diamond value management gssa conference september 2014

1 GSSA Diamond Symposium: September 2014|

DIAMOND VALUE MANAGEMENT:

UNDERPINNING THE TURNAROUND

GSSA KIMBERLEY DIAMOND SYMPOSIUM

10-13 SEPTEMBER 2014


AGENDA

• Growth strategy

• Diamond Value Management (‘DVM’):

• Mineral Resource Management (‘MRM’)

• Earthmoving Renewal Plan

• Fit for purpose technologies

• Economic metallurgy

• Shareholder Value Management

• Conclusion

Three high quality +100 carat stones recovered from

Saxendrift in May, July & August 2014

103 carats + 35 carats

104 carats

117 carats


STRATEGY

116 carats SHC August 2013


PROPERTIES:

MIDDLE ORANGE RIVER PROJECT LOCATION MAP


* Indicative quarterly revenue and +50 carat stone production based on technical reports

THE RATIONALE:

WHY THE 500,000M3 P.M. QUALITY PROCESSED GRAVEL TARGET?

PAST (Actual) CURRENT (Actual) FUTURE (Plan)

MINES

QUARTERLY

REVENUE*

# +50 CARAT

STONES PER

YEAR* 5 17 25

110,000m3 340,000m3 500,000m3

MONTHLY

MOR

THROUGHPUT

Saxendrift

110,000m3 / month

Saxendrift

160,000m3 / month

SHC

80,000m3 / month

Niewejaarskraal

100,000m3 / month

Saxendrift

160,000m3 / month

SHC

80,000m3 / month

Niewejaarskraal

100,000m3 / month

Wouterspan

(phased) 150,000m3

/ month

Time

Rev

enu

e

Time

Rev

enu

e

Time

Rev

enu

e


IMPACT OF MOR STRATEGY:

HIGHER AVERAGE VALUE PER CARAT AND GROWING QUARTERLY REVENUE (US$)

Holpan on C&M Klipdam sold

Number of

MOR mines

Acquired Jasper

1 2 3

5

6

7

8

9

10

11

12

13

14

15

1000

1200

1400

1600

1800

2000

2200

2400

2600

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

F2011 F2012 F2013 F2014 F2015

Rev

enu

e (i

ncl

. ben

efic

iati

on

(U

S$m

)

Ave

rag

e va

lue

per

car

at (

US

$)


IMPLEMENTATION OF DVM THROUGHOUT THE BUSINESS

High quality MOR production: 116 carats, 37 carats and 33 carats August 2013


DIAMOND VALUE MANAGEMENT:

IMPACTS EVERY PART OF ROCKWELL’S BUSINESS D

iam

ond

Val

ue M

anag

emen

t Dis

cipl

ines

Operations Management

Mining

Mineral Resource

Management

Earthmoving

Renewal Plan

Processing

Fit-for-purpose

Technologies

Metallurgy

Funding Shareholder Value

management

Marketing Beneficiation

Joint Venture

Five +115 carat stones: Recovered from MOR

(August – November 2013)


OPERATING DISCIPLINES

First step in entrenching DVM across all operations

♦ Introduce greater disciplines & professionalism from top ~ down

♦ Strengthen Rockwell’s pool of skills, especially in the technical area

♦ Bolstered executive management and appointed high caliber non-

executive directors

Board actively engaged and involved in Company matters

♦ Supports leadership team with robust and constructive debate

Culture of accountability now “business as usual”: Regular

interaction between operational heads and executive

management:

♦ Weekly Executive Committee meetings

♦ Monthly Business Reviews

♦ Monthly Technical Reviews on site per mine, attended by operational

heads and executive management

OPERATING


MINERAL RESOURCE MANAGEMENT:

LARGE STONE PLOTS

Large stone plot:

+40ct/-10ct on higher/lower elevation respectively

MINING

ANALYTIC REVIEW OF THE RESOURCE

Monthly trend shows detail of trend due larger sample sizes

- DSFD shows absence of +5ct

- Highlighted by kinks in the grade plot

Used in

conjunction

with a gravel

rating scheme

(Prof de Wit &

Dr Ward)


