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RAPAPORT... Rockwell Diamonds Inc. entered into a conditional agreement to acquire alluvial diamond properties and associated equipment from Bondeo 140 CC and its affiliates for $28.5 million (ZAR 284.2 million). The assets are contiguous to Rockwell's existing properties in the Middle Orange River region and will significantly enlarge its operating and resource base. The purchase is subject to regulatory approval.
The company stated that $12 million will be paid for the mineral rights and three fit-for-purpose processing plants, while $16.5 million will be allocated for an earthmoving fleet and other associated equipment. The sellers will receive $3.9 million in installments over a period of 10 months, and the balance relating to equipment leases and hire purchases will be refinanced with South African financial institutions, and/or current mobile fleet and equipment supply partners. Rockwell engaged Dundee Capital Markets to assist with its expected financing for part of the purchase price payable by Rockwell pursuant to the transaction. James Campbell, the CEO of Rockwell, said, "We are delighted to have concluded this agreement, as it represents an exciting growth platform for Rockwell. Our executive and operational management have demonstrated their alluvial diamond production expertise during Rockwell's corporate turnaround and have the capacity to take on these additional assets. We have reviewed a number of consolidation opportunities, and the transaction met all our strategic criteria. Its assets are contiguous to our existing operations, which are known for their gem-quality diamonds. We know the geology of the area. So these new assets offer economies of scale, with the potential to reduce the volatility of our quarterly production results and take us above our target of processing 500,000 cubic meters per month. It will also give us the opportunity to allocate our financial, human and intellectual capital more efficiently across a broader resource base. Furthermore, we have a long-standing working relationship with the sellers of the assets, which we are acquiring, who initially brought this opportunity to the table and we have agreed to work together in order to find additional opportunities that might benefit both parties."
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