VANCOUVER , June 26, 2014 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) announces its quarterly production and sales update for the three months ended May 31, 2014 :

All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified.

Corporate:

• Achievement of two million lost time injury free hours ("LTIFH") of operation at Saxendrift ( June 16, 2014 ) and one million LTIFH at Niewejaarskraal ( May 29, 2014 );
• Revenues from Diamond sales (excluding beneficiation) up 15% to $8.8 million ;
• Total carat sales were up 34% to 6,677 carats, sold at an average price of US$1,312 per carat (which is down 14% from a year ago);
• Substantial inventory of 5,237 carats (including royalty contract miners inventory of 2,271 carats) carried over into second quarter of fiscal 2015; and
• MOR focused growth strategy remains on track.

The Company's own internal operations¹ in the Middle Orange River² ("MOR"):

• Carat production increased 89%;
• Carat sales grew 30%;
• Average grade increased 59% to 0.62 carats per 100 m³; and
• Four +50 carat diamonds recovered including a high quality yellow MOR 103.08-carat stone.

Company's total properties³:

• Total volumes of gravel processed and carat production increased by 26% and 90% respectively;
• Total carat sales increased by 34%; and
• Average stone size increased 18% to 4.4 carats from 3.8 carats in the prior year.

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¹Includes contribution from mines operated and managed by Rockwell. The Company's own internal operations for the first quarter of fiscal 2015 comprise gravels mined at Saxendrift, Saxendrift Extension (processed at Saxendrift), Saxendrift Hill Complex and Niewejaarskraal. The fiscal 2014 comparative included the production of Saxendrift, Saxendrift Extension, Saxendrift Hill Complex (in production ramp up) and Klipdam (sold at the end of March 2013 ).
² Middle Orange River operations included the production and sales of Saxendrift (incorporating Saxendrift Extension), Saxendrift Hill Complex and Niewejaarskraal in the first quarter of fiscal 2015 while the prior year comprised of Saxendrift (including Saxendrift Extension) and Saxendrift Hill Complex (in production ramp up).
³ Includes contribution from mines operated and managed by Rockwell as well as the royalty mining contractors' contribution.

Analysis:

Total carat production grew 90%, made up of 4,362 carats from own operations and 4,800 carats from royalty mining contractors. The Company reported a 26% increase in first quarter volumes of gravel processed to 1,13 million m³, of which 703,837m³ was mined from its own MOR operations and the balance from its royalty mining contractors operating at Tirisano and the joint venture mining agreement at Kwartelspan.

Rockwell's MOR operations reported a 30% rise in carat sales and a 5% increase in value of sales to US$6.3 million . The value of sales from royalty mining contractors increased 132%, generating US$2.5 million , of which 12.5% or US$312,576 accrues to the Company.

Rockwell's MOR volume production increased by 19% while the grade was up 59% from its three producing mines in the region. Carat production rose 89% as volumes processed at Niewejaarskraal gained momentum, and provided diversification benefits, mitigating the impact of lower earthmoving availabilities at Saxendrift and partial screen failure at Saxendrift Hill Complex ("SHC") which impacted quarterly volumes at these mines but which have subsequently being addressed.

Commenting on first quarter production and sales James Campbell , CEO and President said:

"Our MOR operations recently reached two significant safety milestones, namely 2 million lost time injury free hours ("LTIFH") of operations at Saxendrift on June 16, 2014 , the highest ever recorded at Rockwell, and 1 million LTIFH at Niewejaarskraal on May 29, 2014 . These achievements validate our efforts to maintaining fit for purpose safety practices at all our operations.

"Rockwell's first quarter performance shows continued growth in total volumes of gravel processed and carat production from Company properties, with increases of 26% and 90% respectively. These results are underpinned by our increasingly diversified production profile in the MOR where we now have three producing MOR mines, all of which have multiple mining faces. MOR carat production increased 89% while carats sold were up 30% and we entered the second quarter with 2,966 carats of high quality rough MOR diamonds in inventory.

