MINE RAMPED UP
Revenue/m3: US$2.7 in F2014: Lower volumes during commissioning phase
♦ Average price per carat: US$1,107: Consistent with current stage of production ramp up
♦ 746 carats sold
♦ $0.8m revenue from diamond sales
Mining cash cost/m3: US$23.6 in F2014
♦ Impact of lower volumes during commissioning phase
♦ Included some ramp up costs + plant improvements
Plant handed over to operations in September 2013
♦ 301,509m3 processed in fiscal 2014: Ramp up completed in March 2014
♦ Lower initial grades: Mining an adjacent property (blasting and drilling) in Q3
♦ Carat production gaining momentum: 986 carats
Rapid and low cost implementation of new mine
Way forward: Capex funded from proceeds of Klipdam sale
♦ Bed down contract mining: Commenced March 2014 Phase I (60,000m3/month):
Completed in 10 weeks: DMS ($2.5m)
♦ Consolidate processing at name plate capacity
Phase II (100,000m3/month):
♦ Exploration to upgrade resource from inferred to indicated category
Completed Feb. 2014: IFS + Bulk X-ray system ($1.2m)
* Refer to Appendix for detailed technical information
June 2014 | 24PROPERTIES:
WOUTERSPAN: PEA* SHOWED VIABLE ECONOMICS
Resource**: 5.0 million m3 indicated + 37.8 million m3 inferred
l
ne
an
el
ch
nn
♦ Similar geology + carat value to Saxendrift
o
ae
ha
al
c
p
eo
st
de
ala
♦ Forecast grade (carats/100m3): 0.62 at 5mm BCOS
El
p
e st
Eld
♦ 10yr LOM
Viable economics: Sufficient to proceed to detailed design
PO
1015
1005
1020
1010
1020
OO 1
PO
RT
NN PP 2
IO
RT
MM QQ
N
IO
15
LL
N
3
14
LA
1015
PO
NY
KK
LA
RT
PO
ON
NY
IO
RT
JJ
ON
N
VA
IO
14
LE
VA
N
II
LA
9
LE
37
1010
NY
LA
1005
1000
6
37
HH
NY
ON
1000
6
ON
IRR between 45% and 70%
1020
VA
♦
GG
LE
VA
LE
37
FF
1010
1000
6
37
6
1000
1010 EE
DD
AU G U ST 2 0 0 8
1005
CC 995
1005
1015
BB
AA
Z 990
Y
1020
1005
X
995
W
1010
NPV of $91.71m (at 15%)
1000
V
♦
990
U
1015
T
1000 S 995
R 990
Q
1000
1010
1005
P
1015
1005
O 990
N
990
M
L
1000
♦ $42m capital cost (incl. 25% contingency)
K
1005
995
J 985
I
Older
H
1010
1010
G
p
990
F
alaeo
Ap r
1005
Ma
il 2
rc h
008
E
2 0
cha
08
1010
D
nnel
985
C
995
985
990
1
Apr
1005
il 2
5% revenue variance over LOM: 15% impact on NPV
008
♦
985
B
Inner
2008
Ju
ly
nuary
2008
1000 Febr
Ja
uary
y
20
08
2
oung
995
1
08
20
uary
Ap
SE
r il
Febr
2 0
PT
0 8
er pa
EM
BE
990
R
2008
3
985
2008
985
ST
la
U
G
A
AU
eo riv
2008
08
985
20
nuary
AU
er ch
uary
G
U
SE
ST
Ja
Febr
PT
2008
EM
4
JU
LY
BE
R
2008
2008
8
985
a
200
ne
Ju
5
nnel
985
985
8
200
ne
Ju
6
7
8
985
980
Based on plant with 350,000m3 / month capacity
9
980 10
985
11
ER
E RIV
980
12
ORANG
985
13
980
♦ 2x Bulk X-ray systems (coarse and mid-sized gravels) + 1x DMS stream
14 980
15
985
BR
AN
AK
NE
FO
X
16
BR
NT
AK
EI
N
FO
23
NT
17
EI
N
24
18
(fines)
985
19 985
980
PORTION 16 LANYON VALE 376
20
980
985
21
PO
980
RT
ION
22
9 LAN
980
YO
980
23
N VA
980
LE
376
24
980
970
25
975
26
AN
Phased implementation options under consideration
NE
X
27
BR
KA
AK
LK
FO
KR
NT
AN
28
EI
S
N
41
PORTION 10 LANYON VALE 376
24
980
29 980
975
30
31
Older palaeo chan
nel
♦ 150,000 m3 / month
32
33
M
B F H I J L
POR TION 2 4
LAN Y ON VAL E 3 7 6 A C D E G K
975
♦ Preference to fund internally
Legend
Wouterspan Channel Model
* Glenn A Norton, Pr. Sci. Nat., Group Technical Manager and Walter Bold, Pr. Eng., Group Engineer for Eldest palaeo channel
Inner younger palaeo river channel
Wouterspan Channel Model
Name: Gary Dorkin Scale: 1:5000
Rockwell are responsible for the May 2013 PEA Location: WP
Meters Projection: Hartebeeshoek 94
Older palaeo channel
0 400 800 1 600 Date: 22 May 2014 Datum: WGS 84
** Refer to Appendix A for detailed technical information
June 2014 | 25PROPERTIES:
ROYALTY MINING: CONSISTENT PERFORMANCE
Strategy deployed on areas that Rockwell does not wish to mine due to scale or other
reasons
Rockwell earns 12.5% royalty on revenue: Provides management framework, incl.
