Rockwell Diamonds Inc. - Form 20-F/A - Filed by newsfilecorp.com

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[ ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Level 1, Wilds View, Isle of Houghton,
Cnr. Carse O’Gowrie & Boundary Rd, Houghton Estate, Johannesburg 2198
P O Box 3011 Houghton, South Africa, 2041
(Address of principal executive offices)

Gerhard Jacobs, +27 (0)11 481 7200, GerhardJ@Rockwelldiamonds.com, Level 1, “Wilds View”,
Isle of Houghton, Cnr Boundary & Carse O’Gowrie Road, Houghton Estate, Johannesburg,
South Africa, 2041
(Name, Telephone, E-mail and/or Fascimili number and Address of the Company Contact Person)

Securities registered or to be registered pursuant to Section 12(g) of the Act
Common Shares without Par Value
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Indicate by check mark if the Registrant is a well known seasoned issuer as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]

If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Yes [ ] No [X]

Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark whether the registrant (1) has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405of this chapter) during the preceding 12 months (or for such period that the registrant was required to submit and post such files).
Yes [ ] No [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer or non-accelerated filer. See definition of "accelerated filer" and "large accelerated filer" in Rule 12b 2 of the Exchange Act.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “"Other”" has been checked in response to the previous question, indicate by check mark which financial statement item Registrant has elected to follow:
Item 17[X] Item 18 [ ]

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b 2 of the Exchange Act):
Yes [ ] No [X]

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Except for statements of historical fact, certain information contained herein constitutes "forward-looking statements" including, without limitation, statements containing the words "believes," "anticipates," "intends," "expects" and words of similar import, as well as all projections of future results. Such forward-looking statements involved known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Rockwell to be materially different from any future results, performance or achievements of Rockwell expressed or implied by such forward-looking statements. Such risks are discussed in Item 3D "Risk Factors." The statements contained in Item 4B "Business Overview", Item 5 "Operating and Financial Review and Prospects" and Item 11 "Quantitative and Qualitative Disclosures About Market Risk" are inherently subject to a variety of risks and uncertainties that could cause actual results, performance or achievements to differ significantly.

This Annual Report on Form 20-F is being amended in response to a comment letter dated October 21, 2010 from the Securities and Exchange Commission in order to: (i) clarify disclosure on the tabular disclosure of contractual obligations regarding Capital (Finance) Lease Obligations and Bank indebtedness (ii) revise the Company’s disclosure regarding Management report on internal control over financial reporting. (iii) provide a revised auditor report (iv) revise the notes to the financial statements to exclude any reference to reserves (v) provide additional resource tables to provide estimates that include production for the 2010 fiscal year. (vi) provide detail of how depletion is calculated .

This Annual Report on Form 20-F includes references to "indicated resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves.

This Annual Report on Form 20-F includes references to "inferred resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or preliminary feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

The following table summarizes selected consolidated financial data for Rockwell Diamonds Inc. (the "Company" or "Rockwell" or the "Registrant") for the years ended February 28, 2010, 2009, the nine months ended February 29, 2008 and the years ended May 31, 2007 and 2006. The financial statements have been prepared in accordance with Canadian generally accepted accounting principles ("Cdn GAAP"). Note 17 to the financial statements included herein provides descriptions of the material measurement differences between Cdn GAAP and United States generally accepted accounting principles ("US GAAP") as they relate to the Company and a reconciliation to US GAAP of the Company's financial statements.

The information in the table was extracted from the detailed consolidated financial statements and related notes included in this annual report, and should be read in conjunction with such financial statements included elsewhere in the document and with the information appearing under the heading, "Item 5. Operating and Financial Review and Prospects."

The selected financial data is presented in Canadian Dollars and in accordance with Canadian GAAP and United States GAAP.

⁽¹⁾Loss from continuing operations and loss for the period are the same for all periods presented.

All monetary amounts contained in this Annual Report are, unless otherwise indicated, expressed in Canadian Dollars, Rockwell's reporting currency. On August 25, 2010 the Bank of Canada noon rate for Canadian Dollars was US$0.9397: Cdn$1.00 The following table sets out the exchange rates, based on the noon rates as reported by the Bank of Canada, for the conversion of United States Dollars into one Canadian Dollar in effect at the end of the specified periods, the average exchange rates during such periods (based on daily noon rates as reported by the Bank of Canada) and the range of high and low exchange rates for such periods:

The following table sets out the high and low exchange rates, based on the noon rate as reported by the Bank of Canada, for the conversion of United States Dollars into one Canadian Dollar, for the following periods:

This annual report contains forward-looking statements which relate to future events or Rockwell's future performance, including its future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", or "potential" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in enumerated in this section entitled "Risk Factors", that may cause Rockwell's or the mining industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect Rockwell's current judgment regarding the direction of its business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this annual report. Except as required by applicable law, including the securities laws of the United States, Rockwell does not intend to update any of the forward-looking statements to conform these statements to actual results.

An investment in Rockwell's common stock involves a number of significant risks. The investor should carefully consider the following risks and uncertainties in addition to other information in this annual report in evaluating Rockwell and its business before purchasing shares of Rockwell's common stock. Rockwell's business, operating results and financial condition could be seriously harmed due to any of the following risks. The risks described below are not the only ones facing Rockwell. Additional risks not presently known to Rockwell may also impair its business operations. The investor could lose all or part of your investment due to any of these risks.

There is no assurance that Rockwell can formally establish the existence of any mineral reserve on any of its properties. Until Rockwell is able to establish a mineral reserve, there can be no assurance that production from these properties will continue for any period of time and if production fails, Rockwell's business may ultimately fail.

Although Rockwell now owns and operates properties with a history of sporadic to regular diamond production, which have been subject to examination, testing and quantification through scientific exploration techniques, a reliable determination of grade is difficult in alluvial deposits. Accordingly, there is no assurance that Rockwell can formally establish the existence of any mineral reserve on any of its properties. A mineral reserve is defined by the Securities and Exchange Commission in its Industry Guide 7 (which can be viewed over the Internet at http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a "reserve" that meets the requirements of the Securities and Exchange Commission's Industry Guide 7 is remote. If none of our current or future mineral resource properties contains any "reserve," any funds that Rockwell spends on exploration will be lost.

Even if Rockwell establishes a mineral reserve, there can be no assurance that the related property will be mined.

Even if Rockwell eventually establishes a mineral reserve on one or more of its properties, there can be no assurance that it will be able to turn the property into a producing mine. Both mineral exploration and mine development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.

The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as electrical power, roads, a point for shipping, government regulation and market prices. Most of these factors will be beyond Rockwell's control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable.

Mineral operations are subject to applicable law and government regulation. Even if Rockwell establishes a mineral resource in a commercially exploitable quantity, these laws and regulations could restrict or prohibit the exploitation of that mineral resource. If Rockwell cannot exploit any mineral resource that it might discover on our properties, its business may fail.

Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that Rockwell will be able to obtain or maintain any of the permits required for the continued exploration of its mineral properties or for the construction and operation of a mine on its properties at economically viable costs. If Rockwell cannot accomplish these objectives, our business could fail.

Rockwell believes that it is in compliance with all material laws and regulations that currently apply to its activities but there can be no assurance that it can continue to do so. Current laws and regulations could be amended and the Company might not be able to comply with them, as amended. Further, there can be no assurance that Rockwell will be able to obtain or maintain all permits necessary for our future operations, or that it will be able to obtain them on reasonable terms. To the extent such approvals are required and are not obtained, Rockwell may be delayed or prohibited from proceeding with planned exploration or development of its mineral properties.

In addition, environmental hazards unknown to Rockwell which have been caused by previous or existing owners or operators of the properties may exist on the properties in which Rockwell holds an interest. Even if Rockwell relinquishes its licenses, it will still remain responsible for any required reclamation and rehabilitation of the properties.

Mineral exploration and development are subject to particular operating risks. Rockwell does not currently insure against these risks. In the event of a highwall collapse or similar occurrence, Rockwell's liability may exceed its resources, which would have an adverse impact on Rockwell.

All Rockwell’s current operations are shallow opencast which has an inherently lower risk than other deeper operations which are susceptible to cave-ins.

Nonetheless, mineral exploration, development and production involve many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Hazards such as unusual or unexpected formations and other conditions are involved.

Rockwell's operations will be subject to all the hazards and risks inherent in the exploration, development and production of resources, including liability for pollution, cave-ins or similar hazards against which it cannot insure against or which it may elect not to insure. Any such event could result in work stoppages and damage to property, including damage to the environment. Rockwell applies international best practices principles in all areas of the operations and complies with all health, safety and mining legislation of the South African Republic. Rockwell does not currently maintain any insurance coverage against these operating hazards. The payment of any liabilities that arise from any such occurrence may have a material, adverse impact on Rockwell.

The prediction of grade can be more challenging for the type of deposit which the Company is exploiting.

In the case of alluvial diamond deposits, the prediction of grade can be challenging due to the inherent geological nature of such deposits. The alluvial diamonds are laid down by rivers flowing over uneven terrain and the diamonds vary in terms of size and quality. Individual diamonds are not evenly or uniformly distributed through out an alluvial deposit; neither are they randomly distributed. Rather, their distribution has been described as a random distribution of clusters of points. The clusters are both randomly distributed in space, and the point density of the cluster is also random. In order to determine grade under such circumstances it is necessary to process large volumes of material (bulk sampling) in order to be sure that grade calculations are representative and accurate. Moreover, in the case of such deposits, drilling is only of use in the determination of gravel distribution and not diamond content, since the volume of material recovered is insufficiently representative of grade.

Rockwell expects to derive revenues from the extraction and sale of diamonds. The prices of diamonds have fluctuated widely in recent years, and are affected by numerous factors beyond Rockwell's control including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods. The effect of these factors on the price of diamonds and base metals, and, therefore, the economic viability of any of Rockwell's projects, cannot accurately be predicted.

The mining industry is highly competitive and there is no assurance that Rockwell will continue to be able to acquire mineral claims. If Rockwell cannot continue to acquire properties to explore for mineral resources, it may be required to reduce or cease operations.

The mineral exploration, development, and production industry is largely unintegrated. Rockwell competes with other exploration companies looking for mineral resource properties and the resources that can be produced from them. However, the mining business operates in a worldwide market, and prices for minerals are derived from relatively pure market forces. Accordingly, competition to sell any minerals or concentrates produced should not be an issue if mineral prices warrant production

Rockwell competes with many companies possessing greater financial resources and technical facilities. This competition could adversely affect Rockwell's ability to acquire suitable prospects for exploration in the future. Accordingly, there can be no assurance that Rockwell will acquire any interest in additional mineral resource properties that might yield reserves or result in commercial mining operations.

The recoverability of the amounts shown for the Company’s mineral property interests, property, plant and equipment and inventory is dependent upon the existence of economically recoverable mineral resources and future profitable production or proceeds from the disposition of the mine. The Company’s continuing operations are also dependent upon the discovery and existence of economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to complete the exploration and development of its mineral property interests, and upon future profitable production or proceeds from the disposition of its mineral property interests.

