Rockwell arranges $4.1 million unsecured convertible Debentures

VANCOUVER, Nov. 19, 2014 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) announces that it has completed an offering of two-year unsecured convertible debentures in a principal amount of $4.1 million (all amounts CDN$) with two insiders, namely Rockwell's principal shareholder Daboll Consultants Ltd, an affiliate of Diacore, as to $3.0 million and with Mark Bristow, Rockwell's non-executive chairman as to $1.1 million. The proceeds of the offering will be used to finance current and proposed work programs on the Company's diamond projects and for general working capital purposes.

The debentures bear interest at a rate of 5% p.a. and will become convertible, subject to the prior approval of the disinterested minority shareholders, into equity securities of the Company. Subject to such approval, the debenture holders may convert the principal and interest into the same securities issued as may be issued in any equity financings completed by the Company within the first 12 months after the debentures are issued, and if no equity financings are completed, then the debentures may be converted into common shares at the undiscounted five day volume weighted average price ("VWAP") anytime in the second 12 months. If conversion occurs in connection with an equity financing, the debenture holders will receive a 10% discount to the equity financing price not to exceed a discount of more than 25% from the VWAP (where the Company's shares trade at $0.50 or less and 20% discount from VWAP if above $0.50). If the equity financing is $10 million or more the debentures automatically convert into the same securities on those terms. In accordance with MI 61-101 the Company will seek disinterested minority shareholder approval at the earliest of the next shareholders meeting and in conjunction with the next round of equity financing and a valuation is expected to be provided in connection with seeking minority approval.

Commenting on the issue of the debenture James Campbell, CEO and President said:

"We are pleased that our Chairman, Mark Bristow and Diacore, our beneficiation joint venture partner, have taken up these $4.1 million debentures, which will enable Rockwell to strengthen its balance sheet and continue financing its organic growth projects. Having funded two new processing plants, at Saxendrift Hill Complex and Niewejaarskraal, from working capital during the last two years. Management felt it prudent to pursue this additional funding and received board approval to do so. All key shareholders were consulted and given an opportunity to participate. These two processing plants, together with Saxendrift, are currently processing gravels at an increased rate of some 380,000m³ per month and continue to recover large, high quality rough diamonds that are being sold through our partnership with Diacore.

"Our partnership with Diacore has delivered significant value for both parties over the last seven years and we are delighted to have this further vote of confidence from them. Furthermore, the additional investment by Mark Bristow, who is already a substantial investor in the Company, reflects his confidence in the future growth of Rockwell. The additional funding makes us more resilient in the short term while we continue with internal developments to increase our capacity towards our medium target of processing 500,000m³ of quality gravels per month from our Middle Orange River operations as well as pursue external opportunities to grow and leverage our diamond value chain capabilities".

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. It has recently built two new internally funded mines in the Middle Orange river region, namely the Saxendrift Hill Complex and the Niewejaarskraal Mine which are both in production. Rockwell also has a development project 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 consolidation 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 if 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 as 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.

SOURCE Rockwell Diamonds Inc.