Rockwell Diamonds to Extend Shutdown to Conserve Cash

Rockwell Diamonds Inc. plans to extend the normal year-end operational shutdown period of its South African alluvial diamond mines to conserve cash. The diamond miner said it was hurt by the lower rough diamond prices it got at the October tenders in South Africa and Antwerp.

Citing a seasonal slowdown in the rough diamond market, compounded by the global economic downturn, Rockwell will extend its year-end operational shutdown from a planned two week period to approximately five weeks.

But while Rockwell expects the rough diamond price “weakness” to last over the short to medium term, it noted that due to its sales agreement with the Steinmetz Diamond Group, the company has been able to limit its exposure to diamond price weakness over the past two months.

“Diamond prices are under pressure and sales prices achieved by diamond producers in the past six to eight weeks have been well below those achieved prior to October,” President and CEO John Bristow stated.

“Given current market conditions and the uncertainty as to the longer term situation, we believe that it is prudent to proactively conserve cash and plan operations to best deal with the current economic conditions.”

As a result, it is also reviewing its capital expenditure program for 2009, non-core activities and all service provider contracts.

Operations will be put on temporary shutdown on November 28, maintenance and repair work to be conducted from December 1 to 5. Current plans are to resume operations on January 5.

At the end of November the company will hold cash reserves of about C$8 million (US$ 6.51 million).