Corporate Presentation

Transcription

1 Corporate Presentation September 2010 TSX:RDI JSE:RDI OTCBB:RDIAF

2 Forward looking statements This presentation includes certain statements and other information that may be deemed "forward-looking". Other than statements of historical fact all statements in this presentation that address future production, resource potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, availability of capital and financing, and general economic, market or business conditions. Forward-looking statements are also based upon management s assumptions regarding the Company s future operations growth prospects, and conditions affecting the mining industry generally. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. For more information on Rockwell, Investors should review Rockwell s annual Form 20-F filing with the United States Securities and Exchange Commission and the Company's home jurisdiction filings that are available at Except to the extent required by law, the Company is under no obligations to update any forward looking statements contained in this presentation. 2

3 Rockwell value-chain Project development Mining Product leverage Focus: Low grade alluvial projects Rare gemstones Organic growth Acquisitions Low Capex + Opex Strengths: Geological expertise Grade reconciliation Plant construction Low cost operator Unique diamond product: Large + coloured gemstones Partnerships to add-value Price improvement Strong market fundamentals gemstone supply declining 3

4 Rockwell Diamonds Inc Established alluvial diamond mining and development company Growth plan to build critical mass and expand production Focus on well known South African alluvial diamond deposits Saxendrift Mine Operational Mine Holpan Mine Operational Mine Klipdam Mine Operational Mine Tirisano Mine New acquisition; Production expansion Wouterspan Mine New Plant Development Mine Klipdam Ext Project Bulksampling Project Saxendrift Gekko Jig Project Bulk- sampling Technology Development 4

5 Rockwell operations + project localities N Cape and NW Provinces, South Africa Project hubs in historic alluvial diamond provinces; production since 1860 s and 1920 s Excellent Infrastructure: Located on major road/rail systems Connected to Eskom power grid Within 2 hours of major airports Close proximity of operations centralized management, shared services and skills; reduce costs optimise use of equipment Kilometres Lower Orange River Springbok Namibia Koa River Valley N 3: MOR Wouterspan Douglas Prieska Saxendrift Botswana Middle Orange River 1:VENTERSDORP Tirisano Bloemhof Vaal River Kimberley Bloemfontein Riet River Pretoria Zimbabwe Johannesburg Ventersdorp Lesotho Swaziland Vaal River RSA 2: VAAL RIVER Holpan+Klipdam Klipdam-Extension 5

6 Financial snapshot Low-cost producer and developer ~ 30,000 carats per annum currently ~22 years Life of Mine from existing resources Cash cost < US$ 6 per cube cost base (<$3 per tonne) Exceptional rough diamond value US$1,536/carat - FY2007 US$1,754/carat - FY2008 US$2,086/carat - FY2009 US$1,012/carat - FY2010 Q1 FY2011 ~ US$1,611/carat Cash flow at Operations (FY 2010) Revenue C$35million EBITDA C$9.5million (FY2010) Unique beneficiation partnerships Add-margin (average 10-15%) on rough value via Flawless and SDG partnerships Symbols: TSX:RDI JSE:RDI OTC: RDIAF Shares on Issue: 518 million Share price: CAD 7 cents (3 September 2010) Fully diluted: 540 million 6

7 Rockwell Management and Directors Position Person Experience Board of Directors President & CEO Dr John Bristow 25 years in diamond exploration, evaluation, + mining ; 12 years with De Beers David Copeland (Chairman) John Bristow COO Graham Chamberlain Mining engineer, 25 years experience: project management + financial skills Mark Bristow Sandile Zungu Richard Linnell CFO Gerhard Jacobs Extensive mining and corporate experience Willem Jacobs Gary Wu Diamond Marketing & Sales Manager Jeffrey Brenner Rough diamond expert Mineral Resource Manager Glenn Norton Diamond and Coal; exploration and mining. Qualified person Manager Middle Orange Operations Ben Nell Extensive diamond mining + operational experience; RSA and Africa Manager Vaal River Operations Koggie Mostert Process engineer with extensive Rotary-pan plant expertise Manager North West Operations Leon Meyer Electrical engineer with Process engineering, metallurgical and plant construction experience. HR/IR Group Manager Richard Mhlontlo IR, HR, Training, Employment Equity Financial Manager - Operations Johan Oosthuizen Ex-DeBeers, Eskom Pension Fund Manager 7