Rockwell requires additional financing in order to continue in business as a going concern, the availability of which is uncertain.

The Company and its subsidiaries incurred losses of $7 million during the year ended February 28, 2010 and continue to incur losses subsequent to year end. The Company’s sales are irregular.

Based on the Company’s cash resources and forecasts, the Company has sufficient working capital and reserves to maintain operations through breakeven point and sufficient cash and working capital to fund continuing losses. Future events beyond the Company’s control may change the Company’s ability to continue as a going concern.

Some of Rockwell's directors and officers serve on the boards of other exploration companies, which could potentially give rise to conflicts of interest.

Some of Rockwell's directors and officers are engaged, and will continue to be engaged, in the search for additional business opportunities on their own behalf and on behalf of other companies. Situations may arise where these directors and officers will be in direct competition with Rockwell. Conflicts, if any, will be dealt with in accordance with the relevant provisions of the Business Corporations Act (British Columbia) and applicable law.

The loss of any of Rockwell's key management employees could have a material adverse effect on Rockwell's business.

The nature of Rockwell's business and Rockwell's ability to continue its exploration activities and to exploit any mineral reserves that it may find in the future depends, in large part, on Rockwell's ability to attract and maintain qualified key management personnel. Competition for such personnel is intense, and there can be no assurance that Rockwell will be able to attract and retain such personnel. Rockwell's development now and in the future will depend on the efforts of key management figures, such as John W. Bristow, Rockwell's Chief Executive Officer, and Gerhard Jacobs, Chief Financial Officer, Graham Chamberlain Chief Operating Officer and Glenn Norton Mineral Reource Manager. The loss of any of these key people could have a material adverse effect on Rockwell's business.

All mineral properties are located in the Republic of South Africa. Operations may be affected in varying degrees by government regulations with respect to restrictions on production, repatriation of profits, price controls, export controls, income taxes, expropriations or property, environmental legislation and mine safety.

South Africa has undergone major constitutional changes to effect majority rule, and also to effect mineral title. Accordingly, many laws may be considered relatively new, resulting in risks such as possible misinterpretation of new laws, modification of mining or exploration rights, operating restrictions, increased taxes, environmental regulation, mine safety and other risks arising out of a new sovereignty over mining, Rockwell's operations may also be affected in varying degrees by political and economic instability, terrorism, crime, extreme fluctuations in currency exchange rates and inflation.

South African government empowerment initiatives may adversely affect Rockwell's ability to obtain or maintain permits and licenses for mining rights in South Africa.

In order to address inequalities to Historically Disadvantaged Persons ("HDP") engendered by South Africa's former apartheid system, the South African Government has initiated certain government empowerment initiatives.

In October 2002, the South African government enacted the Mineral Development Act that deals with the state's policy towards the future of ownership of minerals rights and the procedures for conducting mining transactions in South Africa. The Mineral Development Act is a statute with wide-ranging objectives, including sustainable development and the promotion of equitable access to South Africa's mineral wealth by the inclusion of HDP into the industry. The Mineral Development Act came into effect in May 2004. The South African government has stated that, under the Mineral Development Act, it will be issuing permits and licenses for prospecting and mining rights to applicants using a "scorecard" approach. Applicants will need to demonstrate their eligibility for consideration based upon the number of credits accumulated in terms of quantifiable ownership transformation criteria, such as employment equity and human resource development.

Future amendments to, and interpretations of, the economic empowerment initiatives by the South African government and the South African courts could adversely affect the business of Rockwell and its results of operations and its financial condition.

Rockwell has paid no dividends on its shares since incorporation, and does not anticipate doing so in the foreseeable future.

Rockwell conducts operations in currencies other than Canadian Dollars. Of particular significance is the fact that Rockwell’s operations in South Africa are almost entirely paid for in South African Rand, which has historically devalued against the United States Dollar, but which recently has shown unexpected and substantial strength against most major world currencies, including the United States Dollar. The strength in the South African Rand, if it continues, will negatively impact the potential profitability of Rockwell’s mining operations.

Rockwell expects to be a passive foreign investment company, which could have consequences for U.S. investors.

Potential investors who are U.S. taxpayers should be aware that Rockwell expects to be a passive foreign investment company ("PFIC") for the current fiscal year, that it may also have been a PFIC in prior years, and that it may also be a PFIC in subsequent years. If Rockwell is a PFIC for any year during a U.S. taxpayer's holding period, then such U.S. taxpayer generally will be required to treat any so-called "excess distribution" received on its common shares, or any gain realized upon a disposition of common shares, as ordinary income and to pay an interest charge on a portion of such distribution or gain, unless the taxpayer makes a qualified electing fund ("QEF") election or a mark-to-market election with respect to the shares of Rockwell. In certain circumstances, the sum of the tax and the interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the taxpayer. A U.S. taxpayer who makes a QEF election generally must report on a current basis its share of Rockwell's net capital gain and ordinary earnings for any year in which Rockwell is a PFIC, whether or not Rockwell distributes any amounts to its shareholders.

Rockwell's stock is a penny stock. Trading of Rockwell's stock may be restricted by the SEC's penny stock regulations which may limit a stockholder's ability to buy and sell Rockwell's stock.

Because the market price for Rockwell's shares is less than US$5.00, its securities are classified as "penny stock". For transactions involving a penny stock, brokers or dealers are required to approve a previous account for penny stock transactions, which involves obtaining financial information concerning the investor and satisfying themselves that the investor has sufficient knowledge and experience to evaluate the risks associated with penny stock. The broker or dealer must also deliver certain information to investors on penny stock, including disclosure concerning the risks associated with penny stock, and must receive a written agreement from investors prior to the transactions. As a result of the penny stock restrictions, brokers or potential investors may be reluctant to trade in Rockwell's securities, which may result in less liquidity for Rockwell's stock.

FINRA sales practice requirements may limit a stockholder's ability to buy and sell Rockwell's stock.

In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission (see above for discussions of penny stock rules), the Financial Indiustry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy Rockwell common stock, which may limit the ability to buy and sell Rockwell stock and have an adverse effect on the market for Rockwell shares.

Rockwell has a number of outstanding share purchase options, the exercise of which could result in equity dilution.

At February 28, 2010, Rockwell had 22,818,890 share purchase options outstanding. If exercised could likely act as an upside damper on the trading price range of Rockwell's shares. The underlying shares issuable upon exercise of these securities represent approximately 6% of Rockwell's issued shares at February 28, 2010.

Due to the exposure to the natural elements of nature, the potential impact is difficult to quantify for this risk. Business models are prepared to make provision for this and the impact is discounted based on historical experience. Where practical stockpiles are created to minimize the impact on plant throughput.

Diesel consumption is a material component of overall costs at Rockwell. Being linked to the price of crude oil and the resultant exposure to the fluctuating Rand Dollar exchange rate, the purchase price can be volatile.

In April 2008 the Company completed the MORO acquisition, including registration and transfer of Saxendrift Mine Pty (Ltd) and the Saxendrift mining right, as well as prospecting rights in respect of the Kwartelspan, Zwemkuil-Mooidraai and part of the Remhoogte-Holsloot projects.

On April 11, 2009 the remaining mineral right in terms of the Niewejaarskraal acquisition, was registered and transferred. This action completed the Saxendrift/Remhoogte-Holsloot transaction negotiated during April 2008.

Effective October 2, 2008, AVR via Liberty Lane Investments (Pty) Limited, acquired a shareholding of an effective 26% in the Saxendrift project by subscribing for shares in Saxendrift Mines (Pty) Limited for an amount of approximately ZAR26 million. This transaction was also conducted in respect of the Minerals and Petroleum Resources Development Act and has been structured via a loan structure underwritten by Rockwell Resources RSA (Pty) Limited. As of February 28, 2010, AVR has only paid an initial deposit of ZAR3 million in respect of this transaction which is structured over a two year period. Rockwell is also in discussion with AVR regarding the funding for the outstanding amount of this transaction.

(ii) PALA REQUISITIONED SPECIAL GENERAL SHAREHOLDERS MEETING – April 29, 2009

Pala announced on April 29, 2009 that it was convening a Special General Meeting (the “meeting”) of the holders of common shares to be held on June 17^th, 2009, in Vancouver British Columbia, Canada. Pala was proposing three resolutions for the meeting. The three Resolutions were as follows:

The Executive Directors (Copeland, J Bristow, and M Bristow issued a competing proxy circular opposing the Pala initiatives and urged shareholders to support a fair rights offering (one which did not require that the rights plan be terminated).

At the Special General Meeting held in Vancouver on June 17^th, 2009 Pala’s resolutions were rejected, the fair rights offering was withdrawn by the Executive Directors and Pala was denied its legal and other costs in connection with convening the meeting. Subsequent to this meeting Greg Radke, Pala’s representatives on the Rockwell board, and Terence Janes one of the new independents resigned from the Board of Rockwell.

The Company’s Executive Directors considered that the outcome of the meeting vote was to affirm their leadership.

On June 30, 2006, the Company entered into an Agreement-in-Principle to acquire interests and/or rights in the Holpan/Klipdam Property in South Africa, Wouterspan Property in South Africa, Kwango River Project in the DRC and Galputs Minerale Project in South Africa. Pursuant to the terms of a comprehensive agreement, (“the Definitive Agreement”), the Company acquired all of the shares in and claims on shareholder’s loan account of Durnpike, a private South African company, from eight vendors (the “Vendors”). Some of the underlying rights were held by the H Van Wyk Diamonds (“HVWD”) and Van Wyk Trust, collectively the Van Wyk Diamond Group (“VWDG”). For further details on these see the Notes to the Financial Statements.

On November 30, 2007, the Company began trading on the JSE and hence completed its JSE listing condition. Consequently, the Company issued 7,848,663 Common Shares as settlement of its commitment and also 1,676,529 Common Shares as finder fees relating to the Durnpike acquisition.

Under the Midamines Agreement, Durnpike agreed to certain minimum royalty payments being made to Midamines, and Midamines undertook several obligations in favour of Durnpike, including that of procuring and facilitating Durnpike’s access to the Kwango River Project site. The royalties took the form of a series of recurring annual minimum royalty payments of US$1.2 million per annum (commencing on December 31, 2007). During the first quarter of 2008, pursuant to an amendment to the Midamines Agreement, Durnpike paid consideration of US$600,000 to Midamines as compensation for access to the entire concession area (Permit 331), as opposed to the limited contract area. As part of such amendment, Midamines waived its right to payment of the abovementioned US$1.2 million royalty payment due on December 31, 2007.

Subsequently, and pursuant to Midamines’ persistent breach of material provisions of the Midamines Agreement (coupled with its failure to remedy such instances of breach notwithstanding notice to do so), Durnpike and/or Rockwell cancelled the Midamines Agreement. Midamines thereafter disputed the entitlement of Durnpike and/or Rockwell to cancel the Midamines Agreement. It has referred to arbitration a dispute against Durnpike and Rockwell, in which it claims payment of an estimated and provisional amount of $41.8 million. Durnpike and/or Rockwell have, in turn, instituted a counter-claim in the estimated and provisional amounts of approximately ZAR25.4 million for equipment purchased by Rockwell to undertake exploration and feasibility work, $1.6 million for start-up and acquisition costs in the DRC, and US$20 million (while reserving the right to increase the counter-claim to at least $164.9 million) as an initial estimate of possible lost earnings.

