Rockwell Announces Filing of Preliminary Short Form Prospectus

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./

VANCOUVER, March 2, 2015 /CNW/ - Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) advises that it has filed a preliminary short form prospectus in all provinces of Canada other than the Province of Québec in connection with a proposed offering (the "Offering") of subscription receipts (the "Subscription Receipts") of the Company for minimum gross proceeds of $15 million (the "Minimum Offering") and maximum gross proceeds of up to $20 million (the "Maximum Offering") to be priced in the context of the market. Each Subscription Receipt will entitle the holder thereof to receive one unit of the Company (a "Unit"), without payment of additional consideration or further action, upon satisfaction of certain release conditions (the "Release Conditions") set out in the preliminary short form prospectus. Each Unit will be comprised of one common share of the Company and portion of a common share purchase warrant on terms to be determined in the context of the market.

Dundee Securities Ltd. (the "Underwriter") will act as the lead underwriter in respect of the Offering. 

The Company has also granted the Underwriter an over-allotment option (the "Over-Allotment Option) to purchase such number of Subscription Receipts as is equal up to an additional 15% of the Subscription Receipts purchased under the Offering, or if the Acquisition (as defined below) has been completed at the time of the exercise, an equal number of Units, exercisable in whole or in part at any time not later than the earlier of (i) the 30th day following the closing date for the Offering (the "Closing Date"), and (ii) the occurrence of a Termination Event (as defined below). 

On each of January 6, 2015 and February 5, 2015, the Company issued a press release relating to its conditional agreement to acquire certain alluvial diamond properties and associated plants and equipment from Bondeo 140 CC and its affiliates (the "Acquisition") for an aggregate purchase price of ZAR 284.2 million (approximately $30.9 million) (the "Purchase Price"). The Purchase Price consists of (i) ZAR 120 million (approximately $13 million) for certain mineral property rights and three processing plants payable on the closing date of the Acquisition (the "Acquisition Closing Date"), which will be paid using a portion of the net proceeds of the Offering; and (ii) the remaining ZAR 164 million (approximately $17.8 million) for the earth moving fleet and other associated equipment, will, in the event the Maximum Offering is not achieved or pursued, be satisfied as follows: (A) ZAR 125.4 million (approximately $13.6 million) which is payable on the Acquisition Closing Date is expected to be financed by the Company by additional financing options, including additional debt instruments to be entered into on or prior to the Acquisition Closing Date; and (B) the Company will pay the remaining ZAR 38.6 million (approximately $4.2 million) plus interest accruing at 6% (nominal annual interest compounded monthly) in equal monthly installments over a 10 month period after the Acquisition Closing Date.

The Company will use a portion of the net proceeds of the Minimum Offering towards funding the ZAR 120 million (approximately $13 million) portion of the Purchase Price. The remaining net proceeds of the Minimum Offering will be used by the Company to cover additional costs related to the Acquisition and for general working capital purposes.

The assets being acquired pursuant to the Acquisition are contiguous to Rockwell's existing properties and will enlarge its operating and resource footprint in the Middle Orange River region ("MOR"). The Company believes that the Acquisition will contribute to its growth strategy in the MOR region, increase its scale, cash flow and earnings per share and improve the Company's long-term cash position.

Upon closing of the Offering, the gross proceeds from the sale of the Subscription Receipts (including the exercise of the Over-Allotment Option, if any) less the expenses of the Underwriter in connection with the Offering and one-third of the commission to be paid to the Underwriter (the "Escrowed Proceeds") will be deposited with and held by Computershare Trust Company of Canada, as escrow agent (the "Escrow Agent"), and invested in short-term obligations of, or guaranteed by, the Government of Canada (and other approved investments), pending satisfaction of the Release Conditions. Upon satisfaction of the Release Conditions, the Subscription Receipts will automatically be converted into Units, without payment of additional consideration or further action on the part of the holders.

In the event that: (i) the Release Conditions are not satisfied on or prior to a date to be determined by the Company and the Underwriter (the "Release Deadline"); or (ii) prior to the Release Deadline the Company advises the Underwriter or announces to the public that (A) it does not intend to satisfy the Release Conditions or (B) the Release Conditions are incapable of being satisfied by the Release Deadline (each such event being a "Termination Event"), then the Escrow Agent shall return to the holders of the Subscription Receipts an amount equal to the Escrowed Proceeds held by them and their pro rata share of interest earned on the Escrowed Proceeds. The Company shall be responsible and liable to such holders of the Subscription Receipts for the amount that is equal to the expenses of the Underwriter in connection with the Offering and one-third of the commission paid to the Underwriter, including interest thereon.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein.

This press release contains references to South African Rand, referred to herein as "ZAR" and Canadian dollars, referred to herein as "$". All dollar figures stated herein are expressed in Canadian dollars, unless otherwise specified.

As at February 26, 2015 the noon exchange rate as reported by the Bank of Canada for South African Rand was ZAR 1.00 = $0.1086 or $1.00 = ZAR 9.2081.

Unless otherwise stated, amounts in this press release that are converted to Canadian dollars from South African Rand were converted at the above exchange rate.

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 Acquisition 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 (including the offering) 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.