8 Producer of large and exceptional gem diamonds Saxendrift large stones September-October 2009 Saxendrift coloured stones salmon pink; intense yellow October

9 Diamond size distribution analysis deposit DNA provides statistical tool Rockwell production is exceptional - >60% are larger than 1 carat 0.01 VE Ventersdorp KLIPGAT SW Vaal RIVERVIEW River BW Holpan-Klipdam HOLPAN MOR WPAN Middle Orange River > 1 carat 60% Percentage Carats Greater than Z Carats per Stone (Z) 100 9

10 Rough and polished price trends Rough diamond prices fell ~50% late-2008 Price recovery since mid-2009 due to destocking of the diamond pipeline created by De Beers and Alrosa cuts in production and sales BMO Research Rough Diamond Index, Rebased to 2000= Peak: August 2008 = Idex Polished Diamond Price Index May 2010 = Average: April November 2009 = BMO Rough Diamond Price Index Forecast BMO Rough Diamond Price Index SOURCE: Idex SOURCE: BMO Capital Markets 10

11 Rockwell diamond sales prices Steady improvement in prices from mid nd Quarter FY 2009 sales improved 54% over 1st Quarter FY 2010 average: US$1,012/carat Q1 FY 2011 ~ US$1,611/carat US $/ct Linear (US $/ct) $2, $1, $1, $1, US$/carat $1, $1, $ $ $ $ February April May June July August November February April May August sale of small parcel to State Diamond Trader 11

12 Long-term average sales value ( ) Long-term average ~ US$1,500 per carat (excludes special stones sold in late 2008) Steady increase in prices through late-2009 and into 2010 after 2009 recession Fiscal 2010 ~ US$ 1,012/carat US $/ct Linear (US $/ct) Linear (US $/ct) $9, $8, $7, $6, US$/carat $5, $4, $3, $2, $1, $ ~US$1,500/carat carat D-flawless stone - Klipdam First Sale after November 2008 market crash 12

13 Rockwell rough diamond production average US$/carat World Diamond Average $90/carat <0.3 c/stone # Tirisano (North West Province, RSA) $600/carat ~0.9 c/stone # Holpan/Klipdam (Vaal River, RSA) $900/carat ~1.2 c/stone # Small diamonds used in lower price point and pave jewelry Engagement rings, mid to high price point jewelry Engagement rings, high price point jewelry Saxendrift /Wouterspan (Moro, RSA) $2000/carat ~2.5 c/stone # High-end luxury jewellery; High Net Worth Individuals Investment Stones # - Rough stone average sizes 13

14 Vaal River operations Holpan mine + plant Klipdam mine + plant Processing Plant Ongoing Optimisation Holpan Rooikoppie resource Klipdam Palaeochannel, Rooikoppie 1 x Scrubber 1 x Scrubber 200 tph DMS 2 x 18ft Rotarypans (low-cost) 6 Flow-sort X-ray machines Grease Plant 4 Flow-sort X-ray machines Grease Plant Holpan Installation of 3 rd Trommel Screen 1 2 year of resource (43-101) Klipdam Installation of hands off sorting 1 2 year of resource (43-101) 14

15 MOR operations - Saxendrift mine + plant Flagship operation US$2000 per carat product Processing Plant 4 x 18ft Rotary-pans 4 x Scrubbers 10 X ray machines 1 x optical sorter PLC Controlled Ongoing Optimisation New high throughput scrubbers In pit screening plant (preconcentrate, reduce tramming costs, increase plant efficiency) Further cost reductions : ~US$5 per cube 15

16 Tirisano mine acquisition N W Province fast track plant reconstruction with enhancements Salient Features Modernise and re commission Processing plant Large well evaluated diamond resource : 50 m cubes or 100 m tonnes (additional resource to be added) Grade: ~ 2.7 cphc; double that of N Cape operations Excellent gemstone production ~ US$ per carat Improve plant layout 4 module Rotary-pan plant similar to Saxendrift Upgraded front-end screening plant to address high clay content 4 large scrubbers to remove clay fraction 8 x 16ft Rotary-pans 8 Flow-sort X-ray machines 2*50 tph DMS units available for utilization Section-11 application in process with DMR; Transaction documents in final draft 16

