March 31, 2014
Rockwell's fourth quarter production and sales update highlights increased carat production and sale of 109 carat polished vivid yellow diamond

March 31, 2014 Vancouver, BC -- Rockwell Diamonds Inc. ("Rockwell" or the "Company") (TSX: RDI; JSE: RDI) announces its quarterly production and sales update for the three months ended February 28, 2014:

The Company's own internal operations1 in the Middle Orange River2 ("MOR"):
  • Average stone size increased by 139% to 4.6 carats from 2.0 carats in the prior year.
  • Continued benefits from MOR growth strategy with 39% increase in carat production from its three mines that are now in production in the region.
  • Carat sales from MOR operations grew 76%.
  • Diamond sales revenues from own internal operations (excluding royalty mining) increased by 34% to $8.5 million.
Company's total properties3:
  • Total volumes of gravel processed and carat production increased by 45% and 74% respectively.
  • Total carat sales increased by 81%.
Corporate:
  • Revenues from diamond sales (excluding beneficiation) increased to $12.1 million, an increase of 69% in the fourth quarter of fiscal 2014.
  • Total carat sales from Company properties for the quarter were up 81% to 9,596 carats, sold at an average price of US$1,264 per carat, which is down 7% from a year ago.
  • The Saxendrift Mine reached 1.5 million lost time injury free hours ("LTIFH") on March 11, 2014.
Analysis:
  • Total carat production grew 74%, made up of 2,676 carats from own operations and 4,041 carats from contractors. The Company reported a 45% increase in fourth quarter volumes of gravel processed to 897,288m3, of which 615,510m3 was mined from its own MOR operations and the balance from its five royalty mining contractors operating at Tirisano.
Rockwell's MOR operations achieved a 76% increase in carat sales while the average carat value rose 14% to US$1,978. The value of sales from that region increased 101% to US$8.5 million while the value of sales from Tirisano mining contractors generated US$3.6 million, of which 12.5% or US$452,270 accrues to the Company.

Volume production from Rockwell's three MOR mines, forming the cornerstone of Rockwell's organic growth strategy, increased by 60% and carat production rose 39% as Saxendrift Hill Complex operated at its nameplate capacity throughout the quarter and volumes processed at Niewejaarskraal gained momentum, approaching nameplate capacity of 100,000m3 per month at quarter end.

Commenting on fourth quarter production and sales James Campbell, CEO and President said:

"Rockwell's fourth quarter performance shows progress on a number of fronts with the results all pointing in the right direction and in line with our strategy to focus on the Middle Orange River ('MOR'). MOR volumes of gravel processed are up 60% from a year ago on the back of additional throughput from new capacity and this is in spite of abnormally heavy rainfall as well as service delivery protests that were managed in partnership with local leaders and regional authorities to minimise the impact on our workers and our operations. This delivered a 39% increase in carat production with the value per carat up 14%. We now have three mines in production in the MOR, all of which have multiple mining faces. This has provided us with benefits from production diversification as well as mining flexibility. During the quarter we continued to focus on the fleet optimization programme to renew our aging fleet, cost effectively. We are currently reviewing the various financing options that have been presented to the Company and have started the implementation phase. The consistency of results from the royalty mining contractor agreements at Tirisano is now enabling the Company to take a measured approach to assessing the future options of some of its remaining non-core assets. Our objective remains to continue our drive to grow our own mining and processing capacity to 500 000m3 per month of quality cubes and increase the recovery of large diamonds."

Fourth quarter operational update:

Volume and carat production for the Company's operational mines for the quarter ended February 28, 2014:

Operation Volumes of gravel processed (m3) Carats produced Average grade (carats / 100 m3)
Q4 2014 Q4 2013 % change Q4 2014 Q4 2013 % change Q4 2014 Q4 2013 % change
Klipdam - 227,361 - - 1,133 - -  0.50 -
Saxendrift 273,418 383,770 -29%  1,594 1,929 -17%  0.58  0.50 16%
Saxendrift Hill Complex 179,479 - -  681 - -  0.38 - -
Tirisano -  1,823 - -  39 - -  2.14 -
Niewejaarskraal 162,613 - -  401 - -  0.25 - -
Total: Own operations 615,510 612,954 0%  2,676 3,101 -14%  0.43  0.51 -14%
Contractors' mining*  281,778 - -  4,041  727 456%  1.43 - -
Saxendrift tailings -  6,592 - -  26 - -  - -
Total production on Company properties 897,288 619,546 45%  6,717 3,854 74%  0.75  0.62 20%
* "Contractors' mining" refer to independent royalty contractors processing gravel for their own risk and reward. Carats recovered are then sold through the Company's tender process. The Company retains the responsibility for diamond security and sales and receives royalty income of 12.5% on these diamonds sold with the balance of the revenue accruing to the contractors.

Diamond sales and revenue for the Company's operations for the quarter ended February 28, 2014:
Operation Sales (carats) Value of Sales (US$) Average value (US$ per carat)
Q4 2014 Q4 2013 % change Q4 2014 Q4 2013 % change Q4 2014 Q4 2013 % change
Klipdam -  1,574 - - 1,915,053 - -  1,217 -
Saxendrift  2,764  2,440 13%  6,039,694 4,239,923 42%  2,185  1,738 26%
Saxendrift Hill Complex  1,154 - -  1,987,045 - -  1,722 - -
Tirisano -  291 - -  196,590 - -  676 -
Niewejaarskraal  385 - -  482,976 - -  1,254 - -
Total: Own operations  4,303  4,305 0%  8,509,715  6,351,566 34%  1,978  1,475 34%
Contractors' carat sales*  5,293  581 811%  3,618,164  403,818 796%  695 - -
Saxendrift tailings -  422 - -  436,882 - 1,035 - -
Total sales from Company properties  9,596  5,308 81%  12,127,879  7,192,266 69%  1,264  1,355 -7%
* "Contractors' carat sales" refer to independent royalty contractors processing gravel for their own risk and reward. Carats recovered are then sold through the Company's tender process. The Company retains the responsibility for diamond security and sales and receives royalty income of 12.5% on these diamonds sold with the balance of the revenue accruing to the contractors.

