VANCOUVER, Jan. 14 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the

"Company") (TSX:RDI; JSE:RDI, OTCBB:RDIAF) announces financial results for the

three and nine months ended November 30, 2009. Currency values are presented

in Canadian dollars unless otherwise indicated.

Rockwell is engaged in alluvial diamond production with focus on the

mining and development of alluvial diamond deposits that yield high value

gemstones.

In 2010, Rockwell has operated the Holpan, Klipdam, and Saxendrift mines

and its fourth operation, the Wouterspan mine, is currently on care and

maintenance. The Company has implemented a number of key initiatives at its

operations in fiscal 2010 resulting in better mining and processing plant

efficiencies, increased production, higher diamond recoveries, lower operating

costs, and improved overall operating performance.

The improved operating efficiencies implemented by the Company, in

combination with improving diamond prices, resulted in profitable operations

in the three months ended November 30, 2009.

Production of exceptional stones

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- Three large stones recovered in September/early October: a 122-carat

rounded octahedral stone of light yellow Cape colour with a number of

inclusions; a 120-carat irregular rounded and frosted stone which

appears to be of good white colour and clarity, and a 105-carat high

quality rounded, white stone of excellent clarity at Saxendrift.

- Three high quality coloured diamond recovered in October: a 30.54

carat salmon-pink stone and two intense fancy yellow stones of 35.54

and 36.32 carats were recovered at Saxendrift.

- Three greater than 50-carat stones recovered in November - a 60.8

carat rounded off-white stone at Saxendrift and a 52.4 carat light

yellow octahedral stone of excellent clarity at Holpan.

>>

Increasing diamond prices

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- Average price received during the three months ended November 30,

2009 was US$1,269 per carat, a 48% increase over the US$855 per carat

in the previous three month period.

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Operating costs improved and stabilizing

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- The average operating cash cost for the Company's three operations

over the nine months in fiscal 2010 is US$2.73 per tonne. The average

cost for all the operations including rehabilitation, hire purchase

payments and royalties is US$4.44 per tonne.

Operations Overview

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In the three months ended November 30, 2009:

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- 7,963.28 (2008: 5,981.25) carats were produced at the Holpan/Klipdam

and Saxendrift operations. 5.3 carats were recovered from the

Wouterspan final recovery plant during auditing and reprocessing of

concentrate material.

- 9,409.94 carats were sold at an average price of US$1,268.83 per

carat.

- Sales of $12.8 million, together with other sales of $0.09 million,

resulted in $12.9 million in revenue.

- Cost of sales of totalled $7.1 million and amortization totalled

$3.3 million.

- An operating profit of $2.5 million was realized for the period.

- Net general and administrative expenses amounted to $1.6 million,

interest amounted to $0.3 million and taxation was $0.05 million.

- A profit of $ 0.5 million or 0.002 cents per share was realized for

the period.

>>

In the nine months ended November 30, 2009:

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- 19,920.44 (2008: 16,558.09) carats were produced from operations at

Holpan/Klipdam, Wouterspan and Saxendrift.

- 20,646.13 carats were sold at an average price of US$969.17 per

carat.

- Tender sales of $21.9 million, plus beneficiation profit share of

US$0.5 million and other sales of $0.3 million, resulted in total

revenue of $22.7 million.

- Cost of sales of $16.7 million and amortization of $8.3 million. As a

result, an operating loss of $2.3 million was realized for the

period.

- Net general and administrative expenses amounted to $4.8 million, and

net interest expenses were $1.1 million, offset by a net tax recovery

of $1.6 million. As a result a loss of $6.1 million or $0.026 cents

per share was realized for the period.

>>

Diamonds in inventory at November 30, 2009 totalled 2,800.51 carats.

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Production, Sales and Inventory

>>

The following is a comparison of the nine months ended November 30, 2009

with the nine months ended November 30, 2008.

