Rockwell issues further details on its recently announced agreement to acquire additional operating and resource assets which will substantially enhance its production

Acquisition Highlights:

• The projects, Remhoogte / Holsloot ("the Properties") and Bo-Karoo, are contiguous to Rockwell's existing properties in the MOR region, South Africa
• The Properties have produced more than 7,300 carats of high quality diamonds (at a sample grade of some 0.8 carats per 100 m³ ("cphm³")) valued at US$3,000 to US$4,000 per carat for the nine months ended December 2014
• The Properties have the potential to increase the Company's portfolio by 11 to 12 million m³ of gravel at target grades of 0.4 to 1.5 cphm³. The Transaction is expected to increase the Company's existing processing capacity in the MOR by approximately 200,000 m³ per month
• The Company has also recently been granted additional prospecting and mining rights in the MOR, spanning an area of more than 50,000 hectares ("ha")
• Closing of the transaction is expected to occur in Q2 2015, subject to satisfaction of all conditions precedent, Section 11 applications have been filed with the Department of Mineral Resources ("DMR")

Commenting on the Transaction James Campbell, CEO and President said:

"We are confident that we have delivered a value accretive acquisition with Remhoogte / Holsloot and Bo Karoo, which will be a foundation to further Rockwell's MOR growth strategy. The Remhoogte / Holsloot properties add Exploration Targets of some 11 to 12 million m³ of gravels, with target grades which are higher than those on our current MOR properties. Furthermore they are early life mines with exploration upside potential comprising three recently commissioned processing plants that include some state of the art Bulk X-ray technology. Recent production has confirmed the high value per stone potential of the properties and the Transaction also includes the brownfields Bo Karoo project, where bulk-sampling has produced typical MOR style stones in the past."

"Along with our own planned rationalization and expansion projects and the recently granted mining and exploration rights, we expect that this transaction will allow us to grow our production target to materially above the magic 500,000m³ per month. This has been shown to be the minimum rate at which one overcomes the variances that are inherent in mining alluvial diamond deposits and which lead to swings in quarterly operating results associated with the industry."

Acquired Mineral Deposits and Processing Plants

Remhoogte / Holsloot Project:

Under the terms of the Transaction, Rockwell will acquire the mining rights to Remhoogte, a 1,585 ha property, in the Northern Cape. Remhoogte is contiguous to Holsloot, a 1,050 ha property, as well as the Company's existing MOR operations. The Properties comprise early stage projects, with three fit-for-purpose processing plants with total monthly processing capacity of approximately 200,000 m³.

The processing plant at Remhoogte, commissioned in June 2014 from all-new equipment, consists of a Bourevestnik Bulk X-ray system for the processing of coarse gravels and a four rotary pan plant to treat the fine gravels. A second rotary pan plant at Remhoogte consisting of four pans was commissioned on the property in November 2014. At Holsloot, a processing plant was recently commissioned from new equipment and consists of a de-sanding system, a Bourevestnik Bulk X-ray system for the processing of coarse gravels and a dense media separation system for fine gravels.

Extensive historical drilling combined with limited reconnaissance sampling of the Properties indicates the presence of Exploration Targets with 11 to 12 million m³ of gravel at a grade of 0.4 to 1.5 cphm³.  Average diamond values realized from the Properties on the sale of +5,000 carats on the open market, are in the range of US$3,000 to US$4,000 per carat for the nine-month period ended December 2014, resulting in total sales of US$16.9 million. The recovered stones produced better colours than Rockwell's current MOR assortment with the largest stone weighing 178 carats. These statements of potential quantity, grade and value are conceptual in nature, there has been insufficient exploration in these areas to define a Mineral Resource and it is uncertain if further exploration will results in the targets being delineated as a Mineral Resource.

Bondeo has processed approximately 0.9 million m³ of gravel since start-up in May 2014, producing 7,307 carats with an estimated sample grade of 0.8 cphm³. The Company will undertake detailed surveying and infill drilling during 2015 in order to define a Mineral Resource and expects to report the results during Q1 of F2017.

Bo-Karoo Project:

Bo-Karoo is a diamond mining right situated on a farm in the Hopetown district of the Northern Cape measuring 3,508 ha and located 20km northeast of Saxendrift. The property has previously been sampled by various operators who have not invested in exploration hence limited data is available regarding the potential volume of gravels.

This property is a brownfields project with many areas at the same elevation levels as the Saxendrift and Niewejaarskraal properties and has extensive Exploration Targets with historical sample grades of 0.2 to 0.4 cphm³ and diamonds values ranging between US$3,000 and US$4,000 per carat.