"We saw a progressive improvement in production as a result of sticking to our MOR focused strategy during the first quarter. These culminated in all time record carat production for the Company during the month of May 2014 . Contributing to this milestone was the improving performance at Niewejaarskraal where we mined according to the new mine plan and completed the production ramp up. These significant improvements include a reported grade of 0.57 carats per 100m³ and a first quarter average carat value of US$2,408 , both in line with plan. Saxendrift's results were impacted by lower earthmoving availabilities due to its aging fleet, but we are addressing this through the fleet renewal programme which is now well into the implementation phase. Volumes at SHC were affected by a mechanical breakdown of our front-end screen. We mitigated this breakdown by processing old recovery tailings and bypassing the front end for six weeks whilst the equipment underwent repairs.

"Having completed the Niewejaarskraal ramp up, we now have a steady state monthly production throughput capacity of 340,000m³ and are now turning our attention to delivering the remaining capacity upgrades to reach our target of 500,000m³ per month. Improving earthmoving availabilities at Saxendrift should provide additional volumes to increase this mine's throughput by 20,000m³ per month and we are also considering our options to increase capacity at Niewejaarskraal. Commencement of operations at Wouterspan is now also on our radar screen."

Commenting on the appointment of Rockwell's new CFO James Campbell , CEO and President explained:

"On behalf of the Board and the Company, I extend our best wishes to Gerhard Jacobs , our outgoing CFO and thank him for his contribution to the Company during his four year tenure. We also welcome John Shelton , who will assume the position with effect from July 21, 2014 . The high calibre of candidates who applied for this position were a clear demonstration of the progress made by Rockwell in its turnaround during the last three years. We welcome John and express our confidence that with his wealth of experience in the Diamond sector, he will make a meaningful contribution to the Company, as we embark on the next phase of our growth trajectory."

First quarter operational update:

Volume and carat production for the Company's operational mines for the quarter ended May 31, 2014 :

*     "Contractors' mining" refer to independent royalty contractors processing gravel for their own risk and reward. Carats recovered are then sold through the Company's tender process. The Company retains the responsibility for Diamond security and sales and receives royalty income of 12.5% on these diamonds sold with the balance of the revenue accruing to the contractors.

Diamond sales and revenue for the Company's operations for the quarter ended May 31, 2014 :

* "Contractors' carat sales" refer to independent royalty contractors processing gravel for their own risk and reward. Carats recovered are then sold through the Company's tender process. The Company retains the responsibility for Diamond security and sales and receives royalty income of 12.5% on these diamonds sold with the balance of the revenue accruing to the contractors.

Saxendrift Operations:

• Quarterly mining volumes were once again impacted by longer haulage distances from Saxendrift Extension and earthmoving vehicle availability due to the aging equipment fleet at Saxendrift. However, the fleet improvement programme was approved and implementation commenced during the quarter comprising fully managed maintenance leases for the new fleet with no upfront capital investment as well as mid-life overhauls for the dozer fleet. This will enable Rockwell to focus on its core mining and processing activities at this mine, including higher and more consistent processing volumes.
• The mine's average grade improved 45% to 0.64 carats per 100m³, offsetting the lower volumes of gravel processed and underpinning a 15% increase in carat production from the prior year, to 2,345 carats.
• Carats sold from the Saxendrift operation declined 18% to 1,765 carats at an average price of US$2,120 ; down 17% from last year as a result of product mix. For the first quarter the mine showed a 32% decrease in revenue from Diamond sales to US$3.7 million (excluding beneficiation).
• Notable stones recovered at the Saxendrift Mine processing plant included 42 rough diamonds exceeding 10 carats, of which 22 exceeded 20 carats. The three largest stones weighed 65.13 carats, 53.61 carats and most notably a 103.08 carat yellow Diamond.

