VANCOUVER, Sept. 22, 2014 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) announces its quarterly production and sales update for the three months ended August 31, 2014:

All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified.

Corporate:

• Achievement of 2.5 million lost time injury free hours ("LTIFH") of operation at Saxendrift (September 18, 2014);
• Revenues from diamond sales (excluding beneficiation) up 57% to US$13.2 million;
• Total carat sales were up 58% to 8,864 carats, sold at an average price of US$1,489 per carat (down 2% from a year ago);
• Inventory of 5,954 carats (including royalty contract miners' inventory of 3,034 carats) carried over into third quarter of fiscal 2015;
• Successful implementation of earthmoving vehicle ("EMV") renewal plan leads to increased mining efficiencies and volumes.

The Company's own operations1 in the Middle Orange River2 ("MOR"):

• Total volumes of gravel processed and carat production increased by 54% to 964k m3 and 6% to 3,764 carats respectively;
• Carat sales grew 43% to 3,810 carats with a 36% increase in value of sales to US$9.0 million; and
• Two +100 carat diamonds recovered including a 104-carat cape yellow and a 117-carat commercial yellow.

Company's total properties3:

• Total volumes of gravel processed and carat production increased by 57% and 36% respectively; and
• Total carat sales increased by 58%.

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1 Includes contribution from mines operated and managed by Rockwell. The Company's own operations for the second quarter of fiscal 2015 comprise gravels mined at Saxendrift, Saxendrift Extension (processed at Saxendrift), Saxendrift Hill Complex and Niewejaarskraal. The fiscal 2014 comparative included the production of Saxendrift, Saxendrift Extension, Saxendrift Hill Complex (in production ramp up) and Klipdam (sold at the end of March 2013).
2 Middle Orange River operations included the production and sales of Saxendrift (incorporating Saxendrift Extension), Saxendrift Hill Complex and Niewejaarskraal in the first quarter of fiscal 2015 while the prior year comprised of Saxendrift (including Saxendrift Extension) and Saxendrift Hill Complex (in production ramp up).
3 Includes contribution from mines operated and managed by Rockwell as well as the royalty mining contractors' contribution.

Commenting on second quarter production and sales James Campbell, CEO and President said:

"We are pleased that our second quarter production results reflect continued benefits flowing from our focus on the Middle Orange River region. Volumes of material mined are up 41% to 1.2 million m3, exceeding the one million cubic meter threshold per quarter for the first time. This is a clear demonstration that our three producing MOR mines have gained critical mass and that the implementation of our managed mining strategy, including the EMV renewal plan, is delivering significantly higher EMV availabilities. Volumes of gravel processed, (excluding overburden and a small stockpile of gravels) increased 54% compared to the prior year, providing evidence that our processing plants have risen to the challenge of the higher mining volumes. Accordingly, we are well placed to show a sustainable reduction in unit costs. Carat production rose 6% from our own operations, due to higher volumes of ground processed, offset by lower grades, in the second quarter. These however, were in line with the typical cyclicality of alluvial mining and remained well within the long term average grades for the region.

"As our volumes have increased, so we have benefited from a higher average stone size, which was in excess of 4.5 carats in the second quarter. We produced two gem quality +100-carat diamonds in the second quarter which brings the total to eight +100 carat stones recovered from our operations in the last 12 months: another tangible indicator of the success of our focused MOR strategy. In addition, we recovered thirteen more stones in the +20-carat category, underpinning a 43% increase in carat sales from our own operations and leading to a 36% growth in revenue from diamond sales, excluding beneficiation of US$9.0 million.

"Our five royalty mining contractors at Tirisano continue to deliver positive returns for Rockwell. Second quarter, carat production and carat sales from these partners increased 66% and 70% respectively. Diamond values showed a 30% increase per carat, resulting in the value of sales from contractors rising by 121% to US$4.2 million."

Second quarter operational update:

Volume and carat production for the Company's operational mines for the quarter ended August 31, 2014:

Diamond sales and revenue for the Company's operations for the quarter ended August 31, 2014:

* The Klipdam operation was disposed of during Q1 2014

** Niewejaarskraal product was recovered during plant commissioning and the revenue applied against the Capital Project completed at the end of August 2013.

*** Contractors' mining" refers to independent royalty contractors processing gravel for their own risk and reward on Rockwell owned mineral properties. Carats recovered are then sold through the Company's tender process. The Company retains the responsibility for diamond security and sales and recognize 100% of the revenue on sale. The contractual 87.5% of the sales value, payable to the contractor, is recognized as production costs in the statement of profit and loss.

