Rockwell reports Q2 2018 results, not including ‘breakeven’ bankrupt SA affiliates - Soul 2 Soul Mates Blog

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10/17/2017

Rockwell reports Q2 2018 results, not including ‘breakeven’ bankrupt SA affiliates

Rockwell reports Q2 2018 results, not including ‘breakeven’ bankrupt SA affiliates
Canadian alluvial diamond miner Rockwell Diamonds, an affiliate of Vancouver-based mining house Hunter Dickenson, has reported a noncash comprehensive income of C$23.2-million for the three months ended August 31.





The result is based almost entirely on the reversal of foreign currency reserves regarding operations in South Africa, and certain stock based compensation reserves that were unwound. However, it excluded the company’s three South Africa-based subsidiaries Rockwell Resources, HC van Wyk Diamonds and Saxendrift Mine, over which the company no longer has control.
An application to have Rockwell’s three subsidiaries placed under South African business rescue, as opposed to liquidation, was granted in May by the court in Kimberley.




Erstwhile mining contractor C-Rock Mining had previously applied to have the three subsidiaries placed in interim liquidation, at a time when Rockwell was executing a turnaround strategy.
However, willing buyer Ascot Diamonds has stepped forward with two proposed rescue transactions – one for the distressed affiliates in South Africa and another for the group’s two subsidiaries in Cayman Islands. But the deals have been thwarted by the court-appointed business rescue practitioners Metis Strategy Advisors, who filed an untimely motion to place the affiliates into provisional liquidation, placing too much pressure on negotiations, and causing the deal to fall through.




Surprisingly, Rockwell reported that despite the fact that only 25% of the planned volumes were actually processed and, including the additional burden of the BRPs and their legal advisor’s fees, operations were on cash break-even in August.
The three subsidiaries were again placed in provisional liquidation on September 22 by the BRPs and their legal counsel Werksmans, in spite of receiving the formal offer from Ascot Diamonds,




The return date for hearing on the liquidation order is November 3, by which date the provisional liquidators Honey's of Bloemfontein will ask the Kimberley High Court either to proceed with full liquidation or keep the subsidiaries in provisional liquidation pending the successful outcome of the transaction with Ascot Diamonds.
Ascot has also offered to the company in a separate offer and transaction to buy the Cayman companies, although the offer is conditional on a successful transaction in South Africa with regards to the three South African subsidiaries. To the extent that the second offer does proceed, the Rockwell will approach creditors and shareholders for approval.




Rockwell separately reported that while the Wouterspan mine was operational under management of the BRPs, it produced a total of 408 ct, reflecting a significantly improved grade of 0.72 carats per 100 m3, with the average price per carat soaring 200% in August to $2 685/ct, compared with $899/ct in July.
Revenues from diamond sales in the period totalled $1.25-million.




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