security, for operations
♦ 13,554 carats produced + 12,490 carats sold in F2014: U$1.2m royalty
Tirisano: Five royalty mining agreements in operation at year end
♦ C200,000 m3/month, achieving budget grades
MOR: Contracts on smaller properties
♦ Royalty mining contract at Kwartelspan converted to JV in F2015 to
increase return potential
June 2014 | 26FUTURE
Saxendrift Extension gravels processed through SHC Bulk X-ray August 2013
June 2014 | 27PRODUCTION:
ANALYSIS OF DIAMOND VALUE MANAGEMENT IMPACTS
Evolution of Rockwell's Strategy
Bivitec Installed, 150k m3/month
Design Margin 120k m3/month
Technology Retrofit
Rockwell Hits Bottom
Margin (per Unit Time)
Pit to Recovery
Diamond Value
Mangement
Productivity to
Improve
Design
margin
Insitu Lockup, Baseline Poor IFS Bivitec 5mm BCO Additional Improved Beneficiation Current EMV BV Plant Projected
Inefficiency Throughput Efficiency Strategy Retrofit
June 2014 | 28FIVE YEAR GROWTH PLAN:
CREATE CRITICAL MASS AND SCALE IN MOR
ORGANIC GROWTH STRATEGY: Process 500,000m3 of quality gravels p.m. from multiple faces
OBJECTIVE: Enhance quarterly earnings visibility
Production plans (million cubic meters) Revenue (incl. beneficiation) (US$)
7 125
6 Niewejaarskraal Wouterspan Saxendrift Hill Complex Saxendrift
100
5
4 75
3
50
2
25
1
- -
2014A 2015E 2016E 2017E 2018E 2019E 2014 2015 2016 2017 2018
CATEGORY PROBABLE RESERVES INDICATED RESERVES INFERRED TOTAL
RESOURCES
VOLUME (M3) JULY 1, 2013 7,791,300 12,816,900 91,357,000
CARATS 35,060 66,218 849,054 950,332
VALUE (US$) MILLION 70 142 1,071 1,283
Projected production and revenue is shown for own operations. These are based on the Company’s latest internal budget information and the technical reports.
February 2014 | 29MIDDLE ORANGE RIVER GROWTH STRATEGY:
WELL DEFINED STRATEGIC PLAN
Five +115 carat rough diamonds
GROWTH STRATEGY recovered by Rockwell: Middle
Orange, Aug. – Nov. 2013
ORGANIC ACQUISITIONS STRATEGIC ENABLERS
Develop existing Diamond sector
properties consolidation LEADERSHIP
Implement fit-for- Evaluate targets Executive: >100 yrs diamond experience
purpose technology Apply strategic filters Board: Junior mining deal making
OBJECTIVE: BENEFICIATION
• Process 500,000m3 per month of quality gravels Market prices +2.8 carat stones
• Multiple faces in MOR
50% profit share on polished stones
IMPACT: SHAREHOLDING
• Stable diamond size/revenue distributions New BEE partner (ARH): +ZAR30m
• Quarterly earnings visibility Supportive shareholder: Diacore
June 2014 | 30CONCLUSION:
OUR UNIQUE POSITIONING
1. PEOPLE • Experienced leadership team with ≈100yrs diamond experience + engaged board of directors
2. PRODUCT • Produced five large, high value diamonds in Middle Orange since September 2013
• Average value up 34% in Q4: $1,978/carat (own operations) versus global average of ≈US$100/carat
3. PROPERTIES • More than 1.0m carats in situ valued at $1.3bn
4. PRODUCTION • Three producing mines in Middle Orange with monthly capacity of 340,000m3 /month
• On track to achieve mid-term target of 500,000m3 /month to improve quarterly earnings visibility
5. PARTNERSHIPS • Beneficiation partnership with Diacore (+10 carat stones): 50% profit share in sale of polished diamonds
• Supportive shareholder base
6. POTENTIAL • Improving performance due to strategic turnaround programme
• Well defined strategy to focus on Middle Orange: Two new internally funded mines commissioned
7. PROSPECTS • Positive industry fundamentals: Supply deficit forecast after 2018
• Strong demand for investment diamonds
June 2014 | 31THANK YOU!
