Rockwell announces an acquisition which will expand its operating and resource footprint in the Middle Orange River region of South Africa
Rockwell Diamonds Inc. has entered into a conditional agreement to acquire certain alluvial diamond properties and associated plant and equipment from Bondeo 140 CC and its affiliates which own and operate alluvial diamond properties for a total consideration of $28.5 million.
The assets are contiguous to Rockwell's existing properties and will significantly enlarge its operating and resource base, thus leveraging the company's growth in the Middle Orange River (MOR) region.
The total acquisition consideration comprises of $12.0 million for the mineral rights and three fit-for-purpose processing plants with such consideration payable on the closing date.
The remaining $16.5 million, allocated to earthmoving fleet and other associated equipment, is made up of $3.9 million to be paid to the sellers over a period of 10 months in equal installments and the balance relating to equipment leases and hire purchases, intended to be refinanced on similar terms with South African financial institutions and / or current mobile fleet and equipment supply partners.
The transaction is subject to conditions precedent, including customary regulatory approvals and the company completing a financing on or before March 31, 2015 in order to raise the $12.0 million payable on the closing date. Rockwell expects that the closing will occur in Q2 2015, subject to the satisfaction of all conditions precedent.
Commenting on the transaction James Campbell, CEO and President 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 MOR 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 500,000m3 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."