JOHANNESBURG (miningweekly.com) – Diamond-mining company Rockwell Diamonds, which has made impressive operational and organic growth strides in the last three years, believes it is well positioned to bring single-asset operations into its fold.

In the last three years, the Rockwell team, under CEO James Campbell, has doggedly ground out operational performance under a tough economic environment. (Also watch attached video).

Now, while continuing to push the organic-growth envelope, the company sees the window of opportunity widening for concomitant industry consolidation, against the background of growing industry recognition of the advantage of having significant assets under proven management in order to be able to weather the bad times when they arise.

“If you look at the number of private diamond mining companies as well as public companies listed in Canada, Australia and London, there are a number out there with single assets,” Campbell tells Mining Weekly Online in the attached video interview.

With its focus on South Africa – “we’re very committed to South Africa” – the Toronto- and Johannesburg-listed company is keen to take in other assets and enlarge its organic growth strategy into a corporate strategy that puts it into the midtier category of Southern African diamond mining.

On the funding of such aspirations, Campbell reports on the favourable current appetite in the diamond market and of an investment market that looks for the kind of performance that Rockwell has begun to demonstrate.

The industry is currently underpinned by consistently strong diamond pricing, especially for larger stones, and Campbell points to Rockwell’s marketing of a 109 ct vivid yellow stone as being reflective of the supportive economics.

“We’re talking to a number of people,” says Campbell on the ambition of Rockwell to be a midtier operator.

In the last three years, the company has preferred to stress its own balance sheet rather than go to the market to raise equity capital; in the next three, it may opt to tap the market instead as it emerges from its current net loss position and reaches its target of processing 500 000 m³ a month.

In the 12 months to February 28, net loss was narrowed to $10.4-million from $13.8-million in 2013, against the background of operational profitability, which reached $6-million before amortisation and depreciation, being a priority.

Operational profit was up from $1.1-million in 2013, helped by costs being cut 29% to $4.4-million.

Cash and cash equivalents of $1.3-million remained after capital investments of $8.7-million in new processing capacity, and net cash flow from operating activities was $2.6-million before investment in new plant.

The Middle Orange River assets are now the bedrock of the company.

Throughput at the company’s flagship Saxendrift operation in the Middle Orange region has been increased from 120 000 m³ a month three years ago to nearly 180 000 m³ a month now.

In the same period, the lossmaking Klipdam has been sold and the cash bleed stopped at Tirisano, which is now making money for Rockwell after its conversion into a royalty mining operation.

Two new Middle Orange mines have been created in Saxendrift Hill Complex, which is running at 80 000 m³ a month, and Niewejaarskraal at just under 100 000 m³ a month, also in the Middle Orange.

Processing at a rate of 500 000 m³ a month is expected to provide regular predictable frequency of large quality diamonds, in the range of the five rough 115 ct-plus gems recovered in the Middle Orange in fiscal 2014, the largest being 287 ct.

“It’s like a stock exchange portfolio. If you invest in two, or three stocks, you may do well one quarter and you may do very poorly one quarter, and it’s the same with diamond mining in the Middle Orange with alluvial diamonds.

“We have worked out that we need at least three processing plants, each of which must have at least two open faces to give you that kind of optionality.

“We’re, let’s say, three-quarters of our way towards that half-a-million cubic metres a month. We started at 120 000 m³ three years ago and we’re now up to just over 350 000 m³ a month," Campbell tells Mining Weekly Online in the attached video interview.

Next will be to study the possibility of expanding Niewejaarskraal to 150 000 m³ a month while using the phased approach to bring Wouterspan up to 350 000 m³ throughput a month is being studied.

Revenue increased 39% year-on-year to $45.2-million in the 12 months to February 28, made up of $41.1-million from diamond sales – which were 52% up – and $4.1-million in beneficiation income.

Additional future revenue potential is provided by more than 6 000 ct in the beneficiation pipeline.

Royalty mining contracts delivered net royalties of $1.2-million from five Tirisano contracts.