RAPAPORT... Rockwell Diamonds generated sales of about $4 million in July, reporting that prices for rough diamonds mined at its South Africa-based operations continued to rise, particularly for smaller stones. The junior diamond mining company conducted two sales in July, at the beginning and end of the month.
The first of the two sales sold a total of 2,485.78 carats, generating revenues of $1.8 million, for an average price of $722.18 per carat. The second sale garnered $2.2 million for 1,809.38 carats, or $1,224.58 per carat. Rockwell explained that sales prices in late July showed an increase of approximately 10 percent, from the previous sale, for small rough stones below 0.75 carats, and about 5 percent for diamonds of 0.75 to 2.49 carats. Diamonds between 2.50 and 4.79 carats achieved similar prices to the previous sale, the company reported, but for better quality goods.
The average price achieved at Rockwell tenders has been on the rise. Rockwell noted prices at $531 per carat in March, $585 a carat in May, $700 a carat in June and $1,225 per carat in late July. These increases follow the 50 percent decline in prices toward the end of 2008, when demand shrank with the onslaught of the economic downturn. In response, Rockwell suspended diamond sales between December and February and scaled back its operations. The company reported that there has been stronger interest and attendance at its diamond tenders since June, with numbers in July “approaching the levels apparent in 2008.”
Rockwell noted good demand in the 2 to 10 carat rough diamond range, with the strongest buying focused on 2 to 5 carat stones. It added that demand and prices for 3 carat rough goods have been extremely strong since March, while those for stones 10 carats and larger have remained "subdued."
John Bristow, company chief executive officer (CEO), said that he foresees a steady overall improvement in prices for Rockwell’s production during the remainder of 2009, “albeit staying well below the highs of 2008.” Rockwell’s production across its three operating alluvial mines in South Africa — Holpan, Klipdam and Saxendrift — for March through July totaled 8,747.93 carats. Bristow said the company is considering resuming operations at the Wouterspan mine as the market strengthens.
Bristow recently overcame an attempt to oust him and two other senior managers by major shareholder Pala Investment Holdings due to weak performance of the company’s shares. The stock closed Monday trading on the Toronto Stock Exchange (TSX) at 5 cents a share, down 75 percent from a year ago. After failing in its takeover attempt, Pala reduced its stake in Rockwell from about 20 percent to 8.7 percent. Bristow stressed that with monthly production of 2,400 carats and continued average prices above $1,000 a carat, "the company is cash-flow positive, and as prices improve further, Rockwell will return to profitability."
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