Bulk X-ray pilot project: 145 carats D-color recovered from old recovery tailings October 2012
June 2014 | 3233
FORWARD LOOKING STATEMENTS
Except for statements of historical fact, this presentation 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 if 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 and 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 annual Form 20-F filing with the United States Securities and Exchange Commission
www.sec.com and the Company's home jurisdiction filings that are available at www.sedar.com.
This presentation also uses the terms 'indicated resources' and 'inferred resources'. Rockwell Diamonds Inc. advises investors that although these terms are recognized
and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission
does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In
addition, 'inferred resources' have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility
or pre-feasibility studies, or economic studies except for Preliminary Assessment as defined under 43-101. Investors are cautioned not to assume that part or all of an
inferred resource exists, or is economically or legally mineable.
The securities of Rockwell being offered have not been, nor will be, registered under the U.S. Securities Act and may not be offered or sold within the United States or to,
or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This information does not constitute
an offer or sale of securities in the United States. Prior to making any investment decision, investors should consult a professional advisor.
June 2014 | 33APPENDIX A
Four +100 carats recovered in Middle Orange River in August/September 2013
June 2014 | 34to support growth
43-101 MINERAL RESOURCE SUMMARY: AT 1 JULY 2013
Reserves
Bottom Volume Grade* Value
Mining area Terrace complex cut-off size m³ ct/100m³ USD/ct
PROBABLE RESERVES
Saxendrift Brakfontein Hill (“BHC”) 5mm 6,921,600 0.40 2,400
B1 terrace
INDICATED RESOURCES
Saxendrift Brakfontein Hill (“BHC) 5mm 7,135,000 0.40 2,400
B1 terrace
Saxendrift Hill # Saxendrift Hill (“SHC”) 2mm 1,774,600 1.15 2,300
B2 terrace
Saxendrift Extension Saxendrift River (“SRC”) 5mm 1,303,400 0.60 1,884
C3 terrace
Rooikoppie 2mm 614,400 0.70 2,029
B terrace 5mm 0.62 2,300
Wouterspan
Fluvial-Alluvial 2mm 3,858,800 0.70 2,029
B terrace 5mm 0.62 2,300
Tirisano Undifferentiated Upper and 2mm 25,066,900 2.37 726
Lower Gravel Packages
INFERRED RESOURCES
Saxendrift Brakfontein Hill (“BHC”) 5mm 492,000 0.40 2,400
B1 terrace
Saxendrift Hill Saxendrift Hill (“SHC”) 2mm 86,000 0.68 2,300
B2 terrace 5mm 0.52 2,400
Saxendrift Extension Saxendrift River (“SRC”) 5mm 577,000 0.60 1,884
C3 terrace
Kwartelspan Kwartelspan Complex (“KPC”) 2mm 500,000 1.00 2,300
5mm 0.76 2,400
Rooikoppie 2mm 5,911,000 0.70 2,029
B terrace 5mm 0.62 2,300
Wouterspan
Fluvial-Alluvial 2mm 31,863,000 0.70 2,029
B terrace 5mm 0.62 2,300
Rooikoppie 2mm 1,840,000 0.84 2,029
A terrace 5mm 0.65 2,400
Fluvial-Alluvial 2mm 11,831,000 0.84 2,029
A terrace 5mm 0.65 2,400
Niewejaarskraal
Rooikoppie 2mm 969,000 0.84 2,029
B terrace 5mm 0.65 2,400
Fluvial-Alluvial 2mm 5,990,000 0.84 2,029
B terrace 5mm 0.65 2,400
Tirisano Undifferentiated Upper and 2mm 15,334,000 2.37 726
Lower Gravel Packages
#
Due to a lack of reliable data on SHC, the 5mm bottom cut-off size (bcos) values are not included at Indicated Mineral Resource classification.
Diamond values (under “Values”) for BHC, SHC, KPC and Niewejaarskraal are based on a two-year moving average (from +10,000cts from The BHC
terrace on the Saxendrift Mine at a 5mm bcos).
Diamond values for SRC are based on the 5mm bcos sales data for FY2013 only.
Diamond values for Wouterspan are based on extrapolation of FY2011 data at 5mm bcos.
Tirisano data is at 29 February 2012.
Resource and Reserve estimates completed by Rockwell’s Group Technical Director, GA Norton, (Pr. Sci. Nat.), a Qualified Person who is not independent
of the Company and reviewed by TR Marshall, PhD (Pr. Sci. Nat.), an independent Qualified Person.
Note: The Indicated Mineral Resources on the BHC terrace of the Saxendrift mine are inclusive of the Mineral Reserves.
18 ROCKWELL DIAMONDS ANNUAL REPORT 2013
June 2014 | 35You can also read