17 MOR - Wouterspan modernization on care + maintenance Old Plant New Plant 90,000 m³/m 180,000 m³/m 600 carats/m 1,100 carats/m 12 x 16ft Pans 4 x 18ft Pan Plant modernization Capital Expenditure Processing plant Earthmoving equip. Pay Back ~ R 50 million (US$ 7 million) ~R50 million 12 months Cash Cost US$/m³ $3.00 US$/Carat 1,800 NPV US$ ~$72,000,000 Unique diamond population e.g. 152 carats, Flawless D color US$4.3million (US$28,000/ct) 17

18 Rockwell mining fleet, processing + recovery plant Plant Capacity m³/month X- Ray Sorters Owner operator NAV ~C$30 million Saxendrift Wouterspan * Holpan Klipdam Tirisano Klipdam Ext Gekko Jigs 120, ,000 90,000 90,000 90,000 50,000 30, Excavators Long Haul Trucks ADT s Bull Dozers Loaders Graders Tracked Dozer Wheeled Dozer Grader Excavator ADT Trucks Long Haul Trucks Loaders TLB's * Wouterspan: Planned new large volume low cost plant 18

19 Rockwell production profile Developing additional operations to smooth production Total Carats Linear (Total Carats) Operations (24/7) 4 Operations (24/5) 3 Operations (24/5) Carats / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / month shutdown - International Credit Crunch (December 2008 February 2009); Wouterspan on care and maintenance Industrial Action Annual Christmas New Year shutdown 19

20 Mining cash costs US$ per cube excludes depreciation, royalties + H/O US$/m3 ZAR/m3 US Dollars South African Rands Cash cost target - < $6 per cube Three current operations - Holpan, Klipdam, Saxendrift Wouterspan on care & maintenance from February 2009 January through February 2010 cost increase - lost production days due to exceptionally heavy summer rainfall & flooding 20

21 Downstream value-add partnerships Flawless Diamond Trading House (FDTH) Internationally recognized marketing and sales facility (Johannesburg) Rockwell holds 20% in FDTH Platform to market, sell, and leverage Rockwell production Exploring new opportunities and markets for Rockwell e.g. China SDG profit share agreement (+10carat stones) MOR Rough stone : 212c Yellow Rough price: US$2.44m (to RDI) 102c Vivid Yellow + 25c yellow Value-add: ~50% on rough price (to RDI) 21

22 Rockwell growth plan create critical mass and scale Short-term - Years 1-2 Expand production: 2,500 -> 4,000 carats Install Saxendrift in-pit screening unit; evaluate Klipdam-Extension Conclude Etruscan acquisition, re-commission Tirisano mine (4 th operation) Modernize, re-commission Wouterspan (5 th operation) Years 3-6 Expansion to ~10,000 carats per month ( pa): Develop quality project pipeline for organic growth e.g. Niewejaarskraal; Wouterspan Phase 2 expansion; Tirisano Phase 2 expansion M+A activity to add value e.g. Tirisano acquisition Revenue target +C$50 million per annum in ~ 5-years Enlist support of strategic investors to create a leading gemstone diamond producer Larger + improved mix of diamonds - leverage sales + beneficiation 22

23 Proposed production growth plan (carats) Holpan Klipdam Klipdam Ext Saxendrift Saxendrift Jigs Tirisano A Wouterspan A Tirisano B Wouterspan B Niewejaarskraal A Niewejaarskraal B Carats Per Month Fy2011 Fy2012 Fy2013 Fy2014 Fy2015 Fy2016 Years 23

