Rockwell held first sale of 2008

Rockwell Diamonds Inc. reports on its first sale for 2008 completed on January 29.

The Company offered a total of 1,863.53 carats for sale, representing production for December 2007 and early January 2008 from the Wouterspan, Holpan, and Klipdam mining operations and the Makoenskloof bulk sampling project.

Rockwell realized total revenue of US$4,316,572 for this sale, representing an average price of US$2,316 per carat.

Prices achieved for the diamonds sold in January showed strength in all categories. Prices for top quality white stones being particularly strong, showing increases of approximately 10% above those achieved for similar goods in the previous November sale. Two stones, including a white 25 carat diamond, sold for $19,000 per carat.

Distribution of diamonds larger than 10 carats sold in this latest sale by Rockwell was as follows:

- Eleven stones of 10 - 20 carats

- Two stones of 21 - 30 carats

- One stone of 30 - 40 carats

- One stone of 70 - 80 carats

- One stone of 90 - 100 carats

The diamonds sold in this latest sale represent production from December and the first seven days of operations for January 2008. Diamond production in this period was achieved at an operating cost of approximately US$4.00 per tonne, or US$1,364 per carat. The increase in operating cost is attributed to a combination of factors including the stoppage and upgrade of the Klipdam processing and treatment plant which was implemented over the October-November period and ramped up to full production mode in December, impact of the relatively low production volume (as compared to a conventional mining operation) achieved at the Makoenskloof during the bulk sampling project, excessive and unseasonal rains including several exceptionally violent thunder storms at Wouterspan, Holpan and Klipdam, the strong South African Rand to US Dollar exchange rate for the period, and lower production than normal as a result of the mandatory Christmas-New Year shutdown period.

The cash operating costs are expected to reduce back towards the Company’s target of US$3.00 per tonne as once forecasted production levels are achieved in February 2008. However, Rockwell’s operations have been impacted by the power outages being experienced in South Africa since the start-up of operations in 2008. The possible loss of production in future months and likely need to utilize back-up generator sets could result in operating costs that are somewhat higher than the US$3.00 target.

President and CEO, John Bristow, noted that the prices achieved for this first tender of 2008 were outstanding, particularly for good quality white goods and fancy colours produced from the Wouterspan mine. The excellent results achieved for the first sale of 2008 mainly reflect the very strong demand for large, high value goods in the marketplace where there is an increasing shortage of supply of +2 carat diamonds. Although Rockwell expects this strong demand and overall strength in prices to prevail in the longer term, there is a degree of speculation and discounting in some segments of the market. The latter aspect could lead to some degree of price adjustment going forward.

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