MARKET conditions had forced Rockwell Diamonds to cut jobs and costs at its Tirisano mine in North West this month, the diamond producer said on Friday.
Releasing its financial results for the quarter to May, Rockwell said it had decided to alter the mining plan at the property to recover diamonds closer to the surface to avoid higher stripping ratios until markets recover.
It said the processing plant would be temporarily placed on care and maintenance while the newly commissioned front end would be part of a simplified processing plan using existing equipment.
Ryan Long, a mining analyst from Northland Capital Partners in the UK, said Rockwell had to act quickly as it was mining diamonds that were smaller than expected and the Indian rupee had weakened.
Rockwell chief executive
James Campbell said about 200 people were employed at Tirisano and management wanted to begin negotiations with relevant trade unions.
Tirisano, which contributed 1222 carats towards production at Rockwell in the quarter, has an 18-year life of mine.
“At the beginning of July, we very quickly took note of these market conditions and adopted a prudent approach to reposition the mine plan in light of the economic circumstances. This included developing a two-fold strategy to reduce the operating cost structure of Tirisano and simultaneously adjust the mine plan without prejudicing the long-term growth prospects,” the company said.
Rockwell reported a loss of C$3.03 million (R24.7m) for the quarter, compared with a loss of C$1.21m reported a year ago. The results included a Tirisano ramp-up expense of C$2.5m during the quarter.
The JSE- and Toronto-listed firm reported a comprehensive loss of C$8.38m after exchange operations, as the rand’s 9 percent depreciation against the Canadian dollar caused an additional loss of C$5.32m.
Diamonds recovered at the Saxendrift tailings using the proof of concept bulk X-ray project that was commissioned in April totalled 1 005 carats, which were sold at an average of $853 (R7 053) a carat, realising revenue of C$857 000. Carats sold from Saxendrift rose 10 percent quarter on quarter and 12 percent year on year.
Klipdam mine achieved a 20 percent increase in volumes processed after a conversion to continuous mining in January and a simplification of the front-end production plant.
The shares were untraded at R3.40 on the JSE on Friday.