24 Proposed Rockwell growth plan conservative scenario FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY Carats 35,305 56,971 88,152 88, , ,232 Ave US$/ct Earnings Pre-tax (CAD) Earnings Post Tax (CAD) EXPANSION CAPEX NET CASH POSITION CONSOLIDATED CASH POSITION $ $ 13 m $ 45 m $ 42 m $ 73 m $ 107m $ $ 10 m $ 30 m $ 28 m $ 50 m $ 75 m $ 6 m $ 40 m # $ 10 m $ 20 m $ 10 m $0 ($30 m) $20 m $8 m $39 m $75 m $ 109 m Capital Expenditure: C$30 m in FY assessing EPC (engineering, procurement, construction) project development options and Contract mining operators to reduce Capital costs in FY2012 Assumptions: MOR diamond values: US$1800 per carat (actual: ~US$2000/carat) Tirisano diamond values: US$600/carat (expected US$ /carat) USD:Rand: = 7.5 CAD:Rand =

25 Investment summary Established producer - quality assets unique & rare diamonds Production base + strong operations team Excellent pipeline of brownfield projects for organic growth Acquisitions to fast track growth benefit from window of opportunity (e.g. Etruscan) Creating critical mass + scale Leverage improving diamond prices & growth Benefit from positive long-term market fundamentals world gemstone diamond supply declining Matching 10carat vivid yellows cut from a 35c Wouterspan stone 25

26 Appendices 26

27 Rockwell alluvial diamond resources Significant growth in 5 years ( ) Inferred Resources m3 Grade cphm3 Indicated Resources m3 Grade cphm Diamond Value $/ct Current Diamond Value $/ct Carats Wouterspan 37,774, ,025, $1, $1, ,597 Holpan 5,937, ,137, $ $ ,350 Klipdam 2,816, ,135, $ $ ,957 Saxendrift 4,358, ,063, $1, $1, ,514 Niewejaarskraal 20,630, $1, $1, ,296 Kwartelspan 1,385, $ $1, ,775 Zwemkuil-Mooidraai 1,640, $ $1, ,580 Holsloot 11,503, $1, $1, ,285 Tirisano* 15,334, ,279, $ $ ,547 Total 101,377, ,640, ,774,900 Holpan and Klipdam Specific Gravity = 1.85; Wouterspan and the South Bank MORO Specific Gravity = 2.1 *Niewejaarskraal resources reported as of 2009, had previously been included in Saxendrift Resources for 2008 Approximately 202 million tonnes of inferred + 70 million tonnes of indicated resources. At February 2010 diamond prices, in-situ value of resource is approximately US $2.6 billion (100%).* 27

28 Rockwell grade reconciliation focus on resource management Holpan Recovered Grade versus Resource Grade Mine Grade Grade Linear (Mine Grade) Jan 07 Feb 07 Mar 07 Apr 07 May 07 Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Klipdam Recovered Grade vs Resource Grade Mine Grade Grade Linear (Mine Grade) Jan 07 Feb 07 Mar 07 Apr 07 May 07 Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 Jan 08 Feb 08 Mar 08 Apr 08 May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Saxendrift Recovered Grade vs Resource Grade 3.00 Mine Grade Grade Linear (Mine Grade) May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 28

29 Rockwell producer of rarity, quality & value examples January 2007 to present 107 carats US$ 1.07 million (US$10,000/carat) 110 carats, I/J colour US$ 555,555 (US$5,000/carat) 212 carats, Yellow US$2.44 million (US$11,500/carat) carats, Fancy Yellow US$919,880 (US$12,674/carat) carats, Fancy Yellow US$950,000 (US$9,800/carat) 7.28 carat Flawless Intense Pink US $1.054 million (US$145,000/carat ) 29

30 Mining and processing flow-sheet Open Pit Gravel Mining Trommel Screen ROM Bin +70 mm Oversize Back-fill -70 mm Plant ROM Stockpile Process water dam ROM Bin Scrubber Prep-screen Scrubber water supply +30mm -2.0 mm -30 mm +2.0 mm Rotary Pan Plant # Sinks Fresh water pump Mine Residue Deposit mm -70 mm +30 mm to Rehabilitation mm De-grit screen Float Rehabilitation Concentrate Bin Final Recovery X-Ray, Grease Return water # - DMS plant at Holpan 30

31 Holpan + Klipdam Vaal River operations (owned 74% RDI) 31

32 Middle Orange River operations (MOR) (owned 74% RDI) Note: Acquisition of Trans Hex Middle Orange River Operations concluded April