December 15, 2014, Vancouver, BC – Rockwell Diamonds Inc. (“Rockwell” or the “Company”) (TSX: RDI; JSE: RDI) announces its quarterly production and sales update for the three months ended November 30, 2014:

Salient features

• Middle Orange River operations (“MOR”), as of December 5, 2014, achieved a record 4.7 million lost time injury free hours (“LTIFH”) of operation.
• The successful implementation of the earthmoving vehicle (“EMV”) renewal plan at Saxendrift and Saxendrift Hill Complex (“SHC”) helped the Complex process a record 1.5 million m3 of gravel up 47% from the same quarter last year.
• Increased processing volumes compensated for lower grades at Saxendrift.
• Carat production up 15% compared to the same period last year.
• Record diamond sales revenue of US$15.8 million driven by 127% increase in carats sold.
• Average carat price down 35% from Company owned properties due to lower incidence of large diamonds in third quarter.
• Inventory of 2,624 carats (including royalty contract miners’ inventory of 815 carats) carried over into fourth quarter of fiscal 2015.

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

“Our production and sales performance continues to improve with record volumes of both gravel mined and processed and carat sales from the MOR in the third quarter. A highlight for the quarter was bedding down of the earthmoving vehicle renewal plan and ongoing optimization of our in-field screens that helped us post a 60% increase in mining volumes and 47% increase in gravel processed. The increase in volumes processed offset the lower grades and lower prices achieved for the rough product.”

“Also our new mine, Niewejaarskraal, made good progress in ramping up its production with a commensurate improvement in diamond value and the royalty mining contractors continued to make a positive contribution to the company’s performance.”

PRODUCTION REVIEW

Volume and carat production for total Company owned properties to November 30, 2014 were as follows:

Additional information: Refer to Appendix 1: Detailed production data

• Saxendrift: Volumes of gravel mined increased 62% from the previous year, facilitated by the implementation of the new mining fleet, enabled the average monthly plant throughput to exceed 180,000m3. Lower grades were processed from the traditional Saxendrift mining area, now in the second half of its Life of Mine (“LOM”). The remaining mining areas require higher stripping ratios and accordingly, gravel volumes processed increased 21%. Carat production declined 29%, but included eight stones larger than 20 carats.
• Saxendrift Hill Complex: Volumes of gravel mined and processed increased 46% and 3% respectively. As a result of ongoing exploration, SHC’s mine life has been extended into 2015. Year-on-year carat production, whilst on plan, declined 63% due to the exceptional recoveries in the prior year. SHC’s bulk X-ray processing plant operated at its nameplate capacity of 80,000m3 per month throughout the third quarter. Notable stones included a 68-carat rough diamond.
• Niewejaarskraal: Volumes showed strong increases of 68% and 92% in gravels mined and processed respectively. Towards the end of the quarter, the monthly capacity of the plant was increased to 120,000m3 with modifications to the front end in-field-screen. Carat production increased almost threefold, underpinned by higher volumes and grades, which increased to 0.54 carats per 100m3, in line with the average grade for the mine. Notable stones recovered in the period included five stones exceeding 20 carats, the largest of which weighed 68.6 carats.
• Royalty contractor mining: The royalty mining contractors operating at Tirisano and in joint venture at Kwartelspan continue to deliver positive results, with volumes of gravel processed up 98% and carat production up 59% for the third quarter.

SALES REVIEW

Diamond sales for total Company owned-properties to November 30, 2014 were as follows:

Additional information: Refer to Appendix 1: Detailed sales data

• Saxendrift: Diamond sales rose 5% to US$4.2 million from the sale of 2,442 carats (up 10%) at a stable average price per carat of US$1,707 compared to the prior year. The average carat value was lower than in the preceding quarter due to the lack of recovery of exceptional diamonds experienced in the current period.
• SHC: The number of carats sold was in line with the prior year, and although the value of diamonds sold was down 24%, this was on plan. The decline was due to the lack of recovery of high valued stones experienced in the current quarter.
• Niewejaarskraal: Diamond sales increased to US$2.9 million, in line with the ramp up of operations at Niewejaarskraal. Carat sales increased more than six-fold and the average value per carat more than doubled.
• Royalty mining contractors: The contractors at Tirisano delivered a solid performance. The value of sales rose 107% in line with the increased number of contractors compared to a year ago and operations at the Kwartelspan joint venture gained momentum.

Financing Revision and Update

Further to the news release of November 19, 2014 the Company has now received $2.33 million of the $4.1 million committed by the two related parties with the balance to be in-hand by January 23, 2015. The structure of the financing was also slightly revised to comply with the requirements of certain securities laws exemptions in Canada. The revised transaction is that $3.775 (92%) will be raised by issuance of the previously announced debentures, and $0.325 million (8%) as demand loans bearing interest at 5% (2nd year 8%) and without any optional or mandatory conversion aspects. The structure revision was necessary in order to rely on the exemption from the requirements of Canadian Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) where the Company is relying upon exemptions from the formal valuation requirements and minority shareholder approval requirements of MI 61-101 in Sections 5.5(a) and 5.7(a), which requires that the value of the Debenture portion of the transaction must not exceed 25% of the Company’s 20 day average market capitalization on the date of announcement. Therefore the Company and the related parties agreed that the aggregate amount of Debentures will be limited to $3.775 million and the balance of the $4.1 million will be advanced by way of separate loans from Emerald Holdings Ltd (Mark Bristow) ($89,000) and Daboll Consultants Limited (Diacore) ($236,000). The loans are exempt from the minority shareholder approval requirements set out in Section 5.7(f) of MI 61-101 – Loan to Issuer, No Equity or Voting Component. The exemptions are only in connection with the issuance of the Debentures, actual conversion of the Debentures into common shares on either an option or mandatory basis as described in the November 19, 2014 news release will still require the approval of Rockwell’s minority shareholders.

Appendix 1: Volumes and carat production for the Company’s owned mines and its royalty mining contractors to November 30, 2014 were as follows:

Appendix 2: Sales for each of the Company’s own mines and its royalty mining contractors to November 30, 2014 were as follows:

* 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.

** Contractors’ carats” 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.

For further information on Rockwell and its operations in South Africa, please contact

James Campbell CEO +27 (0)83 457 3724

Stéphanie Leclercq Investor Relations +27 (0)83 307 7587

David Tosi PSG Capital – JSE Sponsor +27 (0)21 887 9602