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Rockwell Restructures Agreement with AVR

Mar 19, 2012 9:35 AM   By Jeff Miller
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RAPAPORT... Rockwell Diamonds  reached an agreement with Africa Vanguard Resources (AVR) with respect to acquiring the Jasper diamond mine property, which is contiguous to Rockwell's Saxendrift mine and has the potential to extend the life of Saxendrift with only limited investment.  As required by South Africa's beneficiation laws, Rockwell allowed AVR to purchase a 26 percent interest in subsidaries of the company and has been in discussions  regarding the replacement of the vendor funding. Rockwell enabled AVR to acquire 26 percent of HC Van Wyk Diamond Group and Saxendrift Mine (Pty.) Ltd. in 2008, the subsidiaries that operate Rockwell's  Northern Cape operations.

AVR paid  $2.9 million (ZAR 22.5 million) but owes the balance of  $7.9 million (ZAR 61.6 million). The  restructuring agreement states that Rockwell will pay AVR $1.9 million in the form of Rockwell shares, listed on the JSE Limited. AVR has undertaken not to trade these shares for a period of one year. Incorporated into the settlement arrangements is Rockwell's  acquisition  of the Jasper mine, subject to various conditions and regulatory approvals. 

Preliminary estimates indicate that the Jasper mine, which is a brownfield opportunity, has remaining diamond-bearing deposits that are easily accessible to the infrastructure at the Saxendrift mine and could extend the life of Saxendrift past its current three-year expectation.

Mark Bristow, the chairman of Rockwell, said, ''The Rockwell management team has negotiated a settlement, which provides for both parties to deal with their own short term challenges whilst simultaneously giving Rockwell the ability to comply with its BEE objectives and growth plans on a commercial basis. Having resolved one of the last remaining legacy issues impacting the company the management team will be able to spend more time on its diamond value management strategy, which is a key driver to delivering on its short and medium plans to create value for all its stakeholders."

Tags: africa, diamonds, jasper, Jeff Miller, Rockwell, south
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