JOHANNESBURG (miningweekly.com) – JSE- and TSX-listed alluvial diamond producer Rockwell Diamonds’ ambition to return the promising Niewejaarskraal mine to production was progressing well within budget and on schedule.

Speaking to Mining Weekly Online, Rockwell president and CEO James Campbell said the operation was expected to deliver its first diamond early in June, while ramping up to the Phase 1 initial full production of 115 000 m³ a month by September.

The company would consider ramping up monthly production at the operation to 150 000 m³ and then 200 000 m³ following the completion of Phase 1.

The diamond producer had fast-tracked the feasibility study on the idle Northern Cape mine, located about 170 km from Kimberley, after receiving an “offer it could not refuse” on its Klipdam asset.

Rockwell, which bought the mothballed Niewejaarskraal mine from Trans Hex, in 2008, approved the recommissioning of the mine in April, as part of its plan to grow the collective processing capacity of its Middle Orange River operations to 500 000 m³ a month.

The group, which aimed to inject the C$2.5-million (R23-million) cash proceeds from the sale of the Klipdam operation into the C$2.2-million project, refurbished the Trans Hex-constructed processing plant, which had been on care and maintenance since 2007.

Rockwell, which had been funding the project through working capital, was preparing the mine’s slimes, overburden and water dams and other related activities in the run-up to mining.

The mine’s dense medium separation (DMS) plant would be supplemented by four 16-foot rotary pans from the now-closed Tirisano mine, as well as equipment from Klipdam that was not sold.

Rockwell would also transfer the current Klipdam production team, as well as the current Klipdam contract miner CML Operations, to Niewejaarskraal.

Campbell noted that only seven of Klipdam’s 220 employees accepted a voluntary retrenchment package offered to them as the operation changed owners. The remaining employees transferred to the emerging operation in the Northern Cape.

The Niewejaarskraal development was central to Rockwell’s expansion of its Middle Orange River operations targeted monthly output of 500 000 m³.

“With three productive mines, namely Saxendrift, the Saxendrift Hill complex – currently in the production ramp-up phase – and Niewejaarskraal, we expect to reach three-quarters of this target by year-end,” Campbell pointed out.

The existing Saxendrift and emerging Saxendrift Hill complex projects would collectively process 250 000 m³ a month.

Further processing capacity could be added after the emerging nearby Wouterspan alluvial diamond project was deemed economical earlier this month by a preliminary economic assessment study.

The Niewejaarskraal deposit’s average grade was 0.7 ct/100 m³ and had the potential to produce higher recovery grades and slightly better projected average carat values than Saxendrift.

Rockwell believed the ramp-up to full production of the Saxendrift Hill and Niewejaarskraal operations would improve the company’s access to short-term debt facilities and cash holdings even further.

The company held net cash and cash equivalents of C$2.8-million as at February 28, 2013, and was currently generating sufficient cash holdings and had access to adequate short-term debt facilities, to cover cash operating costs and group overheads.

“We believe our track record in the Middle Orange River region positions us to start delivering positive net returns by the end of fiscal 2014,” added Campbell.

Rockwell on Thursday reported a fourth-quarter loss of C$3.6-million, owing to impairments on the back of restructuring its loss-making operations and initiating a turnaround.

“Although the fourth quarter was challenging, we have taken decisive action at our loss-making operations, putting us on a sounder footing for fiscal 2014,” Campbell commented.

He added that the company reported good revenue growth, but the financial performance for the three months to February was weighed down, in particular, by the full costs of retrenchments and care-and-maintenance processes at Tirisano.

Rockwell suspended operations at Tirisano in December amid labour difficulties, operational complexities and slower-than-anticipated recovery in the price of smaller diamonds.

The royalties from the two small-scale mining contracts, which allowed the mining of certain areas at Tirisano, and had, to date, yielded 727 ct, offset the care-and-maintenance costs of the mine.

A third royalty contract was inititated earlier this year, and to date, the three miners collectively process up to 80 000 m³ a month.

This would rise to 150 000 m³ a month by the third quarter of the calendar year, after two more small-sale royalty miners initiated operations.

Tirisano emerged as one of Rockwell’s biggest carat producers, attracting several offers to purchase over the past quarter, two of which were under consideration, but subject to board approval and other standard processes.

Rockwell also installed two small-scale miners at the Klipdam mine; however, the mining stopped within three months.