Rockwell Diamonds Incorporated released its results for the three months ended May 31, 2014 today. The diamond mining company has had a tough run of things over the years, but seems to be on the road to sound growth and stability, with its posting of bottom-line profit, and an eighth successive quarter of revenue growth. Rockwell holds a current market cap of R214m, and is listed in South Africa and Canada. Its share price is up 25% on the year, and has continued to rise today on the back of the results. It does seem that despite the concerns surrounding the wellbeing of the company, that optimism, tenacity and patience are beginning to pay off. Alec is joined by James Campbell, CEO and President of Rockwell for a look at the numbers. Have a gander for insights into the company’s strategy and its expectations to produce solid revenues and growth going forward. – LF
ALEC HOGG: Rockwell Diamonds has posted its first-quarter results today. James Campbell, Chief Executive and President of Rockwell joins us on the line. It’s been a good run for the share price of Rockwell Diamonds, James. R3.00 to R4.40 in the past month. I know you’re not the largest traded stock on the JSE, but it appears as though somebody – or more than somebody – was very excited about the prospect that you could get into profit and you’ve duly done so.
JAMES CAMPBELL: Thank you very much, Alec. When we last spoke, we did speak about strategy and how it would eventually lead down to bottom-line results and we’re very pleased with our slow, but steady work in terms of building our middle Orange River mines, much of which is working capital, that the revenue from those mines. In particular, the beneficiation revenue that flows from strong Christmas sales has flowed through to the bottom-line, enabling us to achieve a bottom-line profit.
ALEC HOGG: So is this it, now? Are you now back into the green? Will you be in the green from here onward?
JAMES CAMPBELL: Our strategy Alec, is to get to half-a-million cubic metres per month, and that will enable us to have quarterly earnings stability. At the moment, we’re sitting at round about 350,000 cubic metres per months, which means that we have irregular recovery of large, high quality diamonds, which would still give some earnings volatility. Once we get up to half-a-million cubic metres per month, which is on our program this year we’ll start to see that volatility diminish and bottom-line profits will be more consistent.
ALEC HOGG: Earlier this month, there was an interview in the Sunday Times of London with the new Chief Executive of De Beers, where he was very upbeat about the diamond market and the contribution that De Beers will be making to Anglo American in the forthcoming set of numbers. Is that your experience as well, that the diamond prices have been firm?
JAMES CAMPBELL: We see two things, Alec. Firstly, we see it as being firm but not so optimistic that it’s been very strong. We see it as being cautiously steady and firm. The other part that we’ve seen, Alec, is that there’ve been very large numbers of people attending our tenders – up to 60 companies at times, which is a very strong indicator that there’s a lot of healthy interest in rough diamonds.
ALEC HOGG: What about that share price move? From R3.00 to R4.40 in a month, is quite spectacular. Have you been doing a lot of work with investor relations?
JAMES CAMPBELL: Alec, I think you hit the nail on the head a moment ago. It’s all about the very low liquidity in Rockwell stock. If you look at the number of shares that we traded, it’s actually fairly small. We have actually just completed a roadshow. We went to North America, Canada, and the United Kingdom to talk to our shareholders, which we do once a year and to talk to prospective new shareholders. Maybe because we only do this once a year with our standard corporate presentation, and because we’re a very small company and well below the radar screen, the people maybe only take interest in us when we actually go and present to them.
ALEC HOGG: Well, you have a long way to go to get back to the share prices that you traded at a few years ago, so I suppose there’s upside potential if you do get this right, James. Are you confident though, that the future is bright?
JAMES CAMPBELL: Alec, we stuck to our knitting for the last three years and as we stuck to our knitting, you’ve seen we’ve posted in eight successive quarter-revenue growth as well, and we’ve been having slow but steady progress every single quarter. I see no reason, Alec, why that shouldn’t continue into the future.
ALEC HOGG: That was James Campbell, the Chief Executive and President of Rockwell Diamonds. That share price today – another 12.5 percent higher. It’s trading at R4.55. In fact, 13.75 percent higher. It’s one of those small stocks for private investors, that if you’d managed to jump in three months ago, you’d be very happy today.