<<

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PRODUCTION

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9 months ended 9 months ended

November 30, 2009 November 30, 2008

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Opera- Volume Average Volume Average

tion (cubic Carats grade (cubic Carats grade

meters) (carats per meters) (carats per

100 cubic 100 cubic

meters) meters)

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Holpan 653,992 4,913.61 0.75 512,510 3,869.78 0.76

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Klipdam 737,369 7,945.42 1.08 668,674 6,520.90 0.98

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Wouter-

span 0 14.08 0.00 552,293 3,896.42 0.71

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Saxen-

drift 905,582 7,047.33 0.78 175,441 2,270.99 1.29

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Total 2,296,943 19,920.44 0.86 1,908,918 16,558.09 0.87

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SALES, REVENUE AND INVENTORY

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9 months ended November 30, 2009

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Operation Sales Value of Average Inventory

(carats) Sales value (carats)

(US$) (US$ per

carat)

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Holpan 5,252.96 2,052,602 390.75 501.73

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Klipdam 8,634.08 5,109,645 591.80 1,053.65

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Wouterspan 589.68 280,187 475.15 0.00

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Saxendrift 6,169.41 12,567,081 2,037.00 1,245.13

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Total 20,646.13 20,009,515 969.17 2,800.51

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9 months ended November 30, 2008

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Operation Sales Value of Average Inventory

(carats) Sales value (carats)

(US$) (US$ per

carat)

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Holpan 2,946.42 3,958,748 1,343.58 1,287.79

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Klipdam 4,825.13 18,779,616 3,892.04 2,050.74

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Wouterspan 2,673.86 4,360,884 1,630.93 1,529.26

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Saxendrift 1,520.17 3,274,483 2.154.02 751.45

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Total 11,965.58 30,373,731 2,538.43 5,619.24

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* Included in the Klipdam sales are 322.02 carats at $122,973 from

Windsorton, a prospecting right

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INVENTORY (carats)

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Operation Rough Production Rough Rough

Diamond Diamond Diamond

Inventory Sales Inventory

Beginning End of

of Period Period

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Holpan 841.08 4,913.61 5,252.96 501.73

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Klipdam 1,742.31 7,945.42 8,634.08 1,053.68

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Wouterspan 575.60 14.08 589.68 0.00

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Saxendrift 367.21 7,047.33 6,169.41 1,245.13

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Total 3,526.20 19,920.44 20,646.13 2,800.51

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* Included in the Klipdam inventory are 199.89 carats from Windsorton,

a prospecting right

Profit and Loss

>>

The Company realized a loss of $6.1 million for the nine month period

ended November 30, 2009 compared to a loss of $1.5 million for the comparable

period in the prior year. The loss was due weakness of diamond prices through

the first two quarters of fiscal 2010. Though prices remained weak during this

period, there has been an overall improvement in prices of about 49% from the

initial sharp fall in the last quarter of fiscal 2009. During the nine months

ended November 30, 2009, the Company realized rough diamond sales of $22.4

million compared to $33.4 million for the comparable period in the prior year.

As noted above, the credit crunch and ensuing recession resulted in

prices falling sharply in late calendar 2008 (fourth quarter of fiscal 2009).

Sales prices achieved in the Company's first fiscal quarter of 2010 were below

the cost of production; however, prices achieved in the second quarter covered

the cost of production but were not sufficient to cover fixed overheads in

full and lease payments. As the Company was required to maintain liquidity,

sales were made below production cost. In July and August (second quarter

fiscal 2010), cash inflows from sales exceeded outflows from operating

expenses, though overall inflows were not sufficient to cover the full costs

of the lease payments on a limited amount of earth moving equipment which

resulted in the Company invoking the payment deferral with Komatfin, which

ended on the November 1. Income generated in November has been sufficient to

cover all the third quarter costs and significant arrear creditors, including

ZAR11.4 million ($1.6 million) for outstanding royalties. The November income

resulted in a third quarter operating profit.

Mining costs for the nine months ended November 30, 2009 amounted to

$16.7 million (nine months ended November 30, 2008 - $15.9 million), which

excludes amortization and depletion charges of $8.3 million (nine months ended

November 30, 2008 - $8.1 million).

Exploration expenses (excluding stock-based compensation) decreased to

$93,985 for the nine months ended November 30, 2009 compared to $367,170 for

the same period in the prior year. This decrease is due to less engineering

activities and property assessment fees performed during the nine month period

ended November 30, 2009 on South African diamond properties.

