Johannesburg - Rockwell Diamonds pointed to litigation and the suspension of mining operations in its Northern Cape mine as it reported a C$5.5 million loss for the three months period ending in November 2016. The diamond miner with a primary listing in Vancouver said that litigation brought by its former contractor, C-Rock Mining Limited (CML), had delayed the schedule at its Wouterspan plant construction project (WPC) during the third quarter.
As a result, Rockwell reported a 65 percent year-on-year decrease in rough diamond revenues at $2.4 million due to substantially curtailed diamond production following the suspension of operations.
Total revenues decreased by 51 percent to $3.5 million.
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On the upside, Rockwell said the company had been taken back in September 2016 from being effectively operated by third parties and was now managed by its management.
This meant that Rockwell is once again in full control of its business after a number of setbacks following an interim spoliation order granted in favour of the contractor.
Construction to complete the Wouterspan wet plant has started. Completion of the second and final section is scheduled for March 2017.
Rockwell said a solution was also found to bring adequate infield screening capacity forward to ramp up Wouterspan to full production immediately after completion of the wet plant.
Challenging
Commenting on the third quarter financial performance, chief executive Tjaart Willemse said not all challenges had been overcome yet but those were receiving due attention.
"Rockwell completed a challenging quarter which commenced with a review of the practices, strategy and business plans and ended with new financing to complete WPC, whilst having to attend to a series of unfounded and malicious legal attacks from its erstwhile mining and construction contractor," Willemse said.
"On restarting the operations production ramp-up has been slower than anticipated, mostly as a result of unexpected challenges with earthmoving equipment after it was found to have been tampered with during the period following the interim spoliation ruling in favour of the contractor."
Rockwell also entered into an agreement to dispose of its non-core Remhoogte/Holsloot and Saxendrift mines for a reasonable cash consideration and added benefit of reducing its outstanding rehabilitation liabilities by more than 80 percent.
The comprehensive restructuring and rightsizing exercise would result in a reduction of its labour complement from 604 to 297 employees.
Rockwell said during its business repositioning exercise, it would continue to focus on further reduction of off-mine costs, driving cash operating costs down, and the commissioning of complete WPC wet plant among others.