Comprehensive documentation has been filed by the parties and arbitration proceedings are pending in Belgium. The Company remains of the view that the claim against it is without merit and will vigorously defend against it.

As provided for in the Definitive Agreement, the Company executed an agreement in relation to the acquisition of control of the mineral rights relating to the Galputs Minerale Project. For the Galputs deal to be fulfilled the condition precedent was that the South African Department of Minerals and Energy had to give its written approval to transfer the shares from the vendor to the purchaser by no later than May 31, 2008. No written approval was obtained, so this acquisition was not completed.

In conjunction with the acquisition of Durnpike, HCVW had an option agreement to acquire the Makoenskloof alluvial diamond project in South Africa. As a result of the acquisition of HCVW by Durnpike, and concurrent acquisition of Durnpike by Rockwell, the Company assumed the option to purchase the Makoenskloof property. In November 2006, HCVW exercised its option to purchase the property and the company that held the mineral rights of the Makoenskloof property. The Company paid a total consideration of ZAR 19 million ($2.7 million) for the property and associated equipment.

A bulk sampling program was carried out during fiscal 2008. The property has been on care and maintenance since that time.

In March 2007, Rockwell and Trans Hex and its subsidiary THO announced that the companies had entered into an agreement whereby Rockwell’s wholly owned South African subsidiary, Rockwell RSA, would acquire the MORO from Trans Hex (“the Transaction”). Pursuant to the terms of the Transaction, Trans Hex was to transfer all its relevant mineral rights and associated assets into a new special purpose vehicle Saxendrift Mine Pty (Ltd) which Rockwell acquired via Rockwell RSA.

The Transaction was substantially completed in April 2008 when the Ministerial consent to transfer the Saxendrift mining right, as well as prospecting rights in respect of the Kwartelspan, Zwemkuil-Mooidraai and part of the Remhoogte-Holsloot projects, was obtained. Cession of the Niewejaarskraal mining right occurred on March 4, 2009, and a payment of ZAR 18,901,294 ($2.4 million) plus interest of ZAR 2,381,294 ($0.3 million). Rockwell chose not to exercise the option on the Remhoogte prospecting right due to current harsh financial constraints and depressed diamond prices. All the other rights have been ceded to Saxendrift Mine (Pty) Ltd and Rockwell Resources RSA has taken ownership of the company.

On July 30, 2007, H.C. Van Wyk Diamonds Ltd acquired 100% of the shares and shareholder loans of Farhom Mining & Construction (Pty) Ltd for ZAR10 million ($1.5 million). This company holds the mineral rights over the Farhom farm which is part of the Wouterspan property. This transaction was concluded in terms of an option granted to H.C. Van Wyk Diamonds Ltd on February 24, 2005 and later amended on July 10, 2007.

During the year ended May 31, 2007, Africa Vanguard Resources (Pty) Limited (“AVR”), the holding Company of Richtrau No 136 (Pty) Limited (“Richtrau”), purchased through Richtrau a 15% interest in Van Wyk Diamond Group (“VWDG”) from the Van Wyk Trust for an amount of ZAR22.5 million ($3.4 million). The holdings of the VWDG comprised the mining projects known as Holpan, Klipdam, and Wouterspan purchased by Rockwell through its wholly owned South African subsidiary Rockwell Resources RSA (Pty) Limited (“Rockwell RSA”) from H C Van Wyk Diamonds Limited. Subsequently on November 30, 2008, AVR indicated its commitment to increase its shareholding in the VWDG to 26% by subscribing for an additional 11% of the shares in each of the entities comprising VWDG. The additional 11% stake was acquired by another subsidiary of AVR, Georgia Avenue Investments (Pty) Limited (“Georgia”), at a subscription price of ZAR17.5 million. The AVR group was also contractually committed to inject ZAR10.5 million in working capital into the VWDG.

As a result of the world wide credit contraction and economic recession, depressed market conditions and decline in diamond prices, the AVR group indicated to the Board of Directors of Rockwell RSA (the holding company of the entities in VWDG) during the fourth quarter of fiscal 2009 that it was unable to make outstanding payments to complete its financial obligations, and that it was pursuing other funding mechanisms to meet its obligations. As at February 28, 2009, AVR owed Rockwell approximately ZAR19 million to conclude the Georgia transactions; this amount is still outstanding at February 28, 2010. The contractually committed ZAR10.5 million due to VWDG has also not been received from AVR at this point in time.

Rockwell RSA has, in conjunction with AVR, endeavoured to identify alternate sources of funding to assist AVR to complete its investment in the VWDG projects, and currently negotiations are being progressed with the Industrial Development Corporation (“IDC”) of South Africa. Rockwell RSA is in on-going discussions with AVR, and has also engaged with the Department of Mineral Resources with the assistance of its legal counsel to address the completion of the BEE participation in the share capital of the entities comprising VWDG. The shares for the outstanding equity purchases are held in trust by legal firm Tabacks pending conclusion of the transaction.

Hunter Dickinson Services Inc. ("HDSI") provides management services to Rockwell, pursuant to a geological and administrative services agreement dated January 1, 2001. HDSI has certain directors in common with the Company and provides geological, corporate development, administrative and management services to, and incurs third party costs on behalf of, the Company on a full cost recovery basis per agreement. HDSI is one of the larger independent mining exploration groups in North America and employs or retains staff or service providers substantially on a full-time basis. These individuals include professional technical staff (which include accredited professional engineers and geoscientists), professionally accredited accountants and administrative, office and field support staff.

HDSI has supervised mineral exploration projects throughout Canada and internationally in Brazil, Chile, China, the United States (Nevada and Alaska), Mexico and South Africa. HDSI allocates the costs of staff input into projects based on time records of involved personnel. Costs of such personnel and third party contractors are billed to the participating public companies on a full cost recovery basis (inclusive of HDSI staff costs and overhead) for amounts that are considered by Rockwell's management to be competitive with arm's-length suppliers.

Rockwell Diamonds Inc is based in British Columbia, Canada. It also has corporate offices located in Johannesburg, South Africa. As at July 31, 2010, Rockwell had the following subsidiaries:

A minority interest of 15% is recognized with the consolidation of HCVW until such time as the outstanding loan by the BEE group is fully repaid, at which time the Company will increase the non-controlling interest to 26%. As a consequence the outstanding loan has not been recognized as a receivable in the accounting records of the Group.

The Company’s legal registered office is in care of its Canadian attorneys Lang Michener LLP, Barristers & Solicitors, at Suite 1500, 1055 West Georgia Street, Vancouver, British Columbia, Canada V6E 4N7, telephone (604) 689-9111, facsimile (604) 685-7084. The South African head office of the Company is located at Level 1, Wilds View, Isle of Haughton, Cnr. Carse O’Gowrie and Boundary Road, Houghton Estate, Johannesburg 2198, telephone 27 (11) 481-7250, facsimile 27 (11) 481-7247. The Canadian head office of Rockwell is located at Suite 1020, 800 West Pender Street, Vancouver, British Columbia, Canada V6C 2V6, telephone (604) 684-6365, facsimile (604) 684-8092.

Rockwell has plant and equipment located on its Holpan, Klipdam, Wouterspan, Makoenskloof and Saxendrift properties as at February 28, 2010.

NI 43-101	National Instrument 43-101, the national securities law instrument in Canada respecting standards of disclosure for mineral projects.
Alluvial deposit	Accumulation of mineralization as a result of deposition in a river or stream.
Mineral Resource/Reserve	A concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. The mineral deposit classifications in this annual report on Form 20F adheres to the resource/reserve definitions and classification criteria developed in 2005 by the Canadian Institute of Mining as required under NI 43-101. Estimated mineral resources fall into two broad categories dependent on whether their economic viability of them has been established and these are mineral namely “resources” (economic viability not established) and ore mineral “reserves” (viable economic production is feasible). Resources are sub-divided into categories depending on the confidence level of the estimate based on the level of detail of sampling and geological understanding of the deposit. The categories, from lowest confidence to highest confidence, are inferred resource, indicated resource and measured resource. Reserves are similarly sub-divided by order of confidence into probable (lowest) and proven (highest).
Inferred Mineral Resource	The part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
Indicated Mineral Resource	The part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
Measured Mineral Resource	The part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

South Africa has recently undergone major constitutional changes to effect majority rule, and also to effect mineral title. Accordingly, many laws may be considered relatively new, resulting in risks such as possible misinterpretation of new laws, modification of mining or exploration rights, operating restrictions, increased taxes, environmental regulation, mine safety and other risks arising out of a new sovereignty over mining, any or all of which could have an adverse impact upon Rockwell. Rockwell's operations may also be affected in varying degrees by political and economic instability, crime, fluctuations in currency exchange rates and inflation.

Changes, if any, in mining or investment policies or shifts in political attitude in South Africa may adversely affect Rockwell's operations or likelihood of future profitability. Operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production, price controls, export controls, currency remittance, income taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety.

The political situation in South Africa introduces a certain degree of risk with respect to Rockwell's activities. The Government of South Africa exercises control over such matters as exploration and mining licensing, permitting, exporting and taxation, which may adversely impact on Rockwell's ability to carry out exploration, development and mining activities. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure could result in loss, reduction or expropriation of entitlements or in the imposition of additional local or foreign parties as joint venture partners with existing or other interests.

The exploration and mining activities of Rockwell are subject to various South African national, provincial and local laws governing prospecting, development, production, taxes, labour standards and occupational health, mine safety, toxic substance and other matters. Exploration activities and mining are also subject to various national, provincial and local laws and regulations relating to the protection of the environment. These laws mandate, among other things, the maintenance of certain air and water quality standards, and land reclamation. These laws also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Although Rockwell's activities are currently carried out in accordance with all applicable rules and regulations, to the best of its knowledge and belief no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing operations and activities of exploration, mining and milling or more stringent implementation thereof could have a material adverse effect on Rockwell's business, results of operation and financial condition.

The mining industry in South Africa, where the Company's projects are located, is subject to extensive regulation. The regulatory environment is developing, lacks clarity in a number of areas and is subject to interpretation, review and amendment as the mining industry is further developed and liberalized. In addition, the regulatory process entails a public comment process, which makes the outcome of legislation and regulatory controls uncertain and may cause delays in the regulatory process.

In October 2006, the Government of South Africa released the Mineral and Petroleum Resources Royalty Bill 2006 (the "Royalty Bill") and the Diamond Export Levy Bill 2006 (the "Export Levy Bill"). The Royalty Bill requires that companies extracting diamonds pay a royalty 5% from the sale of those diamonds, payable on gross revenue.

In order to address inequalities to Historically Disadvantaged Persons ("HDP") engendered by South Africa's former apartheid system, the South African government has initiated certain government empowerment initiatives (See discussion in Risk Factors).

