January 13, 2015, Johannesburg, South Africa – Rockwell Diamonds Inc. (“Rockwell” or the “Company”) (TSX:RDI; JSE:RDI) announces results for the three months ended November 30, 2014.

Currency values are presented in Canadian dollars, unless otherwise indicated.

FINANCIAL HIGHLIGHTS

Salient features

• The operating result is reflective of a difficult quarter due to the low incidence of large diamonds across all our operations. Average diamond prices realized from Company owned operations declined 35%.
• The tenth successive quarter of US$-denominated gross diamond revenue growth up 59% to $18.9 million with rough diamond sales up 55% as a result of a 127% improvement in carat sales.
• Cost reduction initiatives continued, resulting in a reduction of 15% in consolidated average cash operating costs for the Middle Orange River (“MOR”) operations to US$11.5 per cubic metre, the main drivers being increased volumes mined (up 60%) and processed (up 29%).
• The announced transaction to acquire certain alluvial diamond properties and associated plant and equipment contiguous to Rockwell’s existing properties will extend the current operating and resource base and allow additional rationalization of plant and equipment to lift the overall volumes processed to above the targeted 500,000m3 in the MOR. The assets in question comprise early life mines that are in production and capable of being enhanced by Rockwell’s management team to deliver immediate operational and financial benefits.
• Focus is on expanding the Niewejaarskraal mine throughput to ensure profitability.
• The remaining resource at Saxendrift Hill Complex (“SHC”) will be processed through the Saxendrift infrastructure and the processing plant and equipment be utilized as part of the ongoing drive to further optimize the MOR resources. The result will increase the Company’s throughput.

Commenting on the third quarter financial performance, James Campbell, CEO and President said:

“These results reflected a challenging quarter with a lower incidence of large stones. Despite this we achieved US$-denominated revenue growth for the tenth successive quarter on the back of an increase in carat sales. Equally pleasing was the 15% reduction in the cash operating cost per m3. We are mindful that we need to ensure our ability to profitably process some of the lower grade resources and are committed to further drive down unit costs, thus the decision to process the remaining Saxendrift Hill Complex (“SHC”) resource through the Saxendrift plant; and relocate SHC’s assets to the other MOR properties, in particular Niewejaarskraal. In spite of a $3.2 million operating loss I believe we remain within the statistical variance modeled for MOR alluvial deposits and this volatility in diamond recoveries is best addressed by lifting our monthly processing capacity above 500,000m3.

“Given the progress we have made in rebuilding Rockwell as a diamond value focused business on the back enhanced management and operational efficiency, and cost discipline (without external funding), our priority is now to build on past achievements through our recently announced acquisition which we believe will be the game changer we have been searching for. The most critical component of being able complete the transaction will be our ability to raise the required equity within the time frame.”

Financial review:

• Revenue: Gross diamond revenues increased for the tenth successive quarter, to $18.9 million including beneficiation revenue. Rough diamond sales increased 55% to $17.5 million, led by a 127% improvement in carat sales to 13,759 carats. The 35% decline in average carat price from Company owned properties is due to the lower incidence of large diamonds recovered in the quarter.
• Production Costs: The consolidated average cash operating cost at the Company’s three operations, was US$11.5 per cubic metre. The average total cash cost for all operations (including rehabilitation and royalty payments) for the period amounted to US$12.2 per cubic meter, down 35% from a year ago.
• Cash cost of sales: The cash cost of sales increased to $22.1 million, commensurate with the higher carat sales. This was led by increased mining output at Niewejaarskraal and the royalty mining contractors at Tirisano while the inventory movement also had an impact.
• Net cash position: At November 30, 2014 Rockwell had net cash and cash equivalents of ($0.5 million), having recorded a net movement in cash and cash equivalents of $0.4 million including the receipt of $2.3 million in respect of convertible debenture and loans.
• Middle Orange River (“MOR”) operating performance: A total of 1.4 million m3 was mined from Rockwell’s MOR operations, up 60% from the prior year, facilitated by the ongoing optimization of our screening operations and the earthmoving vehicle (“EMV”) fleet through the renewal plan. Volumes of gravel processed increased 29% to 1.0 million m3 with the inclusion of Niewejaarskraal.

Market update

Global rough diamond sales slowed in the third quarter, with lower pricing resulting from high inventories in the pipeline and a liquidity squeeze in the industry. Two De Beers Group Sightholder Sales Sights held during the period saw relatively less goods supplied at stable prices, except in certain categories. In the polished diamond market, discounting was evidenced, particularly in India, where the industry is experiencing liquidity constraints. Retail demand was sluggish with retailers limiting purchases to meet immediate requirements and buying on extended credit terms. Discounting is expected to enhance sales volumes to reduce inventories and improve liquidity. Demand for exceptional fancy colored goods continues to improve with record prices achieved for blue, red and pink diamonds.

Discounting of polished goods is anticipated to persist into the fourth quarter to support December sales, supporting demand in the final weeks of F2015 as factories restock polished inventories ahead of the Chinese New Year and Valentine’s Day, both of which are in February.

Strategy including growth projects and priorities

Rockwell’s ongoing exploration activities aim to increase production from its MOR properties, and extend the mine lives. These include contiguous exploration of existing resources at the Saxendrift Extension property. Through trial mining, the Niewejaarskraal inferred resource will be upgraded. The Company continues to review options to bring the Wouterspan property into production on a phased approach, following the completion of a preliminary economic assessment in May 2014.

Fourth quarter operational and corporate priorities are as follows:

• Managing operating costs while increasing volumes processed across all operations.
• Maintaining the higher volumes of gravel mined and processed at Saxendrift while sustainably reducing the mining cash cost/m3.
• SHC was designed for an 18-month mine life, which expired at the end of 2014. To optimize the remaining resource, Rockwell has decided to process the remaining resource at the Saxendrift plant. The EMV fleet is being moved to Niewejaarskraal to ramp up production and the processing plant will be reallocated in due course.
• At Niewejaarskraal, the focus is on enhancing the operating economics of the property by further ramping up throughput.
• Closing the acquisition of the contiguous MOR alluvial properties and mining capabilities, is a top priority as these will enhance Rockwell’s MOR operating base through scale.

Conference Call:

Rockwell will host a telephone conference call on Wednesday, January 14, 2015 at 09:00 a.m. Eastern Time (16:00 p.m. Johannesburg) to discuss these results. The conference call may be accessed as follows:

A transcript of the audio webcast will be available on the Company’s website: www.rockwelldiamonds.com. The conference call will be archived for later playback until midnight (ET) January 19, 2015 and can be accessed by dialling the relevant number in the table below and using the pass code 33790#.

For further details, see Rockwell’s complete financial results and Management Discussion and Analysis posted on the website and on the Company’s profile at www.sedar.com. These include additional details on production, sales and revenues for the quarter, as well as comparative results for fiscal 2014

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

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 MOR. It has recently built two new internally funded mines in the MOR 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.