Weak demand for smaller diamonds has prompted Rockwell Diamonds to review mining plan for North West alluvial diamond project
The Johannesburg-and Toronto-listed miner has been ramping up operations at Tirisano, and CEO James Campbell said on Friday the decision to review the mining operation came as a result of the smaller-sized gemstones that were recovered, resulting in a drop in the revenue the company generated per carat despite an improvement in output.
For the three months ended May, Tirisano sold 1007 carats at an estimated average price of $311 a carat.
Mr Campbell said the revised mine plan was now aimed at recovering, on average, 2-carat diamonds, and included a new wet front end at the mine‚ which was in the final stages of commissioning. "We are shifting the focus on our mining operations from the current lower quality to higher quality, with the aim of taking advantage of the demand for high-graded diamonds," he said.
Rockwell was also in the process of improving mining operations at the Klipdam mine, with the aim of increasing the average revenue per carat.
Mr Campbell said Rockwell continued to develop its high-potential projects in the middle Orange River region based on fit-for-purpose technologies. These include the new in-field screen‚ proof of concept bulk X-ray, and the single particle sorter plant‚ at Saxendrift‚ which have yielded positive results in the quarter."We are actively pursuing strategies to extend the economic life of Saxendrift‚ with the acquisition of Jasper and by developing other parts of the properties," Mr Campbell said.
Rockwell reported a loss of C$3,034m ($2,99m) after depreciation for the three months ended May. That follows a loss of $1,206m reported a year ago.Operating profit before amortisation and depreciation came in at C$195‚258 from an operating profit of C$2,531m the previous year.The results included the Tirisano ramp-up expense of C$2,5m.Rockwell reported a total comprehensive loss of C$8,4m‚ largely the result of the 9% depreciation of the rand against the Canadian dollar, leading to a noncash C$5,3m forex translation charge on the conversion of the rand-denominated assets into Canadian dollars.
Despite a challenging quarter, Mr Campbell was confident the company would be able to reach its target of 10000 carats in five years.
Rockwell produced about 7234 carats in the first quarter, and about 6234 carats were sold at an average price of $944 a carat.