Basis for Unit of Production and Depletion of Mineral Resources by Rockwell

The Indicated and Inferred Resource categories used by Rockwell for its alluvial diamond deposits follow the CIM (“Canadian Institute of Metallurgy”) definitions, as set forth in the table of geological terms above.

Rockwell Diamonds Inc utilises a matrix system to determine the category a resource should be placed. It must be noted that Rockwell Resource declarations are inclusive of mining dilution and process inefficiencies with a 2 mm bottom cut off. The value of the diamonds in the Resource declaration is determined through the sale of the recovered diamonds and not through the estimation of value by diamantiares. All Resources are for 100 percent of the mineral area and not for the ownership percentage of Rockwell Diamonds Inc in the underlying subsidiary.

The table below is a summary of what Rockwell will do to determine the two resource categories

Procedure		Comments
Desktop Studies	Identification of an “Area of Interest”	Typically the “area of interest” is in a well known alluvial diamond area or region with a history of past production (mining) and diamond sales
Field Studies	Geological mapping Reconnaissance drilling Remote sensing studies	To increase confidence in geological model, ascertain previous diamond information including grade and diamond value information.
Inferred Resource Estimation	Detailed Drilling on 100x100m grid	To establish nature of geological units (stratigraphy) and estimate gravel volume

	Bulk-sampling minimum of 0.5% of intended declared resource	To estimate grade
	Recovery of 500 carats	To estimate diamond value & size frequency
Indicated Resource Estimation	Infill drilling on a close spacing (50mx50m)	To improve geological knowledge, construct detailed 3-dimensonal resource models and improve the confidence in the estimate of gravel volume
	Bulk-sampling minimum of 5% of the intended declared resource	To estimate grade
	Recovery of 3,000 – 5,000 carats	To estimate diamond value & size frequency- detailed size frequency analysis of stone sizes are conducted to characterize the overall diamond population characteristics particularly with respect to size

In conclusion Rockwell Diamonds Inc has sufficient confidence in its approach to resource determination that the Company has mined since inception in 2006 based on these resources and has demonstrated that the grades and diamond quality remain fairly consistent.

It must be noted that Rockwell is dealing with a distinct deposit-style. Other alluvial explorers and miners all exploit higher grade deposits in central and western Africa and do not have to publicly list the results of their resource determinations. Rockwell has not completed such extensive bulk sampling over all the mineral areas due to the high cost and lack of production capacity. This lack of sampling over the entire mineral area provides less confidence that Rockwell would need to assess the sustainability in diamond grade and values in order for a reserve to be declared. Over time Rockwell bulksample and trial mine the various mineral areas and when sufficient bulk samples (trial-mining) have been carried out over the entire mineral area the Company could be in a position where the requirements for a pre feasibility study can be met and the Company would be in such a position as to declare probable reserves under the Canadian Standards.

Rockwell Diamonds Inc reports all resources in units of volume (cubic metres) instead of units of weight (tonnes), because of the variable nature of the composition of the alluvial deposits and therefore the specific gravity throughout the resource area. This creates too many variables for the Company to be satisfied in the accuracy of the numbers reported. On a bi weekly basis, Rockwell surveys all excavations and stockpiles to determine the volume of ore that has been processed through the processing plants. All survey data is signed off by the Chief Surveyor as well as the Mineral Resource Manager, who is a Qualified Person. This volumetric data and the accompanying diamond production is reconciled bi weekly and entered into the Company’s database. This database is then used for the compilation of the annual and quarterly depletion of the mineral resources.

Note:
⁽¹⁾HCVW are operations acquired from HC van Wyk, including Holpan and Wouterspan mines and Makoenskloof project.
⁽²⁾The deemed carats available are based on resource estimates performed in the technical report dated February 28, 2009. These resource estimates have not been updated as no material transactions, events or activities have taken place which would indicate that these resource estimates need to be updated.
⁽³⁾Depletion for the period is calculated by applying the depletion percentage for that period to the cost of the specific mineral property.

The following tables and discussion includes references to "indicated resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves.

The following tables and discussion includes references to "inferred resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or preliminary feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Note:
(1) The resource estimated per the technical report dated February 28, 2009 adjusted for production volume during fiscal 2010.

Rockwell’s principal properties, Holpan, Klipdam and Saxendrift (which are currently in production), Wouterspan (in production in fiscal 2009 but currently on care and maintenance) and Niewejaarskraal (planned for development as funds are available) had detailed resource assessments completed at February 28 2009. These estimates took into consideration archived data from previous drilling programs, 2009 drilling and sampling if done, and results from processing and depletion from mining to that time. This work was completed by the Company’s Resources Manager and reviewed by an independent expert (both are qualified persons as defined under Canadian Securities legislation). Dr Tania Marshall, PrSciNat, a qualified person who is independent of the Company, is responsible for the estimates. The details of the assessment are included in Technical Reports that were filed with the Company’s year end materials in its home jurisdiction (on www.sedar.com).

The following disclosure is derived from Rockwell files and technical reports. Additional details can be found in technical reports on each property filed on www.sedar.com.

Figure 1 shows the location of Rockwell’s principle properties: Holpan/Klipdam, Wouterspan and Saxendrift/Niewejaarskraal located in the Republic of South Africa ("RSA" or "South Africa").

Figure 1. Location of the Holpan/Klipdam, Wouterspan and Saxendrift/Niewejaarskraal Properties

All of Rockwell’s principle properties are located in central South Africa, an arid semi-arid area with low relief that forms part of the high plateau (or highveld) region. Rainfall is about 200 mm per annum primarily during the summer. Winter temperatures range from 0°C at night time to approximately 14°C during the day; summer daytime temperatures may reach 45°C.

The Holpan/Klipdam property is located 45 km from Kimberley in the Northern Cape Province of central South Africa. Holpan and Klipdam are adjacent properties that are accounted for separately because historically, Holpan was mined by the Van Wyk Diamond Group and Klipdam was mined by Klipdam Mining and each has its own processing facilities.

The property has ready access to all required infrastructure. Operations are located next to an irrigation canal, so have year-round water supply with necessary pumping stations and water supply pipelines in place. The property is situated on a tarred road and is 45 km from Kimberley, a modern town of 200,000 inhabitants with comprehensive mining support services, spares and supplies. Kimberley has a regional airport and air service that links to all major cities in South Africa. The property is connected to the national electricity grid and the necessary transformers and supply lines are in place. In fiscal 2008, the Company installed back-up generators.

The Holpan/Klipdam property consists of the adjacent Holpan 161 and Klipdam 157 farms, covering an area of 4,019.9 hectares. Details are provided in Table 1.

The surface rights (as well as the land ownership) of the farms Holpan and Klipdam are held by HC Van Wyk and Klipdam Mining, respectively. The surface and land rights of Erf 1 of Windsorton are held by a third party with whom Rockwell has a land use agreement.

With respect to Holpan 161, royalties were paid to the State of 5% of gross proceeds of all diamonds sold up to 28 February 2010. From 1 March 2010 the new Mineral and Petroleum Resources Royalty Act came into effect and royalties are payable at a minimum rate of 0.5% plus adjustments based on profitability. Estimates are that our liability will amount to an average of 3.7% of gross proceeds.

In addition to the royalty, historical annual royalty payments of ZAR165,000 (approximately US$20,625) to the State are owed.

With respect to Erf 1 Windsorton, a prospecting right over the Erf 1 Windsorton mineral area was issued which endures until the February 24, 2011. The prospecting right, granted in respect of diamonds, endures for a period of two years which commenced on the February 25, 2009.

A key factor in the origin of the extensive and rich alluvial diamond deposits found in South Africa and Namibia is the existence of over 1000 diamond bearing kimberlites across southern Africa on the Kaapvaal Craton. Kimberlite emplacement was followed by liberation and entrainment of diamonds and deposition in terraces on the ancient Vaal and Orange Rivers between approximately 4.8 million years ago (Ma) and 4 Ma.

The Holpan-Klipdam deposit comprises an extensive flat-lying alluvial sequence located on the right bank of the modern Vaal River and 6 km inland from a bend in the river known as "the Horseshoe". The sequence extends across an area of approximately 5 km by 2.5 km. Economic concentrations of diamonds within the sequence are found both in the deflational "Rooikoppie" deposit and in well developed, clearly-defined palaeo-channels that were preserved by a highly resistant calcrete cap. The palaeo-channels extend over several km and are up to 500 m wide in places. At Holpan and Klipdam, the bedrock consists of Archaean Ventersdorp lavas, and shale’s and diamictites of the 300 to 250 million year old Dwyka Group of the Karoo Supergroup.

The Rooikoppie unit varies in thickness from a few centimeters (cm) up to about 2 metres (m) and has an estimated average thickness in the order of 1 m. Solution cavities up to 3 m deep in the calcretised bedrock form sharp, discontinuous depressions and are filled with the overlying Rooikoppie gravel. Since such cavities, when considered in a hydrodynamic context, have very high diamond trapping potential and are of key economic importance. Given the high incidence of pronounced solution features in the palaeo-land surface underlying the Rooikoppie (as observed in current mine workings at Holpan-Klipdam), this area is considered to be of high interest with regard to its exploration potential.

The primary gravels found in the palaeo-channels typically comprise the lower third of the sedimentary sequence and rest directly on the bedrock. The thickness of the gravel bed varies from about 1 to 6 m and average approximately 3 m thick. The primary gravels comprise a poorly sorted assemblage of large boulders (up to 45 cm in diameter at the base of the unit), cobbles and pebbles set in a sandy matrix that is considered to have been deposited by a large, middle-stage, meandering river system.

High-resolution digital aerial photographs of the Holpan-Klipdam properties clearly show the distribution of mine workings in the area, including the adjacent Leicester kimberlite pipe. Tonal darkening, seen immediately to the west of the Klipdam plant area, corresponds closely to a buried palaeo-channel as defined by exploration drilling, and is interpreted to be its surface expression.

In 1994, the Van Wyk family began operations on claims on the Holpan property and shortly thereafter Sonora Gold Inc., started operating on an adjacent part of the Holpan property. In 1996, Sonora Gold Inc. acquired Klipdam Mining. Subsequently, in 1999, the company changed its name to Sonora Diamond Corporation. During this time, the Van Wyks also acted as earth-moving contractors to Sonora.

The Van Wyk operations (incorporated in the company HCVW in 2001) were initially small but, with the discovery of larger diamonds and the purchase of larger earth moving equipment, they were able to sustain and enlarge their operations. The HCVW operation grew steadily on Holpan, while the Sonora venture stuttered and eventually collapsed. Records show that, subsequent to 2000, HCVW had grown to a sizable operation on Holpan and acquired Sonora Diamonds, thereby expanding the company’s presence on Holpan and Klipdam.

Holpan and Klipdam have been the focus of intermittent mining since the early 1900’s and have consistently been known for yielding large diamonds. In historic records, George Beet (1931) discusses the ‘Broderick’ diamond – a perfect Cape white, weighing 412.5 carats.

