File picture: Martial Trezzini

Three years after it began rebuilding its business, Rockwell Diamonds boosted profit to C$345 000 (R3.4 million) in its first quarter to May, the Vancouver-based diamond producer reported on Friday, a far cry from the C$1.2m loss in the three months to May last year.

Revenue rose 67 percent year on year to C$15.1m, comprising C$9.7m from diamond sales and beneficiation income of C$5.4m. Rockwell, listed in Johannesburg and Toronto, is a mid-tier diamond producer with interests in producing and exploration alluvial diamond properties in South Africa.

These include Niewejaarskraal and Saxendrift in the Northern Cape.

It was the eighth consecutive quarter of revenue growth, chief executive James Campbell said, “highlighting the consistent delivery against our plan, which saw our exit from loss-making operations and the resolution of a number of corporate legacy issues”.

He attributed the first-quarter performance to the higher quality production, led by the Middle Orange River operation, and the building of two new mines at the Saxendrift Hill Complex and Niewejaarskraal in the past year.

Overall volume of gravel processed and carat production on company-owned properties rose year on year by 26 percent and 90 percent, respectively.

Operating profit before amortisation and depreciation of C$4.2m was up from C$1.1m in the prior year. Net cash flow from operating activities of C$1.1m compared to cash used of C$3m previously.

Additional revenue potential was underscored by a “beneficiation pipeline” exceeding 6 300 carats. Royalty mining contracts at Tirisano delivered net royalties of $312 576 (R3.3m).

Campbell said the company had shown an 89 percent increase in carat production while volumes processed rose 19 percent year on year and the grade improved 59 percent.

The results were achieved despite the ageing earthmoving fleet at Saxendrift and a breakdown of the de-sanding screen at Saxendrift Hill Complex.

Implementation of an improvement and replacement plan started this quarter. It is expected to result in higher processing volumes.

“The lease plan does not require any upfront capital investment and comprises full maintenance leases for the new fleet,” Rockwell said.

“Once completed, the new fleet will position Saxendrift and Saxendrift Hill Complex to process higher volumes with a reduction of between 12 percent and 17 percent of unit costs when operating at full capacity.”

Equipment that is no longer needed is being auctioned off.

The average stone size produced from total properties increased 18 percent in the first quarter, to 4.6 carats from 3.8 carats in the prior year.

Four rough diamonds averaging 50 carats were produced. In addition, Rockwell produced 81 rough diamonds in the 10-carat category, compared with 44 stones in the prior year.

The share rose 12.5 percent to close at R4.50 on Friday.