Administrative costs for the nine months ended November 30, 2009

decreased to $2.3 million from $2.5 million incurred for the same period in

the prior year, primarily the result of controlling costs and reducing

overheads. Travel and conference expenses amounted to $152,474 for the nine

months ended November 30, 2009 compared to $458,782 for the same period in the

previous year. Legal, accounting and audit expenses for the nine months ended

November 30, 2009 amounted to $884,124 compared to $1,454,927 incurred for the

same period in the prior year. The Company has experienced significant legal

costs due to the unsolicited bid by Pala and the capital raising exercise.

Stock-based compensation decreased to $146,444 for the nine months ending

November 30, 2009 in comparison to $1,557,517 for the same period in the

previous year.

Interest expenses were $1,221,402 for the nine months ended November 30,

2009, compared to $1,939,516 for the nine months ended November 30, 2008.

These charges were incurred due to the use of the credit facility to maintain

working capital and the deferred lease payments.

Additional details can be found in the Company's Financial Statements and

Management's Discussion and Analysis which are filed on www.sedar.com.

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Private Placement and Rights Offering

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Further to its news release of January 6, 2010, Rockwell has closed a

second round of its private placement, which was oversubscribed and resulted

in the receipt of approximately $8.6 million in total. These funds were raised

through the issue of a total of 132.8 million new shares at share price of

$0.065.

Due to the success of the private placement and the intervening holiday

period, the Company's rights offering was delayed slightly so that the private

placement could close. The Company expects to file the final rights offering

circular Canadian securities regulatory authorities in all of the provinces

and territories of Canada and with the Toronto and Johannesburg stock

exchanges shortly, following which the Company will be in a position to

provide a timetable for the implementation and closing of the rights offering.

Completion of at least $3.1 million of this rights offering is guaranteed by

Daboll Consultants, which is associated with the Steinmetz Diamond Group.

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Plans Moving Forward

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Rockwell's priority is to maintain flexibility and resourcefulness to

overcome the challenges of the world economic crisis and the concomitant

significant decline in international diamond prices. In this respect the

Company continues to manage costs, leverage diamond sales, and increase

production to maximize revenues at its operations.

Through the success of its private placement, and the support of its new

long term investors such as Godia Capital and existing shareholders, Rockwell

expects to raise up to $14.7 million through the combined private placement

and rights offering. Proceeds from the combined fund raising will be utilized

to strengthen the Company's balance sheet, settle short term debt, and

undertake further production improvements and cost saving measures at existing

operations. Given the improvements in diamond prices, the Company also plans

to use a portion of the proceeds to upgrade and re-commission the plant at

Wouterspan in the last quarter of fiscal 2010.

President and CEO John Bristow commented, "Rockwell is well positioned to

benefit from further increases in diamond prices. The Company has implemented

significant improvements to operating and costs structures in all parts of its

business, and management believes that these provide the foundation on which

to proceed with growth and expansion plans."

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The Company will host a telephone conference call on Monday January 18 at

10:00 a.m. Eastern Time (7:00 a.m. Pacific; 5:00 p.m. Johannesburg) to discuss

these results. The conference call may be accessed by dialing (888) 282-4591

(toll free) or 719-457-2637 (toll) in North America, 0 800 980 989 (toll free)

in the United Kingdom and 0 808 101 1147 (toll free) in South Africa. A live

and archived audio webcast will also be available at on the Company's website

at www.rockwelldiamonds.com.

The conference call will be archived for later playback until midnight

(ET) January 24, 2010 and can be accessed by dialing (888) 203-1112 (toll

free) in North America or (719) 457-0820 (toll) and using the pass code

2475528.

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John Bristow

President and CEO

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 and 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 annual Form 20-F filing with the

United States Securities and Exchange Commission www.sec.com and the Company's

home jurisdiction filings that are available at www.sedar.com. The Company

undertakes no obligation to update forward-looking information if

circumstances or management's estimates or opinions should change except as

required by law.

-30-

/For further information: on Rockwell and its operations in South Africa,

please contact Investor Services at (604) 684-6365 or within North America at

1-800-667-2114/