A reminder to the shareholders to keep the faith

I've been following 2 diamond stocks over the last 6 months this one here and HW (Harry Winston ) wich was " supported " by Kinross about a mont ago . Kinross took a participation in HW as was discussed and stated on Kinross and HW hubs, and it's been a very good deal for bth of them so far in my opinion .

The reason i refer to them here is because i finaly see some action with Rockwell even though to my knowledge nothing is goin' on with them .

Now let's consider some facts about them

1- Like most in their industry they have shut down operations during the downturn , laying off people ( According to retrenchment notices sent to Solidarity by Rockwell Diamonds, the international diamond company that mines alluvial diamonds in the Northern Cape planned to retrench almost 55 percent of its approximately 640 employees ) see related articles below

2- They have or had a little money (At the end of November the company had cash reserves of C$6.8 million) see related articles below

3- They have or had as of last november something as good as money in store holding a few thousand carats of diamond waiting for prices to increase ( 5619.24 carats as of 2009 ) see related articles below.

As we know the price of gold usualy goes in the opposite direction from the price of diamond , actualy the price of gold is a refuge in times of economic hardship and is a commodoty for the jewl industry . It's use as a refuge is well known and boosts it's value tremendously when those times come and when high inflation shows it's ugly face .

Few people doubt that inflation will hit us in the years to come but in months ahead the market starts thinking that inflation is not to be feared so much as deflation ,so the price of gold should somehow level down until inflation appears on a shorter horizon on the radar .Yet the price of gold should'nt deflate so much since fears about the whole economy and financial problems will remain high for still quite a while even as the stock market inches it's way up . Bearish sentiment will remain strong for quite a while and downturn will surely happen along the way .

But as for the diamond industry even though we can't expect to see it back to where it was in 2007 and 2008 before quite a while , we should nevertheless see some gain over the wedding season while withnessing some M&A through the industry ( Wonder Nyanjowa, Frost & Sullivan metals and mining analyst, said: "Resource prices are likely to pick up at the tail end of the second quarter once the global economic slowdown starts lifting, but not by the substantial margins that will spur increased production." ) see related articles below.

A few months ago everybody talked about the battered mining industry as being the worst hit , lately some among them saw a lot of improvement as the economy seemed to creep out of the hole and stimulus packages especialy in China seemed to improve the oulook of commodities . Yet diamond miners have probably been hit even worse then most and the swift reaction from DeBeers and others to shut down production and rationalise their business must have reduced the " official " world production and surpluses .

All in all it's a industry that should gain quite a bit if the markets keep going up and fears slowly subside 'cause it has lost a lot .

The example of HW ( Harry Winston ) is quite remarkable but also unique because of their association with Kinross and DeBeers and also because it's much larger then RDI . Yet many good things could happen to RDI over the course of the summer .

BUSINESS Times

Rockwell Diamonds production up 7.2% I-Net Bridge Published:Jan 15, 2009

Alluvial miner Rockwell Diamonds reported a 7.2% increase in diamond production in the three months to end November 2008.

Rockwell reported third quarter production of 5,981.25 carats from mining operations but sold only 1,997.94 carats at an average price of US$6,762.76 per carat for revenue of US$13.5 million.

The company said it elected to hold 5,619.24 carats worth US$38 million in inventory "due to its strong cash position".

Cost of sales and amortisation totalled C$6.5 million and net general and administrative expenses amounted to C$1.9 million, but were offset by a net tax recovery of C$134,035.

This resulted in an operating profit of C$9.5 million and a net profit of C$4.5 million or C$0.02 per share.

Diamond production was, however, down 11% for the nine months to end November 2008.

The company produced 16,558.09 carats during the nine-month period compared with 18,614.77 carats in the nine months to end November 2007.

Sales over the nine months amounted to 11,965.58 carats, which were sold at an average price of US$2,538.43 per carat yielding revenue from sales of US$30.4 million.

Cost of sales and amortisation totalled C$24 million and net general and administrative expenses amounted to C$6.5 million.

This was offset by a net tax recovery of C$1.2 million and the loss on the sale of a discontinued operation of C$203,338.

An operating profit of C$9.5 million was reported for the period with net profit coming in at C$1.4 million or C$0.01 per share.

During the nine months the company successfully commissioned its fourth operation at Saxendrift near its Wouterspan operations, which is located along the bank of the Middle Orange River.

The company has recently implemented a rigorous and regular review of all aspects of the business, resulting in the decision to suspend the Wouterspan operations.

At the end of November the company had cash reserves of C$6.8 million

"Rockwell is encouraged by its strong results, cost reductions, and profitability achieved for the three and nine month period to November 30 of fiscal 2009, in spite of the considerable challenges faced by the Company during the overall period," said Rockwell president and CEO John Bristow.