From 1994 to 2005 at Holpan-Klipdam, extensive mining of Rooikoppie and primary gravels took place, as well as drilling and bulk testing. A high efficiency 200 tonnes per hour (tph) Dense Media Separation (DMS) plant with X-ray Flowsort recovery and grease table final recovery apparatus began operation in August 2005 and has been used for most of the processing since that time. Forty-one units of Volvo and Komatsu equipment currently moves 159,000 cubic meters (m³) of gravel and overburden on a monthly basis.

Due to the significant burial depth of the Primary gravels at Holpan-Klipdam, the thickness and distribution of the alluvial gravel deposits have been investigated through systematic percussion drilling. A total of 3,243 boreholes totaling 14,486 m were drilled on the Holpan-Klipdam property between 1994 and 2005. Drill holes extended to bedrock in the majority of cases. Boreholes were spaced at 50 m intervals along traverses 100 m apart. Chip samples were collected at 1-m intervals and logged on site by a geologist. Procedures were audited in conjunction with the original field logs under the supervision of Rockwell's consultant in November 2005.

In March 2006, RH De Decker, Pr.Sci.Nat., an independent qualified person, estimated the inferred mineral resources for Holpan and Klipdam based on operational statistics, drilling and other sampling completed to that time as 12,339,700 m³ grading 1.16 carats per 100 m³, with an average value of US$848/carat. De Decker also suggested that 4,800,000 m² of gravel, that is similar, visually, to the Rooikoppie gravels, surrounds the area of the inferred resource and that this gravel feature, readily identifiable from the prevalent red chert clasts (pebbles) in the regolith, abandoned artisanal workings, and vegetation features discernable from aerial photography, should be evaluated to determine its diamond content. This area is being assessed by exploration work that began in fiscal 2008 and is continuing in fiscal 2009.

Mining at the Holpan and Klipdam properties from January 2006 to March 2007 focused on the Rooikoppie gravels, and a volume of 1,889,308 m³ was mined and processed during the period. The total Holpan and Klipdam inferred mineral resources as of March 31, 2007 were estimated to be 10,450,000 m³ grading 0.95 carats per 100 m³.

During the period of April 1, 2007 and February 29, 2008, 1,591,429 m³ were mined at Holpan and Klipdam. At February 29, 2008 the total inferred mineral resources were estimated to be 8,858,000 m³ grading 0.84 carats/100 m³.

During the period January 2008 – February 2009, some 876,972 m³ of gravel was processed from Klipdam from which 8,066.34 carats were extracted and 691,729 m³of gravel from Holpan from which 5,073.41 carats were extracted, for a total of 1,568,701 m³ and 13,139.75 carats, with average grade recoveries of 0.91 carat/100 m³ and 0.74 carat/100 m³, respectively.

During the period March 2009 – February 2010, some 895,669 m³ of gravel was processed from Klipdam from which 9,669.8 carats were extracted and 805,925 m³of gravel from Holpan from which 6,398.2 carats were extracted, for a total of 1,701,594 m³ and 16,068 carats, with average grade recoveries of 0.79 carat/100 m³ and 1.08 carat/100 m³, respectively.

The mining of the gravels at Holpan-Klipdam uses mechanized, shallow opencast earthmoving techniques. Topsoil (generally minimal) is removed and stored separately for use in later rehabilitation activities. The top layer of Rooikoppie gravel is then bulldozed onto stockpiles from which it is loaded into articulated dump trucks either by excavator or front-end loader for transport to the plant.

The remaining Rooikoppie is then removed from the uneven calcrete substrate by means of an excavator. Calcretised overburden on top of the Primary gravel is removed so that the gravels are exposed and can be mined by bulldozers and excavators. The calcrete overburden is backfilled, side-cast or used in road-building. Care is taken to ensure the sterile excavation of the Primary gravels such that no contamination by the footwall lithologies occurs. Excavation continues to the base of the gravels where higher basal grades are expected to occur. Where the bedrock is soft, approximately 20 cm of bedrock is excavated with the gravels, so that any diamonds in the weathered rock will be recovered.

The Primary gravels are transported by truck to the diamond recovery plants. Surveying of the box cuts is undertaken on a monthly basis by the mine surveyor in order to obtain precise volumes for the Primary gravel, the suspended gravel, the calcrete and the Rooikoppie, against which diamond production could be reconciled and grade determined.

A double-18 ft rotary pan-plant system used to process gravels on Klipdam and a Dense Media Separation (DMS) plant is used on Holpan. Processing volumes (Run-of-Mine) on the two plants are approximately 350 tonnes per hour and 380 tonnes per hour, respectively.

During 2006/2007 some 24,783.82 carats were sold from the Klipdam and Holpan operations for an average of US$1,040/carat (this was an increase from the US$848/carat received from the previous year’s production and was the result of the improved market for larger stones). During 2008, over 7,000 carats were sold for over US$2,500/carat as a result of the positive diamond market. In late 2008, diamond prices fell dramatically; average sales prices for the market in February 2009 were US$130 to US$190/carat.

During 2009/2010 17,274.4 carats were sold from the Klipdam and Holpan operations for an average of US$581.26/carat and US$492.09/carat respectively. This decrease from the US$2471.44/carat received from the previous year’s production is the result of the world wide economic downturn during in the later half of 2008 and throughout 2009. No diamonds were sold from these mines during November 2008 to February 2009. Prices were significantly lower as a result of the negative diamond market.

The mineral resources at February 28, 2009 were estimated by Rockwell’s Manager, Resources, G. Norton, Pr.Sci.Nat., a qualified person who is not independent of the Company and reviewed by T. Marshall, PhD, Pr.Sci.Nat., a qualified person who is independent of the Company and is responsible for the estimates. The most recent technical report entitled “Revised Technical Report on the Klipdam and Holpan Alluvial Diamond Properties, Barkley West District, the Republic of South Africa”, dated December 22, 2009, by Marshall and Norton has been filed on www.sedar.com.

In the twelve months of the 2010 fiscal year, production at Holpan was 6,398.2 carats from 805,925 cubic meters (1,490,961 tonnes) of gravel processed. Production at Klipdam was 9,669.8 carats from 895,669 cubic meters (1,656,987 tonnes) of gravel. The mineral resources in Table 2a below reflect the depletion during fiscal 2010.

The following table and discussion includes references to "indicated resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves.

The following discussion includes references to "inferred resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or preliminary feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Rockwell Diamonds plans to prospect the remaining areas of the Holpan and Klipdam mining rights and to bulk sample the areas determined to be underlain by gravels.

Rockwell has proposed to make efficiency improvements at the Klipdam Mine and to add an additional X-Ray sorting unit at the Holpan Mine. There are no capital costs associated with these activities as they will be undertaken through the operational budget. The X – Ray sorting machine is a spare machine therefore no additional capital expenditure was incurred.

Ongoing review and updating of resources based on production (trial-mining) will be done by existing Rockwell staff and reviewed by the independent qualified person, as necessary. This trial-mining will form the basis of a Pre-Feasibility Study which will convert a portion of the Indicated Resources to Probable Reserves

The Wouterspan Property is located on the northern bank of the Orange River, about 100 km west of Douglas in the Northern Cape Province, South Africa.

The area has ready access to good infrastructure. Water is available from the Orange River. The property is directly linked to an all-weather gravel road. It is approximately 200 km from the town of Kimberley, where comprehensive back up services for mining, spares and other supplies are available.

Wouterspan is situated on the edge of the Karoo, an arid semi desert that forms part of the high plateau (or highveld) of South Africa. Rainfall is about 200 mm per annum primarily during the summer. Winter temperatures range from 0°C at night time to approximately 14°C during the day; summer daytime temperatures may reach 45°C.

The project area comprises a relatively flat raised terrace adjacent to the modern day Orange River. The main relief features include a gentle rise towards the western limit of the permit area, together with a sharp topographic descent of approximately 12 m in the south-east, adjacent to the Orange River, defining the limit of the terrace. Subtle hollows, some of which host minor ephemeral drainages are also seen in the project area.

The Wouterspan project is comprised of the following individual farm portions of the farm Lanyonvale 376.

Portion	Permit/right holder	Right/Number	Surface right holder	Size (hectares)
Portion 16, a Portion of Portion 9	Farhom Mining & Construction Ltd.	Old order Mining Permit/ MP 144/2004 (1)	HCVW	188.7926
A surveyed Portion of Remainder of Portion 9 (Wouter)	Okapi Diamonds (Pty) Ltd	New Order Prospecting Right/Protocol 65/2006 (2)	A C Vlok Trust	780.61
Portion 14 (Stofdraai)	HCVW	New order Prospecting Right/Protocol 45/2005 (3)	A C Vlok Trust	1,369.9544
Remainder of Portion 9 (Wouter)	HCVW	New order Prospecting Right/Protocol 45/2005 (3)	HCVW	1,640.6412
Portion 16 (a portion of Portion 9)	HCVW	New order Prospecting Right/Protocol 36/2007 (4)	HCVW	240.4480
Remainder of Portion 18	HCVW	New order Prospecting Right/(NC) 30/5/1/1/2/408 PR (5)	Johan Gerber	271.5347
Portion 7 Portion 11 (De Hoek)	HCVW	New order Prospecting Right/(NC) 30/5/1/1/2/1127 PR (6)	CJ Coetzee	1,628.9209 1,288.5227

Large areas of the terrace are covered by diamond bearing surface deposits known as Rooikoppie gravels, often separated from the underlying primary gravel by a hard layer of calcrete The basal gravels, termed "Primary Gravels", are well exposed in the workings and shale’s and tillites of the Dwyka Group, together with lava are common substrates of the gravels. The bedrock displays gully and pothole features creating high diamond trapping potential. At Wouterspan, the gravels occur 20 - 30 m above the Orange River and appear to have been deposited in a braided river system. Suspended gravel deposits found between the Rooikoppie and Primary gravels have also been shown to contain diamonds.

The majority of the alluvial diamonds found in gravel deposits along the Middle Orange River (“MOR”) are found in two distinct gravel horizons: an upper deflation deposit called the Rooikoppie gravel and the basal Primary gravels.

The Rooikoppie unit varies in thickness from a few cm up to about 2 m and has an average thickness of about 1 m. The deposit typically rests on sand, gravel or in places a hard, semi-continuous layer of calcrete and silcrete. Solution cavities up to 2 m deep in the calcretised material form sharp, discontinuous depressions that are filled with the overlying Rooikoppie gravel.

The Primary gravel deposits comprise the lower half to one third of the sedimentary sequence and rest directly on the bedrock. These Primary gravels comprise a poorly sorted assemblage of large boulders (up to 45 cm in diameter at the base of the unit), cobbles and pebbles set in a sandy matrix that is considered to have been deposited by a large, high-energy braided system that would be readily capable of transporting diamonds. The total sequence varies from about 8 m to 18 m in thickness.

The Wouterspan alluvial deposits represent typical remnant river terraces comprising gravel sequences formed, in large part, through reworking of glacial outwash deposits and appear to have a common or similar origin as seasonal flood deposits. The secondary or younger gravels represent re-working of earlier deposits by late stage erosion and re-deposition as sheetwash flood gravels in low level terraces often associated with river damming situations and splays.

