TORONTO, Sept. 22, 2017 /CNW/ - Rockwell Diamonds Inc.
("Rockwell" or the "Company") (NEX: RDI.H; JSE: RDI) provides a
further update as to the developments with respect to its three
subsidiaries in South Africa.
These subsidiaries are Rockwell Resources RSA (Pty) Ltd (Rockwell
RSA), HC van Wyk Diamonds Ltd (HC van Wyk) and Saxendrift Mine
(Pty) Ltd (Saxendrift).
As previously advised last week, the Company received two offers
which, when combined, serve to buy out the Company's operating
assets in South Africa. The offers
are from Istotron (Pty) Ltd, a wholly owned subsidiary of Ascot
Diamonds, which is an 18.2% shareholder of the Company, and a
significant secured creditor of Rockwell RSA.
The first offer was tendered to the Business Rescue
Practitioners (BRPs) to purchase 100% of the creditors' valid and
supported claims in the three entities. Following completion, the
buyer would be the only creditor and the business rescue process
terminated. It was the intention of the buyer to restart the
Wouterspan mine, and to operate it under a similar plan thereafter.
The BRPs accepted the first offer as being in excess of liquidation
value and therefore in the creditors' interest. Given this, the
BRPs, Metis Strategy Advisors, through their legal counsel,
Werksmans of Johannesburg,
attempted to obtain an agreement with labour as a first step.
The BRPs, Metis Strategic Advisors and their counsel, Werksmans
of Johannesburg were unable to
conclude an agreement with labour in order to accept the
offer under the business rescue process in the two days that they
had remaining, given that they had decided to proceed with a
provisional liquidation application to be heard today. That hearing
was held and the three subsidiaries were again placed in
provisional liquidation. The mandate of the BRPs and their counsel
is therefore now terminated and they will have no further
involvement other than to hand over their workings to the appointed
liquidators. Any remaining fees will be part of the general
creditor claims. The liquidators will be appointed within 3
business days of the court order, and since Monday, September 25 is a public holiday in
South Africa, the liquidators will
be appointed on or before Wednesday,27
September 2017.
Notwithstanding this, the buyer has indicated to the Company
that they will proceed to work with the provisional liquidator to
buy the three subsidiaries out of the provisional liquidation
process so as to own the operation, the mining right, plant which
will enable them to restart the mine. As the three companies are
only in provisional liquidation, the mineral and mining rights
remain the property of the three entities.
Given the progress that was achieved between the buyer and the
Company in that last two months, it is believed that a transaction
can be achieved in the short term with the provisional liquidator,
as the offer is in excess of liquidation value.
A second offer was received whereby Ascot Diamonds will purchase
100% of the share capital of N9C, the Company`s Cayman Island
subsidiary which is the intermediate parent company of the South
African entities. This offer is conditional on the successful
acquisition from all provisional liquidation claims against the
South African subsidiaries.
The Company's corporate structure is further outlined in the
Annual Information Form filed May 29,
2017.The proceeds from such sale will be accrue to the Company for
purposes of settling trade creditors in the Company, and making
proposal to shareholders to buy their shares. The two debenture
holders in the Company have indicated that they will not seek any
repayment, will surrender their debentures, and will accept the
purchase of shareholders' interests in order to effect an orderly
wind down of the Company.
Both of these offers will require court, regulatory and
shareholder approval in Canada and
in South Africa, and are expected
to take between 3 and 6 months to complete. Following approvals and
completion of the share buy back from shareholders, the Company is
expected to surrender its charter and thereby dissolve.
About Rockwell Diamonds
Rockwell is engaged in the
business of operating and developing alluvial diamond deposits. The
Company also evaluates consolidation opportunities that have the
potential to expand its mineral resources and production and
provide accretive value to the Company.
Rockwell has set a strategic goal to become a mid-tier diamond
production company with specific focus on the Middle Orange River
region in South Africa.
As at the date of this document, Rockwell's subsidiary in
South Africa (Rockwell Resources
RSA Pty Limited) and its two subsidiaries (HC van Wyk Diamonds
Limited and Saxendrift Mine Pty Limited) were being operated under
Business Rescue Management as ordered by the Court, following an
application by creditors of the three South African subsidiaries on
May 18, 2017.
Rockwell's common shares trade on the Toronto Stock Exchange NEX
under the symbol "RDI.H" and on the JSE Ltd under the symbol "RDI".
Trading of Rockwell's shares remains suspended at the request of
the Company.
No regulatory authority has approved or disapproved the
information contained in this news release.
Forward Looking Statements
Except for statements of historical fact, this news release
contains certain "forward-looking information" within the meaning
of applicable securities law. Forward-looking information is
frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. Although the Company believes the
expectations expressed in such forward-looking statements are based
on reasonable assumptions, such statements are not guarantees of
future performance and actual results or developments may differ
materially from those in the forward-looking statements.
Factors that could cause actual results to differ materially
from those in forward-looking statements include uncertainties and
costs related to the transaction and the ability of each party to
satisfy the conditions precedent in a timely manner or at all,
exploration and development activities, such as those related to
determining whether mineral resources exist on a property;
uncertainties related to expected production rates, timing of
production and cash and total costs of production and milling;
uncertainties related to the ability to obtain necessary licenses,
permits, electricity, surface rights and title for development
projects; operating and technical difficulties in connection with
mining development activities; uncertainties related to the
accuracy of our mineral resource estimates and our estimates of
future production and future cash and total costs
of production and diminishing quantities or grades of mineral
resources; uncertainties related to unexpected judicial or
regulatory procedures or changes in, and the effects of, the laws,
regulations and government policies affecting our mining
operations; changes in general economic conditions, the financial
markets and the demand and market price for mineral
commodities such as diesel fuel, steel, concrete,
electricity, and other forms of energy, mining equipment, and
fluctuations in exchange rates, particularly with
respect to the value of the US dollar, Canadian dollar and South
African Rand; changes in accounting policies and methods that we
use to report our financial condition, including uncertainties
associated with critical accounting assumptions and estimates;
environmental issues and liabilities associated with mining and
processing; geopolitical uncertainty and political and
economic instability in countries in which we operate; and labour
strikes, work stoppages, or other interruptions to, or difficulties
in, the employment of labour in markets in which we operate our
mines, or environmental hazards, industrial accidents or other
events or occurrences, including third party interference that
interrupt operation of our mines or development projects.
For further information on Rockwell, Investors should review
Rockwell's home jurisdiction filings that are available at
www.sedar.com.
SOURCE Rockwell Diamonds Inc.