He said he was content that the company had taken steps to address depressed conditions in the international diamond market.

Rockwell is closely monitoring conditions and results of rough diamond tenders conducted by other producers, Bristow said.

"We are addressing the latest challenges, which are driven by turbulence in the banking sector, capital markets, and diamond trade, and are mindful of their impact on the company’s activities and financial performance in the short to medium term," he added.

Rockwell’s shares had not yet traded by 13:26 on Thursday. The shares closed at 90 cents on the JSE on Wednesday.

1200 job cuts loom over diamond mines I-Net Bridge Published:Jan 16, 2009

More than 1,200 job cuts are looming in South Africa’s diamond mining industry, trade union Solidarity said.

"While retrenchments are already planned across all industries, the relatively small local diamond industry is being severely affected," the trade union said in its latest weekly newsletter Solder.

Solidarity said it has already received retrenchment notices from five diamond companies, with three of these issued only this week.

"This brings to 1,200 the number of planned retrenchments in the local diamond industry," the trade union said.

Solidarity said notices were received this week for the retrenchment of about 500 employees at Sandstraat Eksplorasie, Diamond Core Mining and Exploration, and Rockwell Diamonds.

Last year notices were issued for the retrenchment of more than 700 employees at Namakwa Diamonds and Petra Diamonds.

News has also emerged that diamond giant De Beers is looking at retrenchments across its operations, including South Africa.

The company is reportedly planning to cut 1,415 jobs. It is unclear at this stage whether these only apply to De Beers’ South African operations, where it employees 3,500 people.

De Beers spokeswoman Lynette Gould told the National Jeweller Network on Thursday that De Beers would endeavour to minimise job losses wherever possible through innovative solutions like production holidays, fewer shifts, part-time and flexible working.

"Diamond companies blame the planned retrenchments on the sharp drop in diamond prices since October last year. However, Solidarity believes that the current diamond prices compare favourably with those recorded in the first half of 2008," Solidarity said.

"October was, however, a very good month for diamond prices and cannot really be used as a benchmark for prices in general," it added.

More miners face big axe Kea’ Modimoeng Published:Jan 19, 2009

RETRENCHMENTS in the diamond-mining industry seem to be on the increase due to the current economic conditions.

Trade union Solidarity received three Section 189 (retrenchments) notices from diamond companies last week.

According to these notices, nearly 500 employees could soon be retrenched at Rockwell Diamonds, Diamond Core Mining and Exploration, and Sandstraat Eksplorasie — which are all based in the Northern Cape.

Last month, the union received notices for retrenchments of more than 700 employees of Namakwa Diamonds and Petra Diamonds.

The latest additions bring the number of affected employees in the diamond industry to more than 1200.

On Friday, Business Times reported that diamond giant De Beers was mulling the retrenchment of 1415 employees, which the company denied.

On Friday afternoon, it confirmed that it planned to begin consultations with trade unions over job cuts at its six SA operations.

It said it would only know how many people would be affected by the job cuts once formal consultations got under way at each site.

Jaco Kleynhans, Solidarity’s spokesman, said even though companies were using the diamond prices as a reason for retrenchments, market prices were not exceptionally low.

He said: "Current diamond prices compare very favourably with those recorded in the first half of [last month]. However, October was an exceptionally good month for diamond prices and cannot really be used as a benchmark for prices in general.

"In this country, diamond mining is concentrated in the Northern Cape and these retrenchments will affect the community badly as there aren’t other opportunities."

According to retrenchment notices sent to Solidarity by Rockwell Diamonds, the international diamond company that mines alluvial diamonds in the Northern Cape planned to retrench almost 55 percent of its approximately 640 employees.

Sandstraat Eksplorasie, a diamond exploration company in the Northern Cape, plans to retrench about 78 people — nearly two-thirds of its workforce.

Diamond Core Mining and Exploration also informed the union of its plans to retrench all 59 of its staff members and says that due to the overhead costs at the company, it is not economically viable to continue mining activities.

According to a Frost & Sullivan Growth Partnership Company’s mining analysis: "South African mining companies will have to place greater emphasis on efficiencies and cost containment this year, as the effects of the economic downturn continue to be felt on the commodities market.

"High cost marginal operations will be dropped as mines look to preserve cash and ensure profitability."

Wonder Nyanjowa, Frost & Sullivan metals and mining analyst, said: "Resource prices are likely to pick up at the tail end of the second quarter once the global economic slowdown starts lifting, but not by the substantial margins that will spur increased production."

The

Tuesday January 13 | 2009