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.
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.”