The relevant Section 11 applications for the transfer of the Remhoogte and Bo-Karoo mineral rights have been lodged with the Department of Mineral Resources.

Earthmoving Vehicle Fleet ("EMV")

In addition to the Remhoogte / Holsloot and Bo-Karoo projects and their processing plants, Rockwell is purchasing a portion of Bondeo and its affiliates' fleet of EMV equipment that match the Company's MOR mines' operational requirements. This EMV equipment is relatively new and has a low number of operating hours, which meets the specifications of the fleet optimization strategy determined by Rockwell in 2014. Additional required equipment will be sourced on similar terms to the existing fleet leased through Eqstra Holdings Limited.

Rockwell is reviewing its EMV fleet arrangements across the MOR to standardize its fleet fully, including its inventory requirements, spares and supplies, as well as mining practices across all operations with a single fleet management team to achieve full economies of scale and related purchasing power and supply line efficiencies. After closing the Transaction, and as part of the integration process, Rockwell plans to transition the Remhoogte / Holsloot EMV fleet to Rockwell's standard operating practices.

Further Expansion of MOR Footprint:

The Company has recently been granted prospecting and mining rights to approximately 50,000 ha in the MOR region (rights are still to be executed) providing significant upside potential beyond the life of its current assets. These prospecting and mining rights, together with the assets and rights being acquired as part of the Transaction, effectively give Rockwell access over the majority of the Orange River alluvial diamond fields over a 100 km length.

Integration Plans:

The increase in scale in the MOR region will also offer an opportunity for efficiencies in the short term through more efficient allocation of the same resources across a broader asset base.

The immediate priorities are as follows:

• The remaining resource at Saxendrift Hill Complex ("SHC") will be processed through the Saxendrift processing infrastructure, with portions of the SHC EMV fleet being relocated to Niewejaarskraal. A process to retrench the affected workforce is in progress with issuing of the Section 189 retrenchment notices in compliance with the South African Labour Relations Act, 1995 ("Labour Relations Act").
• At Niewejaarskraal, the reallocation of the SHC fleet will enable that mine to operate at its current design capacity of 130,000m³ per month. The SHC plant assets will be relocated in the short term to Niewejaarskraal, increasing capacity up to 200,000m³ per month.
• At the Properties, operations will be standardized to Rockwell's operational template in operation at Rockwell's other existing MOR sites. Rockwell will also apply its geological and technical skill in operating in the MOR to the Properties, including longer term planning. Rockwell's optimization could include integration of the plants on the Properties.
• The current employees from the Remhoogte Project will also be transferred to Rockwell employment to ensure continuous production, in terms of Section 197 of the Labour Relations Act.
• After closing the Transaction, Rockwell will launch a formal exploration programme at the Properties to define a Mineral Resource by the end of February 2016. Exploration will also commence at Bo Karoo, to evaluate its potential as a possible replacement for Saxendrift which is now in the second half of its mine life.
• Following the granting of more than 50,000 ha of new mining and prospecting rights the Company is expanding its regional geological strategy, to identify new targets for follow up and economic assessment.

Financing

The Transaction is subject to conditions precedent, including customary regulatory approvals and the Company obtaining financing in order to raise the ZAR 245,630,000 (approximately $25.8 million) payable on the closing date. Rockwell expects that the closing will occur in Q2 2015, subject to the satisfaction of all conditions precedent. Rockwell intends to raise the necessary funds by way of one or more debt or equity financings.

Rockwell previously announced that it has engaged Dundee Capital Markets as its advisor in connection with the Transaction and to explore financing options.

This Press Release was reviewed and approved by Rockwell's Group Technical Manager, G.A. Norton, B.Sc.Hons (Pr. Sci. Nat.), a Qualified Person who is not independent of the Company and T.R. Marshall, PhD, (Pr. Sci. Nat.), a Qualified Person who is independent of the Company.

All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified.

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 MOR. It recently built two new internally funded fit-for-purpose processing plants in the MOR region, namely the Saxendrift Hill Complex and the Niewejaarskraal Project. 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", "potential", "should", "likely", forecast", "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 the Transaction and the ability of each party to satisfy the numerous conditions precedent in a timely manner or at all, including, without limitation, completion on a timely basis of financings on satisfactory terms, receipt of shareholder approval, if required, receipt of all regulatory approvals, including the acceptance of the Section 11 applications and exchange and securities regulatory authority approvals; 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.