Big diamond makes big difference for Rockwell’s Q2

A single diamond sold for US$10.3 million made up the bulk of Rockwell Diamonds’ (RDI-T, RDI-j) revenue over the latest quarter, which was affected by striking miners demanding higher wages.

For the period ending Aug. 31, total revenue from the company’s four diamond operations in South Africa came to US$15.2 million.

The large, white stone — the second biggest ever found by the company — offset revenues lost due to the strike, but the find was not out of the ordinary, says Rockwell president and CEO John Bristow.

“We expect to get three to four high-quality stones on a yearly basis,” Bristow said in a telephone interview. “It was good for the quarter, but we would’ve picked it up along the way anyway.”

The 189.68-carat white stone was priced at US$54,255 per carat. The average price per carat from the four operations was US$3,680 from a combined total of 4,135.5 carats sold over the period. That’s much higher than the average price received over the last two fiscal quarters, which was US$2,491 per carat.

The large diamond came from the Klipdam alluvial diamond operation (adjacent to the Holpan operation) located 45 km from Kimberly. It’s the fourth large stone that Rockwell has found this year, though it is far from setting any records — the Cullinan diamond discovered in South Africa in 1905 weighed 3,106 carats. Rockwell’s biggest find was a 212-carat yellow stone last September.

Rockwell reports that run-of-mine diamond production was 35% lower than original projections due to a strike in July and August.

Cash costs were higher as a result at US$4.65 per tonne, excluding Saxendrift and US$5.62 per tonne including Saxendrift, where a wet-rotary pan plant is being built.

The company expects September cash costs to be about US$4 per tonne.

Negotiations during the strike led to a 13.5% wage increase for non-management employees, matching the latest consumer price inflation figures for South Africa.

The strike, deemed illegal by Rockwell, started at the Wouterspan mine on the Middle Orange River in Northern Cape province. Rockwell kept the daytime shift going with the help of management, supervisors and non-unionized employees from the Saxendrift, Wouterspan and Klipdam operations.