The surface deflation Rooikoppie deposits comprise a diamond-bearing lag deposit created by erosion, winnowing and removal of light components, and enrichment of heavy components including diamonds.

The first diamond discovered in South Africa was about 75 km upstream of Wouterspan on the MOR, and led to the rapid proliferation of small-scale artisanal mining activities.

Early mining concentrated on the surface deflation deposits, known as Rooikoppie gravels. Rooikoppie gravels were mined extensively between Douglas and Prieska from 1926 to 1936 and again during 1943 to 1945.

The MOR had not seen much prospecting and mining activity since that time because large areas are covered by a very hard layer of calcrete, 0.5 m – 3 m thick, which limits access to the underlying gravel horizons; and the gravels contain a high percentage of banded ironstone clasts, which makes the treatment and concentration of the gravels technically difficult when using the traditional pan plant processes. More recently, the mining problem of the MOR was solved by the use of blasting and heavy earthmoving equipment to rip and remove the hard calcrete-silcrete layer. This new technology has resulted in the area being effectively explored and mined for the first time.

A number of companies have been active in the area. The MOR alluvial deposits have regularly yielded exceptional large diamonds such as a 211 carat stone recovered from a terrace on a high level terrace upstream from Wouterspan and was reportedly sold for ZAR 28 million ($3.8 million); a 181 carat stone recovered from Terrace B on Saxendrift; a 205 carat stone recovered by Trans Hex from Saxendrift and a 175 carat stone from Trans Hex’s MOR mine.

In 2005, drilling indicated an exploration target at Wouterspan of gravel in the range of 30 million tonnes. Bulk sampling returned grades in the order of 0.4 - 0.5 carats per 100 m³.

Between March 2005 and January 2006, a total of 513,892 m³ of Primary gravel and 24,013 m³ of Rooikoppie from 11 localities at Wouterspan property were tested during trial mining operations by VWDG. Bulk sampling locations were selected according to the most well-developed gravel assemblages both laterally and vertically as identified by drilling and a series of box-cuts were excavated. This work indicated that the property hosts an extensive alluvial deposit with a large average stone size within the Rooikoppie and Primary gravel units. A volume of approximately 4,481,000 m³ of Rooikoppie gravel and 43,259,000 m³ of primary gravel was indicated as exploration potential from this work.

Additional drilling was done in 2006, 2007 and 2008. An independent resource estimate was done at February 2009, see Estimates of Mineralization below.

The upper 2-3 m of the fluvial-alluvial sequence is calcreted to varying degrees so prior to excavation, the sample block needs to be blasted, typically on a 5 m x 5 m grid, to break up the hard calcrete carapace. The broken material is then stripped off using hydraulic excavators. In various areas of the property varying depths of calcretisation has meant that some of the upper gravel layers are also highly cemented so prior to excavation, the gravels are ripped by one of two bulldozers, effectively liberating the gravels (and the diamonds) from the calcrete matrix. The disaggregated material is then loaded by excavator, onto articulated dump trucks and transported to the plant site for further processing.

The gravels are fed into the processing plants by front end loader. Twelve 16-ft rotary pan plants have been used to process gravels at Wouterspan, with a combined processing capacity of 312 tonnes per hour. Once processed, the concentrate is sent to the seven Flowsort recovery units on a vibrating belt. The Flowsort units separate the concentrate into various size fractions, which are all captured and placed in a twin-locked box before being hand-sorted in a glove box. All steps in the final recovery, as well as access to the final recovery area, are monitored by a Closed Circuit Television unit. At least two Rockwell personnel are present whenever diamonds are sorted.

Wouterspan has been on care and maintenance since November 30, 2008, so there has not been any production in fiscal 2010.

Since Indicated Resources are estimated, inter alia, by defining an envelope of 250 m around/ahead of the current mining face, given suitable geological conditions and drill spacing, after mining of the above gravel from a previously identified indicated resource block, a new envelope was modelled to contain an estimated 313,000 m³ of gravel derived from forward modelling, which would be added to the final depleted resource estimate. Further, a minor amount of gravel volume (some 300,000 m³) was added to the inferred resource category by limited infill drilling completed in 2008.

The mineral resources at August 31, 2009 were estimated by Rockwell’s Manager, Resources, G. Norton, Pr.Sci.Nat., a qualified person who is not independent of the Company and reviewed by T. Marshall, PhD, Pr.Sci.Nat., a qualified person who is independent of the Company and is responsible for the estimate. The most recent technical report entitled Technical Report on the Wouterspan Alluvial Diamond Property, Herbert District, the Republic of South Africa, dated December 22, 2009, by Marshall and Norton has been filed on www.sedar.com.

The following discussion includes references to "inferred resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves. In addition, "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or preliminary feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

During fiscal 2010 and early 2011, the mine has remained on care & maintenance. Subsequent to fiscal year end, the Company completed a rights offering and initiated plans to upgrade the processing plant facilities to provide greater volume capacity and more efficient recovery of smaller stones and the mine will be trial-mined in fiscal 2012.

The total cost of this refurbishment, based on formal quotations from potential suppliers, is estimated to be about ZAR 45 million (approximately US$6 million). The trial-mining will form part of a planned Pre-Feasibility study to convert part of the estimated Indicated Resources to Probable Reserves.

The Saxendrift Mine area is accessed via a tarred road (route R357) from Douglas to Prieska. A well-maintained network of high-speed gravel roads and farm tracks provides ingress to all areas of the Saxendrift Mine and prospecting area. Rockwell has built a bridge across the Orange River to allow access between the operations on the south (Saxendrift) and north (Wouterspan) sides of the river. Water for the Saxendrift Mine is pumped from the Orange River. Power is accessed from the national power grid. Maintenance is done during power outages and a 2 megawatt generator is available to run the plant during these periods. A backup generator is also retained at the administration centre in Barkley West. An unpaved airstrip and helipad are located on the property. A large, national, airport is located at Kimberley. Labour and services are available in Douglas and skilled labour and broader services are available in Kimberley.

Figure 2. Location map for the Saxendrift Project in relation to known operations and other properties along the Middle Orange River.

Together the Saxendrift properties comprise 5,142.52 hectares. The mining area of Saxendrift Mine constitutes 1,368.17 hectares.

The surface rights to the Saxendrift Mine properties are held by Rockwell. The prospecting properties are owned by third parties with whom land use agreements are negotiated. The prospecting rights on the Kwartelspan Project cover some 903.65 hectares. Both Kwartelspan and Kransfontein properties are co-owned by CEJ van Niekerk with whom Trans Hex Operations (Proprietary) Limited (“THO”) has a surface use agreement. Although the agreement lapsed at the end of February 2008, continued payment of a surface use rental by Rockwell has kept the agreement in place until a new agreement is negotiated.

Property Name	Area (ha)	Mineral Right Holder	Permit Type and Number	Renewal Date
Saxendrift 20 Re/Ptn	1,368.2940	Saxendrift Mine (Pty) Ltd	New Order Mining Right 28/2008MR	17 March 2018
Annex Saxensdrift 21 Re/Ptn, and Ptn (Ptn 1)	1,368.2940	Saxendrift Mine (Pty) Ltd	New Order Mining Right 28/2008MR	17 March 2018
Saxendrift 20 Re/Ptn	359.0000	Saxendrift Mine (Pty) Ltd	New Order Prospecting Right 751/2006(PRC)	29 Nov 2008 (Renewal submitted to DME on 09/09/2008 and was accepted on 22/09/2008)
Saxendrift 20 Ptn 12, 13, 16, 24, 25	1873.6898	HCVW	New Order Prospecting Right (NC) 30/5/1/1/2/1284PR	Granted on 19 June 2008, until 18 June 2010
Kransfontein 19 Ptn (Ptn 1) Kwartelspan 25 (Re/Ptn)	903.6500	Saxendrift Mine (Pty) Ltd	New Order Prospecting Right 210/2006	11 April 2008 (Renewal was submitted to DME on 10 April 2008 and was accepted on 23 April 2008)

The present Orange River between Douglas and Prieska, generally referred to as the Middle Orange River (“MOR”), displays a meandering channel morphology, best developed in areas underlain by the Dwyka Group. Palaeochannel depositional packages of the Orange River are preserved at different elevations above the present Orange River bed. The ages of the terraces young with decreasing elevation and, conversely, the probability of preservation decreases with increasing age and elevation. The Saxendrift deposit comprises an extensive flat lying alluvial sequence located on terraces developed on the left bank of the present Orange River, approximately 20-70 m above the Orange River.

The bedrock is well exposed in the workings and shale and tillite of the Karoo age Dwyka Group, are common. The fluvial-alluvial gravels comprise a sequence of (basal) gravels 2-4 m thick overlain by generally less than 5 m of variably calcreted sands and silts and covered by a thin layer of soil and scree. The cobble-sized clasts within the gravels consist mostly of lava and quartzite with significant, if variable, amounts of Banded Iron Formation (BIF), and minor amounts of limestone, tillite, and agate. The matrix is sandy to gritty. As is usual with these types of deposits the degree of calcretisation decreases downwards, from hardpan or laminar calcrete at the surface to loosely cemented gravels at depth. The gravels are, generally, not well sorted, and are typical of braid bars that migrate through sections of river channels in response to variable water speed.

The Saxendrift area has had a long history of diamond production dating back to the mid 1920’s. An estimated 96,000 carats of diamonds were extracted from the area between 1928 and 1964. Trans Hex commenced exploration and mining in the area in 2000 through a merger with GEM Diamond Mining Limited, which held the mineral rights to Saxendrift at that time.

While owned and operated by TransHex, Saxendrift comprised three mining areas: Brakfontein, Saxendrift Terrace A and Saxendrift Terrace B. Brakfontein was not included in the disposal to Rockwell. From commissioning to the end of 2005, the Saxendrift Mine produced a total of 76,803 carats. The largest gem quality stone ever produced by Trans Hex – a 216 carat octahedron – was from the Saxendrift operation in 2001. Saxendrift also held the Trans Hex record for the highest Dollar per carat price with a 9.22 -carat blue stone that was sold in 2003 for in excess of US$45,000/carat. Production on Saxendrift was achieved by open cast mining methods with processing and recovery being achieved by a combination of rotary pan plants, Dense Media Separation and Flow-sort X-ray recovery.

The Saxendrift Project was held by THO from 2000 until the sale to Rockwell in 2007/2008. Although limited mining production took place up until January 2007, the Saxendrift Mine had officially been put on “care and maintenance” by THO during 2006 as a result of a variety of economic aspects.

The upper 2-3 m of the fluvial-alluvial sequence is calcreted to varying degrees so prior to excavation, the sample block needs to be blasted, typically on a 5 m x 5 m grid, which breaks up the hard calcrete carapace without damaging diamonds. The broken material is then stripped off using hydraulic excavators. In various areas of the property varying depths of calcretisation has meant that some of the upper gravel layers are also highly cemented so prior to excavation, the gravels are ripped by one of two bulldozers, effectively liberating the gravels (and the diamonds) from the calcrete matrix. The disaggregated material is then loaded by excavator, onto articulated dump trucks and transported to the plant site for further processing.