Saxendrift Hill Complex:

• At SHC, quarterly volumes of gravel processed were 12% lower than in the prior year. Gravel throughput was impacted for a six-week period during the quarter due to mechanical failure of the de-sanding screen. In spite of the mechanical failure, the Bulk X-ray recovery system continued to perform on plan.
• While the equipment was undergoing repairs, old recovery tailings were processed. SHC reported a grade of 0.66 carats per 100m³ and accordingly carat production increased 178% to 748 carats.  This improvement in grade and carat recovery is chiefly due to the over recovery of additional small diamonds from the old recovery tailings.
• SHC delivered a threefold increase in carat sales to 550 carats from the prior year when the mine was still in its ramp up phase. These were sold at an average price of US$1,728 per carat, generating revenue from Diamond sales for the period of US$950,867 .
• Notable stones recovered at SHC during the first quarter included 11 rough diamonds exceeding 10 carats including, most notably one 57.26 carat Diamond.

Niewejaarskraal:

• Operations at the 100,000m³ per month Niewejaarskraal processing plant were bedded down, including the newly installed In-Field Screen ('IFS') and Bulk X-ray system. The total volume of gravel processed in the first quarter amounted to 222,613m³ (up 37% from previous quarter during which ramp up was still in process).
• Mining according to the new 18-month mine plan which was implemented in mid-February 2014 delivered the expected results. The mine produced 1,269 carats during the first quarter, representing a grade of 0.57 carats / 100m³ which is within the long term average grade expectation for the mine.
• Sales from Niewejaarskraal amounted to 652 carats with total revenue of US$1.5 million at an average price of US$2,408 per carat. The Company is pleased that carat values continued to improve in the first quarter and reflected the higher carat values that characterise the MOR.
• Notable stones recovered at Niewejaarskraal during the first quarter included 24 plus 10-carat rough diamonds with three stones exceeding 30 carats.

Royalty Mining Contractors

• The royalty mining contractors operating on the Tirisano property continued to perform consistently in the first quarter while the recently implemented joint venture mining arrangement at Kwartelspan also commenced operations. Total volumes of gravel processed amounted to 425,808m³ from which 4,800 carats were recovered.
• Total revenue generated by the contractors from Diamond sales amounted to $2.5 million ( $312,576 royalty income accruing to Rockwell) from the sale of 3,710 carats at an average price of $674 per carat.
• Contractors recovered four stones exceeding 10 carats in the first quarter.

Subsequent event: Appointment of new Chief Financial Officer

The Company announces that Gerhard Jacobs has elected to take an early retirement from the Company with effect from July 20, 2014 . He had previously communicated his decision to step down due to close family health issues, but agreed to stay indefinitely until a suitable replacement was found. During his four-year tenure, Gerhard played a positive role in Rockwell's corporate turnaround and significantly improved the standard of the Company's financial reporting and regulatory compliance. The Company expresses its gratitude to Gerhard for his contribution at Rockwell and wishes him well in the future.

Rockwell is pleased to announce the appointment of John Shelton (50) as the new CFO with effect from July 21, 2014 . John is a Chartered Accountant with 25 years experience in the Diamond sector with De Beers. His career at De Beers culminated in his role as Group Accountant (from 1998 to 2014) during which time he contributed to De Beers' corporate activities. He has served on various boards during his tenure with De Beers. John is married to Bridget; they have two teenage sons who are schooling in Johannesburg .

About Rockwell Diamonds:

Rockwell is engaged in the business of operating and developing alluvial Diamond deposits, with a goal to become a mid-tier Diamond production company. The Company's flagship mine is the Saxendrift Mine, in the Middle Orange River. It has recently built two new internally funded mines in the Middle Orange river region, namely the Saxendrift Hill Complex and the Niewejaarskraal Mine which are both in production. Rockwell also has a development project and a pipeline of earlier stage properties with future development potential. The operations are based on high throughput processing capability and Saxendrift has among the lowest unit costs in the industry as a result of implementing fit for purpose technologies.

The Company is known for producing large, high quality gemstone comprising a major portion of its Diamond recoveries that is enhanced through a beneficiation joint venture that enables it to participate in the profits on the sale of the polished diamonds.

Rockwell also evaluates merger and acquisition opportunities which have the potential to expand its mineral resources and production profile and to provide accretive value to the Company.

No regulatory authority has approved or disapproved the information contained in this news release.

Forward Looking Statements

Except for statements of historical fact, this news 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 as 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 home jurisdiction filings that are available at www.sedar.com.

SOURCE Rockwell Diamonds Inc.