Pala Sets the Record Straight on Rockwell in the Face of Minority Directors' Flip-Flops

9:28 AM ET, May 25, 2009

TORONTO, May 25, 2009 (BUSINESS WIRE) -- Pala Investments Holdings Limited ("Pala") today sets the record straight on Rockwell Diamonds Inc. (RDI) and highlights the recent flip-flops of the Minority Directors (David Copeland, John Bristow and Mark Bristow).

In an abrupt reversal, the Minority Directors now favour a rights offering. This is particularly remarkable given that since February and as recently as late April the Minority Directors have repeatedly proposed a private placement as the sole means of conducting a financing for Rockwell. Only after Pala called the shareholders meeting and publicly enumerated the reasons for a rights offering did the Minority Directors reverse course and announce their new-found support for a rights offering.

In a second major flip-flop, the Minority Directors have now suddenly back-pedaled on the $8 million to $10 million financing sought since February. Pala believes the reason that the Minority Directors are now proposing to raise only $3.5 million is to avoid the required shareholder approval for a larger more dilutive offering, which they know they are unlikely to receive.

Equally remarkable, in the context of a rights offering, the Minority Directors have actually publicized their willingness to pay substantial "commitment fees" rewarding outside guarantors for buying up Rockwell's shares at a pittance while further diluting existing shareholders. Such an unnecessary commitment fee would only serve to enrich the outsider while raising the cost of equity for Rockwell.

"The Minority Directors previously pushed for a private placement, but now echo Pala's original call for a rights offering. They were beating the bushes for $8 million to $10 million, now suddenly they appear ready to settle for as little as $3 million," said Jan Castro, Managing Director of Pala Investments AG, advisor to Pala. "Do they really have any idea at all how much money Rockwell needs or how best to raise it?"

"Clearly, the Minority Directors are scrambling to react to situations that have long ago eluded their control or understanding," said Mr. Castro. "The company needs new leadership. The three new independent South African director nominees, combined with the majority of the existing board, will bring the experience and capabilities required to properly assess Rockwell's financial needs, conduct an appropriate financing and restructure Rockwell."

Additional information on these matters and details about the upcoming Rockwell shareholders' meeting can be found in the Proxy Circular mailed to shareholders on May 20, 2009, and available on www.sedar.com.

About Pala

Pala Investments Holdings Limited, based in Jersey, Channel Islands, is a US$1.0 billion multi-strategy investment company with a particular focus on mining and natural resource companies in both developed and emerging markets. Pala Investments' exclusive investment advisor, Pala Investments AG, is a Switzerland-based team with extensive experience within the mining and natural resource sectors. Pala Investments seeks to assist companies in which it has long-term shareholdings by providing strategic advice and innovative financing solutions.

Certain statements in the press release are forward-looking statements and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. These statements generally can be identified by the use of forward-looking words such as "may", "should", "will", "could", "intend", "estimate", "plan", "anticipate", "expect", "believe" or "continue", or the negative thereof or similar variations. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from the expectations of Pala include, among other things, general business and economic conditions globally or in particular geographic regions in which Rockwell and its subsidiaries conduct business, the inability to attract and retain qualified employees, competition, regionally and internationally, changes in law, disruptions in business operations due to reorganization activities, and interest rate and foreign currency fluctuations. Such forward-looking statements should therefore be construed in light of such factors, and Pala is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Information concerning Rockwell contained in this press release and has been taken from, or is based upon, publicly available information and records on file with Canadian securities regulatory authorities and other public sources. Rockwell has not reviewed this press release and has not confirmed the accuracy and completeness of the information in respect of Rockwell contained herein. Although Pala has no knowledge that would indicate that any statements contained herein concerning Rockwell taken from or based on such documents and records are untrue or incomplete, neither Pala, nor any of its affiliates, nor any of their respective directors or officers, assumes any responsibility for the accuracy or completeness of such information or for any failure of Rockwell or its directors or officers to disclose events or facts which may have occurred or which may affect the significance or accuracy of any such information but which are unknown to it.

SOURCE: Pala Investments Holdings Limited

Pala Investments AG
Colin Murray
+41-41-560-9070
or
Northern Shareholder Services
Craig Rogers
1-416-644-8187
or
Edelman Public Relations
Katie Clark
1-416-979-1120 ext. #231

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