During much of 2008, Rockwell processed gravels through an existing 4 x 18 ft rotary pan plant which was re-commissioned in April and used as the primary processing plant until the new plant came on-stream during November 2008. The new plant has a design plant-throughput of 500 tonnes per hour, with an expected monthly treatment of 255,000 tonnes (based on the mining of 340,000 tonnes), with recovery through a bank of ten Flowsort machines and an Optical Sorter.

Rockwell re-commissioned an existing small pan plant on the property in the first quarter of fiscal 2009. A new high-volume wet rotary pan plant was constructed during the year and full commissioning took place in the third quarter of fiscal 2009.

During calendar 2008 Rockwell re-modelled the resources according to the Company standards, and identified differences in volumes based on an incomplete dataset supplied to Rockwell by TransHex, and different to that supplied to Venmyn in 2006/7, resulting in an increase in the resources and a decrease in the inferred resources at that time.

The mineral resources at February 28, 2009 were estimated by Rockwell’s Manager, Resources, G. Norton, Pr.Sci.Nat., a qualified person who is not independent of the Company and reviewed by T. Marshall, PhD, Pr.Sci.Nat., a qualified person who is independent of the Company and is responsible for the estimate. The most recent technical report entitled Revised Technical Report on the Saxendrift Alluvial Diamond Project (Saxendrift Mine and Kwartelspan Prospect), Hay District, the Republic of South Africa, dated December 22, 2009, by Marshall and Norton has been filed on www.sedar.com.

Production at Saxendrift over the twelve months of fiscal 2010 was 8,833.8 carats from 1,216,503 cubic meters (2,554,656 tonnes) of gravel processed. The mineral resources in Table 6a below reflect depletion from production during the year.

Note:
(1) At 2 mm cut-off
(2) The resource estimated per technical report dated February 28, 2009, adjusted for production volume during fiscal 2010.

The following discussion includes references to "inferred resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves. In addition, "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or preliminary feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Current exploration targets include the 1,430,810 m³ of material in the dumps as well as the mapped occurrences of Terrace C at Ankerpaal.

A single terrace was identified by TransHex to exist on the Kwartelspan prospect area. Based on drilling and bulk-sampling of Rooikoppie gravels an inferred resource was estimated as of March 2007 by the South African consulting company Venmyn. C.A. Telfer, Pr.Sci.Nat., of Venmyn is an independent qualified person as defined by National Instrument 43-101.

The following discussion includes references to "inferred resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves. In addition, "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or preliminary feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Ongoing review and updating of resources based on production at Saxendrift will be done by existing Rockwell staff and reviewed by an independent qualified person, as necessary. Since Rockwell has large amounts of existing drill data which it acquired from TransHex, and requires further analysis and integration with mining results, no new drilling programs have been planned for Saxendrift for fiscal 2011.

Before any new drilling is planned and budgeted for on Kwartelspan, Rockwell staff will complete supplementary field work, geological mapping, internal re-interpretation and remodelling of existing data. No additional costs have been budgeted for 2010/2011 for this exercise as it will take place within Rockwell’s existing operational budgets.

During calendar 2010, Rockwell proposes to upgrade the screening and processing sections of the plant , as part of a Pre-Feasibility Study, which will convert a portion of the estimated Indicated Resources to Probable Reserves. Rockwell plans to install an in-pit screening plant to decrease the quantity of ore that has to be moved from the pit to the processing plant. This allows for an increase efficiency and utilisation of the mining fleet. The Company continues to make efficiency modifications to the main processing plant. The total capital expenditure is in the order of ZAR 7,000,000 or approximately US$ 1,000,000.

The Niewejaarskraal project (comprised on the Niewejaarskraal and Viegelandsput properties) is located along the south bank of the Orange River between Douglas and Prieska in the Northern Cape Province. Douglas lies 110 km southwest of Kimberley. Niewejaarskraal is situated approximately 66km southwest of Douglas, some 13 km beyond Saxendrift Mine (to the south).

The Niewejaarskraal project is comprised of the farms Niewejaarskraal 40 (two separate surveyed portions of Ptn 6 and a portion of Ptn 4, and Portion of Portion 2) and re/farm and Portion of the Remainder Viegelandsput 39 in the Prieska district of the Northern Cape Province. The area covered by the Mining Right is 1,766.39 hectares. The surface rights are held by Die Nuwejaarskraal Testamentere Trust and Redivuvus Louw, with whom Rockwell has land-use agreements in place.

The Niewejaarskraal Project area is accessed via tarred route R357 from Douglas to Prieska. A well-maintained network of high-speed gravel roads and farm tracks provides ingress to all areas of the property. Water can be pumped from the Orange River. The property is connected to the national electricity grid, and the Company retains a backup generator in the Barkly West area to supplement as necessary. An unpaved airstrip and helipad is situated on the Saxendrift property, some 24 km by road from the project site. A large, national, airport is located at Kimberley.

The present Orange River between Douglas and Prieska, generally referred to as the Middle Orange River (MOR), displays a meandering channel morphology, best developed in areas underlain by the Dwyka Group. Palaeochannel depositional packages of the Orange River are preserved at different elevations above the present Orange River bed. The ages of the terraces young with decreasing elevation and, conversely, the probability of preservation decreases with increasing age and elevation. The Saxendrift deposit comprises an extensive flat lying alluvial sequence located on terraces developed on the left bank of the present Orange River, approximately 20-70 m above the Orange River.

The Niewejaarskraal Project was held by THO from 2001 until the sale to Rockwell in 2007/2008.

Trans Hex began development of the Niewejaarskraal Mine with a bulk-sampling program in mid-2001. A DMS plant was erected on site and full-scale production commenced in April 2002. This operation was suspended in late 2006.

TransHex commissioned Venmyn to complete mineral resource estimates in conjunction with its plans to sell the MORO properties.

Rockwell acquired the property in April 2008, subject to cessation rights from the DME which were acquired in February 2009.

Data from the project was compiled and re-assessed in fiscal 2009 (see Estimates of Mineralization below). No work was carried out in fiscal 2010.

In fiscal 2009, Rockwell and its consultant re-processed the Trans Hex drilling data according to Company’s operating procedures. The estimated resources have increased, overall, but have been re-classified as “Inferred” due to the lack of confidence in the original data – due primarily to the length of time lapsed since the last diamond valuation (and the uncertainties surrounding current and short-term diamond prices) and the improvements made in diamond processing/recovery procedures which will change the available diamond grade values. The current estimates also represent volumes available in the ground, fully depleted of material removed by the THO bulk-sampling program.

A total of 8,456 carats was recovered (by THO) from Niewejaarskraal (Terrace A Rooikoppie gravels) during the period from mid-2001 to 2005 and sold on the open market. The recovered prices varied from US$13-2,373/carat⁽¹⁾, with a weighted average of US$1,375/carat. During the same time period, the average price received for diamonds from Terrace A on Saxendrift was US$1,404/carat and from Terrace B was US$1,327/carat. These figures correlate well with the Niewejaarskraal data, as would be expected from similar terraces on nearby properties. During May through to October 2008, the average sales value for diamonds recovered from Saxendrift Mine was US$2,154/carat. A single sale of diamonds in February 2009 (a parcel of some 500 carats sold for US$700/carat) indicates the dramatic collapse in rough diamond prices that has taken place in the latter part of 2008 and early 2009. In order to deal with the vagaries of the current diamond market, Rockwell has modelled US$1,075/carat as the figure expected (at an inferred resource classification) for the Niewejaarskraal production during 2009 (in fact this figure will be used by Rockwell as the expected sales value for all the Orange River deposits during 2009). This data will be updated as actual production and sales take place from these properties.

The mineral resources at February 28, 2009 were estimated by Rockwell’s Manager, Resources, G. Norton, Pr.Sci.Nat., a qualified person who is not independent of the Company and reviewed by T. Marshall, PhD, Pr.Sci.Nat., a qualified person who is independent of the Company and is responsible for the estimate. The most recent technical report entitled “Revised Technical Report on the Niewejaarskraal Alluvial Diamond Project, Hay District, the Republic of South Africa, dated December 22, 2009, by Marshall and Norton is filed on www.sedar.com.

The following discussion includes references to "inferred resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves. In addition, "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or preliminary feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Similar mining operations to those at Saxendrift are planned for Niewejaarskraal.

Rockwell does not plan any development at the Niewejaarskraal mine for fiscal 2011. All care and maintenance costs are covered under the Saxendrift mine operational budget.

Klipdam Extension is situated east of the Klipdam mine. The Company has established a low costs mobile processing and final recovery plant and mining fleet (utilizing spare earth moving equipment owned by the Company to undertake a bulk sampling project on this property. The processing plant was commissioned at the end of the first quarter of fiscal 2011.

The other prospects on the MOR acquired through the Trans Hex transaction known as the Zwemkuil-Mooidraai Project are:

The Zwemkuil 37, Mooidrai 36 and Holsloot 47 farms are accessible by secondary gravel roads approximately 10 km, 17 km and 16 km, respectively, from the Niewejaarskraal Project.

During its tenure of the MOR operations, Trans Hex also conducted exploration and evaluation work on several large alluvial gravel terraces to the north east of Saxendrift, namely Kwartelspan, and to the south west of Niewejaarskraal, namely Vieglandsput, Zwemkuil-Mooidraai and Remhoogte-Holsloot. Exploration work conducted on the adjacent properties included reverse circulation drilling, trenching and bulk sampling.

The Mineral Resources on the Zwemkuil-Mooidrai Project as of March 2007 were estimated by the South African consulting company Venmyn. C.A. Telfer, Pr.Sci.Nat., of Venmyn is an independent qualified person as defined by National Instrument 43-101.

The following discussion includes references to "inferred resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves. In addition, "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or preliminary feasibility studies, except in rare cases. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

In August 2008, the Company acquired eight new prospecting permits from the DME. These new prospecting permits are located in the MOR area in the Northern Cape Province of South Africa, and include a number of permits which are adjacent to the Company’s Wouterspan and Saxendrift properties.

