Johannesburg: Rockwell Diamonds Inc has announced that it had entered into a purchase and sale agreement with Nelesco 318 Proprietary Limited for certain of its non-core assets as part of its recently announced strategic repositioning and business turnaround plans. The Company said that it will use the money thus raised along with funding by two of the key shareholders and a third party, to focus on completing the next phase and ramp up of the Wouterspan mine and processing plant and advance its portfolio of development and exploration properties.

It has been reported that the agreement covers the Remhoogte and Saxendrift mines. It includes a cash consideration of R45M (CAD $4.3M), the assumption of R70M (CAD $6.7M) in rehabilitation liabilities, and the transfer of almost 100 employees. In addition, the deferred taxes of R29M (CAD $2.8M) arising on the 2015 purchase of Pioneer Minerals will be reversed, thus reducing consolidated liabilities by a total of R99M (CAD $9.5M). It added that an impairment of CAD $1.25M book value is expected to be recorded on the transaction.

Payment will be in three tranches based on fulfillment of various conditions. Rockwell said that during the period up to completion of all conditions, Nelesco will operate on a contract mining basis with a royalty payable to the Company of 2.5% of revenue from diamonds recovered from properties covered by the transaction and be responsible for any related rehabilitation liabilities.

In addition, the transaction provides for the lease of the Saxendrift office and accommodation complex back to the Company for a period of twenty years as well as access to water. The Company will provide electricity to Nelesco at cost.