S TRATEGIC V ISION IS U NFOLDING : M IDDLE O RANGE R IVER O PERATIONS ’ G ROWTH P LAN I NTERNATIONAL R OADSHOW J UNE 2014 June 2014 | 1
F IVE +100- CT P OLISHED D IAMONDS P RODUCED W ORLDWIDE IN 2013: T WO WERE R OCKWELL D IAMONDS F ROM : 287-carat commercial colour (tinted white), makeable recovered from Saxendrift Extension in November 2013 T O : Cushion cut 109 carats in progress + 26.33 carat round K VVS2 stones produced (in progress) F ROM : 160 carat typical MOR yellow recovered from SHC in September 2013 T O : Cushion cut 109 carats vivid yellow June 2014 | 2
A GENDA Company • Capital structure and shareholding • Leadership team • Rockwell’s diamond pipeline • Beneficiation joint venture • Diamond market overview • Strategy STOP PRESS! • Large stones recovered from Key milestones • Saxendrift (29/30 May 2014) Middle Orange River (‘MOR’) strategy • Operations • Properties: Overview of operations • Future • Analysis of Diamond Value Management impacts • Growth plans and strategy • 103 carats 56 carats Conclusion • June 2014 | 3
C OMPANY 70 carats Saxendrift Extension August 2013 June 2014 | 4
C APITAL S TRUCTURE AND S HAREHOLDING Top shareholders Share price (24 May 2014) C$0.30 / ZAR3.30 Diacore Market Capitalization (24 May 2014) C$14.5m / ZAR176.6m Other 19% 37% Cash balances (28 Feb. 2014) (C$1.8m) Debt C$8.6m Conus 10% Craton Shares outstanding 53,523,244 Capital Africa 1% Vanguard Warrants - Resources Wells 8% Capital Options ($0.48-9.45) 4,836,431 1% Godia 7% Convertible Debt (~$0.16) C$2.0m / 12,235,686 Mark Earth Middle East Management Bristow Resources Investors Fully Diluted 70,595,361 2% 2% 7% 6% Comparative share price performance 2.5 Rockwell (TSX) 2.0 Rockwell (JSE) HSBC Global Mining Diamonds Index 1.5 1.0 0.5 - 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 June 2014 | 5
E XPERIENCED L EADERSHIP Group Technical Manager Glenn Norton, Board of Directors: BSc (Hons) Dr Mark Bristow (Chairman) CFO Stephen Dietrich Gerhard Jacobs, Willem Jacobs BAcc, MBA Geological, mineral resource Richard Linnell management, production and technical Richard Menell experience in alluvial diamond deposits, Johan van’t Hof Mining and corporate experience with diamond and coal exploration. Qualified junior and senior mining companies person and Pr.Sci.Nat. with operations in SA, Australia and Canada. Knowledge of public listed mining Companies. President and CEO Diamond Marketing & Sales Manager James Campbell, BSc (Hons ) ARSM, Jeffrey Brenner MBA (Dunelm) A leading international diamantaire and Seasoned diamond executive with career spanning over 20 years at specialist in valuation, marketing and De Beers and 4 years as Managing sales of rough diamond production from Director of African Diamonds plc. alluvial deposits. FIMMM, C.Eng, C.Sci and Pr.Sci.Nat. Group HR/IR Manager Richard Mhlontlo, Nat Dip (HR Management & Development) Corporate Development Stéphanie Leclercq BSc, CFA Dr Kurt Petersen, Extensive HR & Industrial Relations Ph.D. (Stellenbosch) management experience including organizational and structural design 15 yrs in investor relations and initiatives as well as strategy corporate development. Worked as a Expert in economic diamond metallurgy, development and implementation. sell side analyst and in-house IRO contracted to Rockwell. across various industry sectors. June 2014 | 6
R OCKWELL ’ S DIAMOND PIPELINE : T HE S TORY O F T HE A LANA ~ A N E XCEPTIONAL G EM Q UALITY D IAMOND R ECOVERED A T SHC Mining the gravels Exploration pitting at SHC: A method used to Large boulders act as Liberating the gravels evaluate the quality of trap sites SOLD – MARCH 2014!! gravel to be mined The 109 carat Alana stone: Fancy yellow, no visual flaws and octahedral shape James Campbell (CEO) and Wikus de Winnaar (GM: MOR Operations) at a trench such as the one where the Alana was eventually found The people on the team Loading and hauling the gravel At the cutting factory the stone was analyzed in 3D to identify the best Looking for the Penelope Mohale (Mining cuts and value for recovery from the Alana Geologist) and Mulalo stone Ndwammbi (Mining Manager: SHC): Responsible for geology and mining when the Alana Selling the Finding the was recovered. Alana (March Alana (August 2014) 2013) Locating the right mining area Location of the Alana Large stone plots : Used to determine Recovering the Polishing the the possible location Alana of large stones Alana The