Rockwell Diamonds Looking to Add Another Diamond Mine to its Portfolio
Rockwell Diamonds, owner of alluvial diamond mines in the Northern Cape and North West provinces in South Africa, is strategizing innovative ways to bring its Wouterspan property into production without significant upfront capital costs, according to CEO James Campbell.
In February, Rockwell brought two new mines—Saxendrift Hill Complex and Niewejaarskraal—on board, doubling their production capacity to 340,000m³ of gravel a month. Rockwell’s long-term goal is to mine 500,000m³ of quality gravel per month.
Rockwell now owns and operates three mines on the Middle Orange River and derives royalty revenue from its properties at Tirisano in North West, which are mined by third parties. Additionally, the company earns revenue from a joint venture in diamond cutting and polishing.
In an interview, Mr. Campbell said the first step towards the 500,000m³ production target would be incremental development at Niewejaarskraal, which is already delivering its expected value. Secondly, Wouterspan would need to be opened and process at least 350,000m³ a month to be economically viable.
Building Wouterspan as a conventional opencast diamond mine would be a costly undertaking, but Rockwell favored the internally funded and phased approach that it demonstrated in developing its two newest mines. Rockwell also needs to upgrade its mining fleet in order to increase efficiency.
Mr. Campbell said that the company has no plans to buy an expensive new fleet. A solution that did not involve a large capital outlay and was deemed appropriate for the small mining company had been found, with details to be announced in the next month.
By the end of the fiscal year in February, Rockwell had used C$1.7m of its overdraft. Although it generated net positive cash flow of C$2.7 million from operations, it spent C$8.7 million on its plant and equipment. This was mainly on the dense media separation, infield screen and bulk X-ray plant at Niewejaarskraal.
Compared with the previous year, revenue rose 39 percent to C$45.2 million and operating profit rose more than fivefold, from C$1.1 million to C$5.9 million. Production costs rose 25 percent to $39.2 million.
Mr. Campbell said that the rise in production costs was partly due to the fact that the Saxendrift Extension was 6km from the recovery plant, leading to additional transportation costs. It also resulted from the high costs of maintaining an aging mining fleet.
Rockwell Diamonds was founded in 1988 and is headquartered in Vancouver, Canada.
Gerald Group resolves iron ore dispute with Sierra Leone
Gerald Group, the US commodity trader, will pay Sierra Leone $20mn and cede a 10% stake in an iron ore project as part of the resolution to a nearly two-year dispute that led to the shutdown of production, the two sides revealed.
Gerald's wholly-owned subsidiary SL Mining filed for arbitration in August 2019 over a royalty payment dispute and suspended the Marampa mine the following month. Sierra Leone's government responded by cancelling its mining licence.
As part of the agreement signed on Friday, Sierra Leone will take a non-dilutable 10% stake in a new company that will replace SL Mining and resume operations at Marampa by June 1, Gerald said in a statement.
Gerald will make two $10mn payments this year and will have the immediate right to ship its current stockpile of about 707,000 tonnes of iron ore, it said.
Both sides will withdraw their legal claims before the International Chamber of Commerce (ICC) and International Centre for Settlement of Investment Disputes (ICSID), the statement added.
Gerald’s chairman and CEO Craig Dean commented: "I am delighted that we have been able to resolve our differences and have a fresh start and new beginning with the government of Sierra Leone."
Sierra Leone's Mines Minister Timothy Kabba told a news conference on Tuesday that the agreement was a milestone for the country.
"Whatever the pain we may have borne or dreaded throughout these two years ... this outcome justifies our action," he said.
Gerald estimates that Marampa holds about 1 billion tonnes of iron ore with a potential lifespan of 30 years.
Back in 2019, Dean spoke with Mining about the development of Marampa and commented: "SL Mining offers a substantial opportunity for Gerald Group as our Marampa mine in Sierra Leone is producing two million tonnes per annum of high grade iron ore in the first phase of development, with expansion possibilities of greater than six million tonnes per annum of high-grade iron ore during its operational life. If you analyse the iron ore market it has transformed, even from a couple of years ago when prices were very low. Now prices have stabilised we’re in a favourable position with our first shipments leaving for China.
"Our goal is to make ‘Marampa Blue’ an internationally recognised premium grade iron ore brand. We intend to expand the delivery of high-grade 65% iron ore concentrate to markets in Europe and Africa.”