Johannesburg –
Canada-based junior miner Rockwell Diamonds says it is selling its no-core
assets as part of its strategic repositioning and business turnaround plans.
In a statement
issued on Friday, the company – listed in Toronto and Johannesburg – says it
has entered into a purchase and sale agreement with Nelesco.
This is for certain
assets and the assumption of certain liabilities for cash consideration of R45
million as well as the assumption of R70 million in rehabilitation liabilities,
and the transfer of almost 100 employees.
Rockwell did not
specify which assets are to be sold in its statement.
It notes, in addition,
the deferred taxes of R29 million arising from the 2015 purchase of Pioneer
Minerals, being an accounting entry under International Financial Reporting
Standards, will be reversed.
This, it
explains, will reduce consolidated liabilities by a total of R99 million.
Read also: Rockwell in overhaul after chief bows out
However, an impairment
of CAD$1.25 million book value is expected to be recorded on the transaction.
Payment will be
made in three tranches, it says.
Until all the
conditions are completed, Nelesco will operate on a contract mining basis with
a royalty payable of 2.5 percent of revenue from diamonds recovered from
properties covered by the transaction and be responsible for any related
rehabilitation liabilities.
“This
transaction represents a significant milestone in our repositioning plans for
the ‘new Rockwell’,” explains recently-appointed CEO Tjaart Willemse.
“It not only
brings in cash in addition to the recently announced funding by two of the key
shareholders and a third party, but also disposes of non-core assets and
associated liabilities, leaving the new Rockwell to focus on completing the
next phase and ramp up of the Wouterspan mine and processing plant and advance
its portfolio of development and exploration properties. The transfer of 98
employees also assists with our employee right sizing initiative and reduces
the number of retrenchees.”
BUSINESS REPORT