SHC processing plant: Gravel is (September The Alana: 169 carats screened and prepped before 2013) (13 September 2013) processing through the Bulk X-ray sorters Mining the gravels Geological daily report: Description of the gravel containing the Alana Mulalo examines Mining Observations Mining continued on the Eastern portion of the block. Please note that there is still a lot of stockpile on the pad (from previous day). Most of the stockpile from the pit has been tipped at the back of the BV pad stockpile and a small portion has been tipped in front of the pad. One dozer operational in the pit. the pit the Geology Observations Gravel description Calcretisation Bedrock Description day GMx % Sand % Clast Types Clast Sizes Pebble - Qtzites, VL, BIF, Mining continues on the Eastern portion of the block. Most of Block B6/C6 43% Yes Dwyka Chert, Jasper, basalt, zeolite the Upper coarse gravel is included with the gravel. There is still high percentage of basalts and zeolites in the matrix. The Cobble - BIF, Qtzites, Chert, BIF percentage still high within the basal gravel with boulders before 55-60% 45-60 42% observed in the gravel. There is an increase in amount of VL granites observed in the gravel in the boulder size range. BIF, VL, Quartzite, Chert , basalt, zeolite, Boulder -quartzite and VL, Slightly Quartzite’s and VL boulders is still high within the block with +15% Calcretisation Jasper, granite granites most of the boulders being rounded. Overall gravel still indicates a high energy system. Grade is expected to the slight sand increase. Liberation: Good liberation dilution from upper gravel Clast (sand matrix) Ave shapes Clasts Size Largest size discovery observed ranged from R to SA. 3 3.0-3.2 VL, Quartzite ! June 2014 | 7
B ENEFICIATION J OINT V ENTURE : C ONTINUES TO A DD S IGNIFICANT V ALUE 77 ct makeable, 145 ct makeable, old 105 ct Type II A, Middle 169 ct yellow, 128 ct yellow, Middle Saxendrift Extension Saxendrift tailings Orange Saxendrift Hill Complex Orange (2012) (2012) (2009) (2013) (2011) ROUGH 37 ct J color round 30 ct stone being 35 ct D color internally brilliant, VS2 polished. Additional flawless 109 ct vivid yellow 81 ct vivid yellow pieces to be polished Sold for $230,000/ct POLISHED BENEFI- + 34 % on initial rough Currently being + 62 % on initial rough + 61 % on initial rough CIATION Not yet sold sale price polished sale price sale price VALUE ADD Diacore profit share agreement (>2.8 carat stones) • Additional revenue channel: Market related prices for diamonds sold into JV + 50% profit share • 10% revenue uplift in F2014: US$4.1m June 2014 | 8
D IAMOND MARKET 116 carats SHC August 2013 June 2014 | 9
P OSITIVE F UNDAMENTALS : D EMAND FOR R OUGH + P OLISHED D IAMONDS E XPECTED TO R ISE Positive Long Term Fundamentals: Polished and rough diamond demand • Rough demand: Expected to grow between (actual and forecast) ($bn) 4.2% and 5.1% p.a. until 2023 (Bain & Co.) • Rough and polished demand: Expected to 40 correlate long-term Polished diamond demand: 35 Value of the diamond content • Clear long-term trend: Increasing demand Deviation from in the jewellery retail sales Polished the long term • Short term deviations from trend line 30 CAGR (2003-12): 4.8% demand trend anticipated: Both up and down Rough diamond demand (Bain 25 & Co. base case) CAGR (2012-23): 5.1% World diamond exploration spend ($m) 20 Rough diamond demand (Bain 15 Rough & Co. lower case) demand CAGR CAGR CAGR (2012-23): 4.2% 26% -64% 10 1,010-1,020 980-990 855-895 Trendline for the polished 5 demand based on 2003-2012 610-620 470-480 data 365-375 315-325 320-330 0 195-205 230-240 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: DMM Advisory Group Analysis, IDEX, Tacy, Bain & Co. Source: NBF Research; Metals Economic Group June 2014 | 10
P OSITIVE F UNDAMENTALS : P RODUCERS B EST P OSITIONED TO B ENEFIT FROM S UPPLY D EFICIT Average operating margins in the diamond pipeline 2012 (%) 20% 16-20% 18% Highest margin 16% in the pipeline 14% 12% 4-14% 10% 8% 6% 2-5% 3-5% 4% 1-3% 1-4% 2% 0% Diamond producers Rough diamond Diamond Polished diamond Diamond jewellery Diamond jewellery trading manufacturing trading manufacturing retail (cutting and polishing) Sequence in the diamond pipeline Source: DMM Advisory Group Analysis, Bain & Co. June 2014 | 11
S TRATEGY 287 carats Saxendrift Extension November 2013 June 2014 | 12
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