Saxendrift Operations:
  • At the Saxendrift Mine, quarterly volumes of gravel processed were down 29% year-on-year to 273,418m3 comprising entirely of gravels from the higher-grade Saxendrift Extension. The drop was due to the combined impact of longer haulage distances as well as earthmoving vehicle availability due to the aging equipment fleet at Saxendrift. These are now being pro-actively addressed through the fleet optimization programme that is in the implementation phase. Service delivery protests in the nearby town of Douglas also impacted volumes in the fourth quarter.
  • The mine achieved a 16% increase in average grade to 0.58 carats per 100m3, however, this was not sufficient to offset the lower volumes and as a result, carats produced declined 17% from the prior year, to 1,594 carats.
  • Carats sold from the Saxendrift operation increased by 13% to 2,764 carats at an average price of US$2,185, 26% higher than in the comparable prior period. Accordingly, the mine produced a 42% increase in revenue from diamond sales to US$6.0 million (excluding beneficiation).
  • Notable stones recovered at the Saxendrift Mine processing plant included 29 rough diamonds exceeding 10 carats, including most notably a 64.72-carat and a 67.12-carat stone.
Saxendrift Hill Complex:
  • The Saxendrift Hill Complex ("SHC") mine, achieved quarterly volumes of gravel processed amounting to 179,479m3 from which a total of 681 carats were recovered during the quarter.
  • Sales from SHC amounted to 1,154 carats at an average price of US$1,722 per carat, generating revenue from diamond sales for the period of US$2.0 million.
  • Notable stones recovered at SHC during the fourth quarter included six rough diamonds exceeding 10 carats including, most notable being a 50.96 carat rough stone.
Niewejaarskraal:
  • The production ramp up to 100,000m3 per month at the Niewejaarskraal Mine was completed towards the end of the fourth quarter and included the second phase of the processing plant, comprising the installation of an In-Field Screen ('IFS') and a rental Bulk X-ray system. The total volume of gravel processed in the fourth quarter amounted to 162,613m3.
  • After a detailed review of the existing geological data, mining commenced according to the new 18-month mine plan in mid-February 2014. Two mining faces have been opened up, adjacent to the IFS, and these should enable higher productivity and provide optionality in the mine plan. Early indications are that the grade is now approaching budget. The mine produced 401 carats during the fourth quarter.
  • Sales from Niewejaarskraal amounted to 385 carats with total revenue of US$482,976 at an average price of US$1,254 per carat. The Company remains confident that carat values will continue to improve and reflect the higher carat values that characterise the MOR once the mine is consistently running at nameplate capacity.
  • Notable stones recovered at Niewejaarskraal during the fourth quarter included ten plus 10-carat rough diamonds.
Royalty Mining Contractors
  • The royalty mining contractors operating on the Tirisano property continue to perform consistently in the fourth quarter with total volumes of gravel processed amounting to 281,778m3 yielding 4,041 carats.
  • Total revenue generated by the contractors from diamond sales amounted to $3.6 million ($452,270 royalty income accruing to Rockwell) from the sale of 5,293 carats at an average price of $695 per carat.
  • The royalty mining contractor agreement at Kwartelspan, which commenced in the fourth quarter of fiscal 2014, is in the process of being converted into a joint venture mining arrangement.

Subsequent event: Sale of rare polished diamond through beneficiation joint venture
  • The Company is pleased to announce that a 109-carat vivid yellow diamond has been polished from the 169-carat rough stone which was recovered in September 2013 at the Saxendrift Hill Complex mine. The cushion cut diamond has been sold through Rockwell's beneficiation partnership with Diacore and the Company's profit share will be recognized as beneficiation revenue in the first quarter of fiscal 2015.
For further information on Rockwell and its operations in South Africa, please contact
James Campbell CEO +27 (0)83 457 3724
Stéphanie Leclercq Investor Relations +27 (0)83 307 7587
David Tosi PSG Capital -- JSE Sponsor +27 (0)21 887 9602

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 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 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.
1 Includes contribution from mines operated and managed by Rockwell. The Company's own internal operations for the fourth quarter of fiscal 2014 comprise gravels mined at Saxendrift Extension (processed at Saxendrift), Saxendrift Hill Complex and Niewejaarskraal. The fiscal 2013 comparative included the production of Saxendrift, Saxendrift Extension, Klipdam (sold at the end of March 2013) and Tirisano (transferred to royalty mining business model in January 2013).
2 Middle Orange River operations included the production and sales of Saxendrift (incorporating Saxendrift Extension), Saxendrift Hill Complex and Niewejaarskraal in the fourth quarter of fiscal 2014 while the prior year comprised of Saxendrift and Saxendrift Extension only.
3 Includes contribution from mines operated and managed by Rockwell. The Company's own operations for the fourth quarter of fiscal 2014 comprise gravels mined at Saxendrift Extension (processed at Saxendrift), Saxendrift Hill Complex and Niewejaarskraal. The fiscal 2013 comparative included the production of Saxendrift, Saxendrift Extension, Klipdam (sold at the end of March 2013) and Tirisano (transferred to royalty mining business model in January 2013).
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