Frank, fiery talk from new Rockwell head

THE new executive in charge of Rockwell Diamonds spared no words in his assessment of the company he was appointed to lead after the board reviewed its assets and strategy.

Tjaart Willemse, who is executive officer of the underperforming alluvial diamond miner, is taking over from diamond mining veteran James Campbell, who said he was stepping down as CEO after the outcome of the review into the newly acquired Remhoogte mine and the behind-schedule and over-cost Wouterspan project.

The board was prompted to intervene and will monitor the mines and projects on a weekly basis. Willemse will report directly to Rockwell chairman Mark Bristow, the no-nonsense CEO of London-listed Randgold Resources.

In his first comments on the state of Rockwell, Willemse pulled no punches in a brutally frank assessment of where the company found itself.

“From my observations to date on the general health of the business and understanding of the main contributors to its current position, it is clear that the business finds itself in a state of despair for a number of reasons,” he said in the release of quarterly results to end-August.

“There has been a general breakdown in controls over a considerable period of time, nonadherence to the procurement policy, amongst others, being very prevalent. This, coupled with inadequate work planning and the lack of project front-end loading, has led to a series of financial management concerns and business risks,” he said.

“Blurred lines of accountability, both within the organisation and between the company and some of its service providers, does not bode well for proper management and control of the business and a perceived lack of a sense of urgency further exacerbates the potential for failure,” he said.

As part of the turnaround strategy, Rockwell is selling its earth-moving fleet and has reached a five-year agreement with a contractor, C-Rock Mining, which entails the transfer of two-thirds of Rockwell’s staff.

Commissioning of key parts of the Wouterspan processing plant will be set in motion in September and October.

The Remhoogte mining plan is under review to accommodate reduced resources and lowervalue gravels.

The former flagship Saxendrift mine will be shut in September, with options considered around infrastructure and bringing in royalty miners to extract the remaining diamonds.

Rockwell is also “assessing potential kimberlite acquisitions to increase stability in monthly production and cash flow”.

“I am of the opinion that, with appropriate controls in place and with the right team to execute it, Rockwell can be turned around to deliver good shareholder value,” Willemse said.

Shareholders in Canada, where it is listed on the Toronto bourse, have sent Rockwell shares down 55% in the past 52 weeks, leaving it with a market capitalisation of C$4.9m ($3.7m). In SA, the thinly traded share has declined 25% in the past 12 months, but has recovered by 36% so far in 2016, but was unchanged on Friday.

Operationally in the three months to end-August, Rockwell sold 4,849 carats, which was 9% lower than the same period in 2015. The value of sales fell 21% to $7.6m. Mining volumes fell 8% as the Saxendrift mine was wound down ahead of being closed.