EARTHMOVING RENEWAL PLAN AT SAXENDRIFT AND SHC

Challenge: Address sub-optimal mining volumes due to aging earthmoving fleet

Conducted full investigation of future requirements

♦ Addressing low availabilities and mounting maintenance costs

Implemented capital investment neutral strategy

♦ Two year, fully managed, maintenance-included lease agreement with Eqstra Holdings Limited

♦ Provides sufficient new earthmoving fleet: 85% guarantee on availability

♦ Existing fleet of Komatsu dozers and excavators underwent mid-life rebuilds

♦ Expected cost saving at cash operating level ranging 12% - 17% (mining and processing at full capacity)

New fleet design to facilitate more efficient mining configuration

♦ Monthly mining volumes of 260,000m3 including overburden

MINING

Anticipated benefits emerging

♦ Saxendrift volumes up in July

2014: 185,758m3

♦ Saxendrift unit cost down to

$6.99/m3 [Q1: $10.10/m3]


PROCESSING DVM:

FIT-FOR-PURPOSE TECHNOLOGIES

PROCESSING

Address high sand content in gravel + ability to process wet gravels

Saxendrift IFS (Nov 2011):

♦ Throughput volumes up 30% (incl. contops and increased BCOS)

♦ Enhanced pan plant efficiency and greater mining flexibility

Niewejaarskraal IFS (Feb 2014)

♦ Doubled capacity: Removal of oversize / undersize material before further processing

IFS becoming core to Rockwell’s processing model

♦ Meeting budgeted throughputs at lower costs

In field screen (IFS)

Bulk X-Ray

Pilot project at Saxendrift (2012):

♦ High throughput Bourevestnik (BV) sorter + BV single particle sorter

♦ Recovered 1,903cts from old tailings, incl. 145-ct + 76-ct stone

Completion of pilot: equipment relocated to SHC

♦ Pioneered in full production environment by Rockwell in SA i.e. for concentration +

recovery mode


METALLURGY DVM

DVM in processing environment

♦ Implemented by Dr Kurt Petersen, diamond metallurgy consultant

Findings used to optimise production profile.

Bottom cut off size (‘BCOS’) adjusted to +6mm.

♦ Eliminated costly recovery of low value, small diamonds:

♦ Impact of handling and processing gravels containing small diamonds

♦ Improved productivity in processing environment

Continuous monitoring of processing plants

♦ Regular testing of various steps of each processing environment to

capture further efficiencies

♦ Awareness of production of quality tons entrenched in production

teams

PROCESSING

-20

0

20

40

60

80

100

(Rev

enue

- C

osts

), R

/m3

Business Categories

Cumulative

Per Business

Current production (+5mm bcos): 50% of carats <6 cts

Historic (“pre-DVM”) production (+3mm bcos): 10% of carat

production <5mm

Minimal contribution from smaller sizes (incl. handling/

processing cost)

Smaller sizes detract from economically effective utilization

0%10%20%30%40%50%60%70%80%90%

100%

0 20 40 60 80 100Cum

ulat

ive

Car

ats

+ G

rade

(%

)

Carat Size (Carats)

Carats Revenue


SHAREHOLDER VALUE MANAGEMENT

Constant engagement during turnaround

♦ Regular updates of material issues

Steadily overcame historical reputational issues

♦ Progress recognized by investors, incl. resolution of corporate legacy issues and consistent performance

♦ Extending production profile through well-considered investments + recycling available resources

Rockwell developed assets without shareholder dilution

♦ Development of two new internally funded mines at SHC and Niewejaarskraal

♦ Increased MOR processing capacity from 160,000m3 to 340,000m3 p.m. towards 500,000m3 goal

Comparative share price performance

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9

2.1

2.3

2.5

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14

Rockwell (TSX)

Rockwell (JSE)

HSBC Global Mining Diamonds Index

FUNDING


SHAREHOLDER VALUE MANAGEMENT:

