Sale of Klipdam Mine releases capital for reinvestment in higher value Middle Orange River operations

VANCOUVER, April 15, 2013 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) is pleased to announce that it has reached an agreement to sell the Klipdam Mine and associated properties¹ for a total cash consideration R23 million (C$2.5 million). This brings the total proceeds from the sale of this asset to R48 million, including the sale of the earth moving equipment in October 2012.  The proceeds will be reinvested in bringing the Niewejaarskraal Mine into production and progressing its strategy of growing its operating footprint in the Middle Orange River region of South Africa. The Company has a strong track record in operating successful mines in this region which typically yields large, high valued diamonds.

The right sizing project that was initiated at Klipdam in October 2012 led to the expected unit cost reductions and increased volume throughputs, however the operation is not considered to be a core asset. Consequently the Company has accepted an unsolicited cash offer to sell the mine to a private alluvial diamond miner. The purchase consideration of R23 million is payable in three tranches. The first payment of R10 million was received upon signature of the sale agreement. The rest of the purchase price will be paid in eight monthly instalments of R1 million each with R5 million to be paid upon receipt of Section 11 approval from the Department of Minerals Resources ("DMR"). Under the terms of the agreement, Rockwell will retain ownership of certain items of plant and machinery that will be redeployed, chiefly to Niewejaarskraal Mine.

Elaborating on the rationale for the transaction, James Campbell, CEO of Rockwell stated: "Klipdam Mine has a remaining life of two years, based on current resources. We accepted the offer for this mine, as opposed to investing further resources to extend its projected mine life through additional exploration, because our analyses projected higher long-term returns from Rockwell's Middle Orange River properties which have better grades and diamond values than Klipdam and yield high-value, gem-quality diamonds."

At the same time, a proposal to take the Niewejaarskraal Mine² out of care and maintenance has been approved by the Board of Directors, with a total capital budget of R20.1 million (C$2.2 million) that is comprised chiefly of labour and earthworks. The project entails bringing the Dense Media Separation ("DMS") plant at Niewejaarskraal Mine back into operation. The DMS production will be supplemented through the addition of four 16-ft Rotary pans from the Tirisano mine in addition to using equipment from Klipdam that was not part of the sale. Trial mining operations are expected to come on stream after a six-month implementation phase with a six-month ramp up to a monthly processing capacity of 115,000 m³.

During the design phase, management considered deploying the same Bulk X-ray technology that has been installed at other Rockwell operations but this would have taken one year to implement at Niewejaarskraal. The Company opted to re-commission the existing DMS plant and install the 16-ft Rotary pans - a lower cost option which has the added advantage of a shorter implementation period. The production team from Klipdam has the requisite expertise and experience to efficiently run a pan and DMS plant, and will be relocated to Niewejaarskraal as will the contract miner CML Operations from Klipdam. As part of the design phase, the Company evaluated the potential for a second phase of commissioning to increase the capacity of Niewejaarskraal to 200,000 m³; this option will be revisited once the initial phase has been bedded down.

"The Niewejaarskraal development is another important milestone towards delivering on our stated objective of growing monthly production volumes to 500,000 m³ from our existing inventory of properties in the Middle Orange River region. With three productive mines, namely Saxendrift, the Saxendrift Hill Complex which is in the production ramp-up phase, to be followed by Niewejaarskraal, we expect to reach three quarters of this target," commented CEO Campbell. "The Niewejaarskraal deposit average grade is 0.74 carats / 100 m³, and so has the potential to produce higher recovery grades than Saxendrift, with the added benefit of slightly better projected average carat values. Our plans for Niewejaarskraal also make use of the existing production plant and equipment without placing undue pressure on our capital resources. We believe our track record in the Middle Orange River region positions us to start delivering positive net returns by the end of fiscal 2014."

About Rockwell Diamonds:

Rockwell is engaged in the business of operating and developing alluvial diamond deposits, with a goal to become a mid-tier diamond production company. The Company's flagship mine is the Saxendrift Mine, in the Middle Orange River and the Saxendrift Hill Complex, which will come into production in the first quarter of fiscal 2014. Rockwell also has two development projects and a pipeline of earlier stage properties with future development potential. The operations are based on high throughput processing capability and Saxendrift has among the lowest unit costs in the industry as a result of implementing fit for purpose technologies.

The Company is known for producing large, high quality gemstone comprising a major portion of its diamond recoveries that is enhanced through a beneficiation joint venture that enables it to participate in the profits on the sale of the polished diamonds.

Rockwell also evaluates merger and acquisition opportunities which have the potential to expand its mineral resources and production profile and to provide accretive value to the Company.

No regulatory authority has approved or disapproved the information contained in this news release.

Forward Looking Statements

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. 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 uncertainties and costs related to exploration and development activities, such as those related to determining whether mineral resources exist on a property; uncertainties related to expected production rates, timing of production and cash and total costs of production and milling; uncertainties related to the ability to obtain necessary licenses, permits, electricity, surface rights and title for development projects; operating and technical difficulties in connection with mining development activities; uncertainties related to the accuracy of our mineral resource estimates and our estimates of future production and future cash and total costs of production and diminishing quantities or grades of mineral resources; uncertainties related to unexpected judicial or regulatory procedures or changes in, and the effects of, the laws, regulations and government policies affecting our mining operations; changes in general economic conditions, the financial markets and the demand and market price for mineral commodities such and diesel fuel, steel, concrete, electricity, and other forms of energy, mining equipment, and fluctuations in exchange rates, particularly with respect to the value of the US dollar, Canadian dollar and South African Rand; changes in accounting policies and methods that we use to report our financial condition, including uncertainties associated with critical accounting assumptions and estimates; environmental issues and liabilities associated with mining and processing; geopolitical uncertainty and political and economic instability in countries in which we operate; and labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in which we operate our mines, or environmental hazards, industrial accidents or other events or occurrences, including third party interference that interrupt operation of our mines or development projects.

For further information on Rockwell, Investors should review Rockwell's home jurisdiction filings that are available at www.sedar.com.

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1 The Klipdam Mine and associated properties consists of the contiguous Holpan 161 and Klipdam 157 farms, covering an area of 3,836 hectares as well as prospecting properties, Erf 1 and Erf 2004, Windsorton. Mining operations at Holpan were placed on care and maintenance in May 2011.

² The Niewejaarskraal Mine project is a past producer that was acquired by Rockwell in 2009. The Company announced results from a Preliminary Assessment of Niewejaarskraal in May 2011.

SOURCE Rockwell Diamonds Inc.