Changes to MOR Operational Management roles:

At the beginning of the second quarter, Rockwell restructured the management team in the MOR operations to address certain areas of underperformance at the mines. This led to improved overall results for the period under review.

The changes were as follows included:

• Frans Bezuidenhout took on the role of General Manager: MOR, from his previous position as Senior Production Manager at Niewejaarskraal;
• George Stevens was promoted from Geological Manager to Senior Production Manager at Saxendrift; and
• Mulalo Ndwammbi, previously Mining Manager at Saxendrift Hill Complex ("SHC") was promoted to Production Manager: SHC, becoming Rockwell's first black woman production manager.

Saxendrift Operations:

• A capital investment neutral EMV renewal plan was implemented at Saxendrift at the end of June 2014, which included six 100-ton trucks, three front end loaders, two dozers and other associated vehicles. The plan comprises a two year, fully managed lease and maintenance agreement with Eqstra based on a fixed cost per hour of usage with a guarantee of 85% availability, or five hundred operating hours per month per truck.
• Quarterly mining volumes increased 8% year on year, reversing the declines consequent to poor EMV availability recorded in the previous three quarters. Saxendrift achieved record volumes of gravel mined in the months of July and August 2014, demonstrating the benefits of the managed fleet strategy.
• Although quarterly carat production was down 40%, due to mining a lower grade area of the Saxendrift property, the variance is within the expected ranges of long term mine plans and is reflective of the quarterly reporting periods. Mining subsequently reverted to the higher-grade areas at the end of August 2014.
• In spite of reporting a lower total carat production, the quality of recoveries at the mine was high; Saxendrift delivered a 21% increase in average carat values, compensating for the marginal reduction of 4% in carat sales, producing 16% increase revenue from diamond sales (excluding beneficiation).

Saxendrift Hill Complex:

• Quarterly volumes of gravel processed were up 38% from the prior year.
• Processing of recovery tailings negatively impacted the grade, which was down 18%, and size of diamonds.
• The average carat value declined 56%, as a result of the inclusion of several high value stones in the prior year, as well as the smaller stone recoveries in the second quarter. In spite of the 34% increase in carats sold, the mine reported at 42% decline in sales (excluding beneficiation) largely as a result of lower average values realized.

Niewejaarskraal:

• Operations at Niewejaarskraal continue to gain momentum, with a 7.5% increase in volume processed compared to the first quarter of fiscal 2015.
• The mine recorded a grade of 0.54 carats per 100m3 for the quarter, which is in line with the expected grade for this property.
• Carat values, which were up 37% over the prior year, are in line with the long-term average MOR diamond values realized.
• The increases in carat sales and revenue from diamond sales (excluding beneficiation) were about tenfold over the prior year when the mine was newly commissioned, and in production ramp up.
• Reflecting benefits of increased throughput at Niewejaarskraal, the pace recovery of larger stones has improved, with the largest weighing 62.2 carats for the second quarter.

Royalty Mining Contractors and Joint Venture

• The royalty mining contractors operating on the Tirisano property performed well in the second quarter but lower volumes were processed at the joint venture mining arrangement at Kwartelspan. Total volumes of gravel processed and carats produced were up 64% and 66% respectively on the prior year.
• Carats sales from royalty mining contractors were up 70%, and included the recovery of several high quality stones which underpinned a 30% improvement in average carat values in the second quarter.
• Total revenue generated by the contractors from diamond sales increased 121%, with Rockwell's royalty income amounting to US$523,000.

About Rockwell Diamonds:

Rockwell is engaged in the business of operating and developing alluvial diamond deposits, with a goal to become a mid-tier diamond production company. The Company's flagship mine is the Saxendrift Mine, in the Middle Orange River. It has recently built two new internally funded mines in the Middle Orange river region, namely the Saxendrift Hill Complex and the Niewejaarskraal Mine which are both in production. Rockwell also has a development project and a pipeline of earlier stage properties with future development potential. The operations are based on high throughput processing capability and Saxendrift has among the lowest unit costs in the industry as a result of implementing fit for purpose technologies.

The Company is known for producing large, high quality gemstone comprising a major portion of its diamond recoveries that is enhanced through a beneficiation joint venture that enables it to participate in the profits on the sale of the polished diamonds.

Rockwell also evaluates consolidation opportunities which have the potential to expand its mineral resources and production profile and to provide accretive value to the Company.

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 as 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 home jurisdiction filings that are available at www.sedar.com.

SOURCE Rockwell Diamonds Inc.