TWO NEW INTERNALLY FUNDED MINES

Saxendrift Hill Complex: Two Bulk X-ray and single particle sorters

♦ Two month payback on US$2.5m capex

♦ Production ramp up completed in August 2013: Total capacity of

80,000m3 p.m.*

♦ High quality diamonds produced since commissioning: Including three

+100 carat stones

Niewejaarskraal: Production ramp up 10 weeks after Board approval

♦ Phase 1a (50,000m3/month): US$2.5m capex funded from Klipdam sale

♦ Phase 1b (100,000m3/month): Incl. IFS and rental Bulk X-ray

♦ Contract mining: CML operations

♦ Majority of employees opted to transfer from Klipdam after sale

* (@5mm bcos)

FUNDING


UNIQUE BENEFICIATION JOINT VENTURE

JV with Diacore: Global leader in cutting, polishing and marketing investment diamonds

♦ Diacore: Right to purchase >2.8ct stones at market value

♦ Rockwell: Equal profit share on sale of polished diamonds

15% - 20% leverage on Rockwell revenue from profit share

♦ Additional revenue on rare, investment stones ranges up to 60%

MARKETING

ROUGH

77 ct makeable,

Saxendrift Ext.

(2012)

145 ct makeable,

Saxendrift tailings

(2012)

105 ct Type II A,

Middle Orange

(2009)

169 ct yellow,

SHC

(2013)

128 ct yellow,

Middle Orange

(2011)

287 ct

Saxendrift Ext.

(2013)

POLISHED

37 ct J color round

brilliant, VS2

30 ct + others being

polished

35 ct D color

internally flawless

Sold for

$230,000/ct

109 ct vivid yellow

81 ct vivid yellow

109 ct cushion cut

+ 26 ct in progress

BENEFI-

CIATION

+34% on initial

rough

sale price

Currently being

polished

+62% on initial

rough

sale price

+61% on initial

rough

sale price

+37% on initial

rough

sale price

Not yet sold


CONCLUSION

287 carats Saxendrift Extension November 2013


DIAMOND VALUE MANAGEMENT STRATEGY:

RECENT HIGHLIGHTS AND WAY FORWARD

Rockwell on track with corporate turnaround

♦ Delivered two new internally funded mines

♦ Pioneered Bulk X-ray technology in production environment in SA

♦ Exited lossmaking operations at Klipdam and Tirisano (royalty mining model)

♦ Implementing EMV renewal plan to replace aging plant in MOR

Financials reflecting benefits of DVM strategy (Q1 F2015)

♦ Higher carat production and increased stone size

♦ First net profit reported since turnaround initiated: +$345,000

♦ Eight successive quarters of dollar denominated revenue growth

♦ Five successive quarters with positive operating profit growth*

♦ Positive net cash flow from operating activities

Next milestones

♦ Reach mid-term target of 500,000m3 p.m. of quality processed gravels in MOR

› Upgrade capacity at Niewejaarskraal

› New mine at Wouterspan: phased approach

♦ Continue evaluating accretive consolidation opportunities in Southern Africa

* (excl. inventory movements)


THANK YOU!

Bulk X-ray pilot project: 145 carats D-color recovered from old recovery tailings October 2012


FORWARD LOOKING STATEMENTS Except for statements of historical fact, this presentation 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 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 if 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 and 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 annual Form 20-F filing with the United States Securities and Exchange Commission

www.sec.com and the Company's home jurisdiction filings that are available at www.sedar.com.

This presentation also uses the terms 'indicated resources' and 'inferred resources'. Rockwell Diamonds Inc. advises investors that although these terms are recognized

and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission

does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In

addition, 'inferred resources' have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an

Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility

or pre-feasibility studies, or economic studies except for Preliminary Assessment as defined under 43-101. Investors are cautioned not to assume that part or all of an

inferred resource exists, or is economically or legally mineable.

The securities of Rockwell being offered have not been, nor will be, registered under the U.S. Securities Act and may not be offered or sold within the United States or to,

or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This information does not constitute

an offer or sale of securities in the United States. Prior to making any investment decision, investors should consult a professional advisor.

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