Diamond prices in Q4 2010 'back at 2008 records'

In the fourth quarter of 2010, diamond prices reached the record levels last seen in 2008, according to alluvial miner Rockwell Diamonds.

"Both rough and polished diamonds prices improved during the 2010 calendar year, with prices enjoying support from strong retail demand for diamonds in the second half of 2010," said Rockwell in its full-year results on Tuesday.

Rockwell's financial position showed substantial improvements during the year, but its operational performance fell short of internal production targets.

Operating profit of CA$4.0 million was reported for the year ending in February, a turnaround of CA$7.5 million from a CA$3.6 million operating loss in 2010.

Revenue increased 43% year on year to CA$42.5 million with an average price increase of 35% to US$1,365 per carat and 2% rise in sales to 27,017 carats.

Production increased 5% to 26,165 carats.

Cash generated by operating activities came to CA$8.9 million from CA$110,694 consumed in fiscal 2010 and the company's net cash balance increased to CA$2.9 million from CA$1.8 million.

A loss of CA$5.1 million or CA$0.01 per share was posted for the year, compared with a loss of CA$7.0 million or CA$0.03 per share in the year before.

This improvement is mainly attributable to the higher average diamond price.

Diamond inventories at the end of February totalled 1,057 carats, slightly below the 1,910 carats at the end of February 2010.

"During the past six months, Rockwell has made enormous progress in repositioning itself to ramp up its production profile," said chairman David Copeland.

"Earlier this year, we completed a thorough strategic review to map the way forward for our company. Our focus is on implementing this strategy to unlock the inherent value in the company," said Copeland, adding that it would do this by optimising output from producing assets to continue improving the company's financial performance.

He said the company would also leverage its assets by developing high volume production plants on its dormant mines.

In order to fund these developments, the company will seek additional financing in the capital markets.

Looking ahead, Copeland said the outlook for Rockwell Diamonds was underpinned by strong fundamentals in the diamond market.

"With ongoing operational improvements to enhance the recovery of diamonds, reductions in operating costs, and the increasing prices and demand for diamonds, the positive trend of the company's financial performance over the past four quarters should be sustainable in fiscal 2012," Rockwell said.