PROSPECTING RIGHT	PROPERTY	STATUS
HC van Wyk Diamonds Ltd (NC) 30/5/1/1/2/193 PR	Remainder of Portion 9 (Wouter) (1369,9544 ha) and Portion 14 (Stofdraai) (1640,6412 ha) of the farm Lanyon Vale 376, Hay	Granted. 22/11/2005 - 21/11/2007 Renewal lodged on 21/08/2007 Accepted on 04/09/2007
HC van Wyk Diamonds Ltd (NC) 30/5/1/1/2/197 PR	Portion 16 (a portion of Portion 9) of the farm Lanyon Vale 376, Hay (240,4480 ha)	Granted. 08/08/2007- 07/08/2009
HC van Wyk Diamonds Ltd (NC) 30/5/1/1/2/309 PR	Remainder of Portion 1 Zweet Fontein 76 (92,8077 ha) Portion 2 (a portion of Portion 1) Zweet Fontein 76 (9,4219 ha) Portion 3 Zweet Fontein 76 (11,3365 ha) Portion 5 of the farm Zweet Fontein 76 (293,8018 ha) Remainder of Portion 1 Of the farm Blaaubosch Drift 78 (1418,0758 ha) Portion 3 of the farm Blaaubosch Drift 78 (219,6875 ha)	Granted. 08/08/2007- 07/08/2009
HC van Wyk Diamonds Ltd (NC) 30/5/1/1/2/408 PR	Remainder of Portion 18 (a portion of Portion 10) of the farm Lanyon Vale 376, Hay (271,5347 ha)	Granted. 08/08/2007- 07/08/2009
HC van Wyk Diamonds Ltd (NC) 30/5/1/1/2/1127 PR	Portion 7 (1628,9209 ha) & Portion 11 (1288,5227 ha) of the farm Lanyon Vale 376, Hay	Granted. 09/11/2007- 08/11/2009

HC van Wyk Diamonds Ltd (NC) 30/5/1/1/2/1247 PR	Portion 20 (Eben) Reads Drift 74, Herbert (1713,0640 ha) 38 (a portion of Portion 18) of the farm Reads Drift 74, Herbert (513,9192 ha)	Granted. 25/04/2008– 24/04/2010
HC van Wyk Diamonds Ltd (NC) 30/5/1/1/2/1257 PR	The Remaining Extent (889,8725 ha), Portion 1 (Bredenhand’s Pan) (894,5363 ha) and Portion 2 (Lentvort) (894,7719 ha) of the farm Diamond Valley 29, Hopetown	Granted. 25/04/2008 – 24/04/2010
HC van Wyk Diamonds Ltd (NC) 30/5/1/1/2/1284 PR	Portion 12 (63,0360 ha), of the farm Saxendrift 20, Hopetown Portion 13 (63,0360 ha) of the farm Saxendrift 20, Hopetown Portion 16 (1545,4884 ha) of the farm Saxendrift 20, Hopetown Portion 24 (95,1727 ha) & Portion 25 (106,9567 ha) of the farm Saxendrift 20, Hopetown	Granted.19/06/2008 - 18/06/2010

Lanyonvale Project: The Lanyonvale properties are situated adjacent to and downstream of Rockwell’s Wouterspan Mine on the MOR. This project will recommence upon the completion of the new Wouterspan plant.

Douglas Project Area: These properties are located upstream of the confluence of the Vaal and Orange Rivers, outside of the town of Douglas. There have been alluvial operations around the town of Douglas for the last 100 years.

Makoenskloof Area: This property is situated on the north bank of the MOR, downstream of Makoenskloof where Rockwell performed bulk sampling in 2007, producing some diamonds. The new property is located adjacent to a private operation owned by another party that is known for the recovery of large diamonds.

Diamond Valley: This property is located some 10 km south of the modern day Orange River and at the same general elevation as the Company’s Saxendrift project located about 15 km to the west.

Saxendrift: These properties are adjacent to the lower (Terrace C) of the three terraces that are located on the contiguous mineral right portions that collectively comprise the Saxendrift property package. The Company already holds rights to the property that hosts the upper terraces A and B which have a history of historical diamond production. With the granting of this new right, Rockwell now has access to the three main terraces contained within the Saxendrift project area, with the potential to add further gravel resources at Saxendrift. Terrace C is located approximately 20 to 40 m above the current river, whereas Terrace A is some 120 m above the present day river, and Terrace B is situated between A and C.

In conjunction with the acquisition of Durnpike, HCVW had an option agreement to acquire the Makoenskloof alluvial diamond project in South Africa. As a result of the acquisition of HCVW by Durnpike, and concurrent acquisition of Durnpike by Rockwell, the Company assumed the option to purchase the Makoenskloof property. In November 2006, HCVW exercised its option to purchase the property and the company that held the mineral rights of the Makoenskloof property. The Company paid a total consideration of ZAR19 million ($2.7 million) for the property and associated equipment.

The Makoenskloof project is located on the north bank of the MOR, approximately 20 km from the town of Douglas, South Africa and 40 km from Wouterspan. The property is accessible by road from Douglas.

The Makoenskloof Project is a Portion 22 of Reads Drift 74 farm, located in the Herbert District of the Northern Cape Province of the Republic of South Africa. The property is 1,808.08 hectares in size.

The Makoenskloof deposit comprises an extensive flat lying alluvial sequence located on a terrace developed on the right bank of the present Orange River. The bedrock is well exposed in the workings and shale and tillite of the Karoo age Dwyka Group are common. Also visible in outcrop are limestone and siltstone (flagstone) of the Griqualand West Group (Transvaal Supergroup). The bedrock characteristically displays an irregular erosional surface with gully and pothole features creating high diamond trapping potential. At Makoenskloof, the gravel terrace occurs approximately 20 to 40 m above the Orange River and appears to have been deposited in a braided river environment. These terraces may be classified as Lower to Intermediate deposits, presumably of Plio-Pleistocene age.

Only small isolated outcrops of Rooikoppie gravels are known from the property. The fluvial-alluvial gravels on Makoenskloof comprise a sequence of (basal) gravels 2-4 m thick overlain by generally less than 5 m of variably calcreted sands and silts and covered by a thin layer of soil and scree. The cobble sized clasts within the gravels consist mostly of lava and quartzite, with minor limestone, chert, tillite, agate and banded iron formation (“BIF”). The matrix is sandy to gritty. As is usual with these types of deposits the degree of calcretisation decreases downwards, from hard pan or laminar calcrete at the surface to loosely cemented gravels at depth.

The gravels are, generally, not well sorted, massive to horizontally - bedded and more matrix - supported. The larger clasts are, generally, in the 300 - 500 mm range. They are typical of braid bars that migrate through sections of river channels in response to variable water speed. Numerous sand-silt lenses (0.5 –1.5 m thick) are also present, indicative of relatively low energy environments such as are found on bar tails. However, incised into the sequence are scour channels filled with clast supported, large cobble to boulder units. These are locally referred to as high speed channels that reflect deposition in a much higher energy environment. It is, typically, from these higher energy environments, especially where incised into the bedrock that the larger diamonds are recovered.

Makoenskloof gravel has minimal BIF, so processing and metallurgy is less complicated and overall mining costs are lower, thereby compensating for potentially low grades.

Bulk sampling and processing was conducted during fiscal 2008. Diamonds recovered were sold in tender sales in October and November 2007 and January 2008. No further work has taken place since that time and none is currently planned.

The following discussion and analysis of Rockwell's financial condition and results of operations for the fiscal year ended February 28, 2010 and February 28, 2009 and the nine months ended February 29, 2008 should be read in conjunction with the Company's consolidated financial statements and related notes included in this Annual Report on Form 20-F. The consolidated financial statements included in this Annual Report on Form 20-F were prepared in accordance with Canadian GAAP. For a reconciliation of the Canadian GAAP to US GAAP, see note 17 to the consolidated financial statements.

Rockwell is engaged in the business of alluvial diamond production. The Company is focused on acquiring additional operating diamond properties or projects that have near-term potential for alluvial diamond production, as described in detail under ITEM 4B Business Overview.

Rockwell Diamonds Inc. (“Rockwell” or the “Company”) is incorporated under the British Columbia Business Corporations Act (formerly the Company Act of British Columbia), and is engaged in the business of diamond production and the acquisition and exploration of natural resource properties. The Company’s mineral property interests are located in South Africa.

The accompanying consolidated financial statements have been prepared on a going concern basis in accordance with Canadian generally accepted accounting principles (''GAAP''). The going concern basis of presentation assumes that Rockwell will continue in operation for the foreseeable future and will be able to realise its assets and discharge its liabilities and commitments in the normal course of business.

For the year ended February 28, 2010 the Company incurred consolidated losses of $7.0 million and has incurred accumulated losses to date of $49.1 million. In response to the economic crisis that started in 2009, the Company reduced costs in order to respond to reduced demand and prices for the Company’s diamonds. In fiscal 2010, diamond prices have increased gradually from US$585 at the beginning of the year to US$1,269 at February 28, 2010. Analyst forecasts as of March 1, 2010 project prices of US$1,143 per carat in the next twelve months and US$1,425 in the following twelve months. The Company expects to pass breakeven point in September 2010.

At year end, the Company’s current assets exceeded its current liabilities by $0.3 million and the Company’s total assets exceeded its total liabilities by $77.8 million. The Company has forecasted its cash flows for the fiscal years 2011 and 2012 and these forecasts indicate that the Company will continue as a going concern. The forecasts assume the plant operating at 85% of capacity, prices remain at current levels, which are 33% below pre-crisis levels and the South African Rand remains at current levels relative to the United States and Canadian Dollar.

In order to increase cash resources and fund current year losses, the Company raised equity of $8.6 million in a private placement at the end of the current year and a further $8.0 million subsequent to the year end.

Based on the Company’s cash resources and the above forecasts, the Company has sufficient working capital and reserves to maintain operations through breakeven point and sufficient cash and working capital to fund the continuing losses until then. Accordingly, the financial statements have been prepared on the basis of accounting policies applicable to a going concern. Future events beyond the Company’s control may change the Company’s ability to continue as a going concern.

If the going concern concept was no longer appropriate, significant adjustments would be required to the carrying value of assets and liabilities and would be recorded at that time.

The Company's significant accounting policies are presented in note 3 of the accompanying audited consolidated financial statements for the year ended February 28, 2010. A reconciliation of material measurement differences between these principles and accounting principles generally accepted in the United States is shown in note 17. The preparation of consolidated financial statements in conformity with Canadian and US generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company evaluates its estimates on an ongoing basis and bases them on various assumptions that are believed to be reasonable under the circumstances. The Company's estimates form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Such estimates and assumptions include the estimation of mineral resources and reserves, the carrying values of mineral properties, the carrying values of property, plant and equipment, the assumptions used in determining the reclamation obligation, and the valuation of stock-based compensation expense.

Rockwell's annual and quarterly operating results are primarily affected by the level of operations activity associated with its mineral property interests. Economic factors such as foreign exchange fluctuations, mineral prices and regulatory development may also affect the Company's operating results and the volatility of the trading price of its common stock. To management's knowledge, there are no governmental, economic, fiscal, monetary or political policies or factors that have materially affected, or could materially affect, directly or indirectly, the Company's operations that are not disclosed in this Annual Report. Inflationary factors have not had a material impact on the Company's operating results for fiscal 2010, 2009 or 2008. The Company's financial position and results of operations are summarized below:

The following is a comparison of the twelve months of fiscal 2010 (ended February 28, 2010) with the twelve months of fiscal 2009 ended February 28, 2009.

SALES, REVENUE AND INVENTORY
Operation	12 months ended February 28, 2010				12 months ended February 28, 2009
Operation	Sales (carats)	Value of Sales (US$)	Average value (US$ per carat)	Inventory (carats)	Sales (carats)	Value of Sales (US$)	Average value (US$ per carat)	Inventory (carats)
Holpan	6,457.7	3,166,842	492.09	780.3	3,741.08	4,272,511	1,142.05	839.82
Klipdam	10,816.7	6,301,240	581.26	595.4	5,656.97	18,954,292	3,350.61	1,742.31
Wouterspan	591.0	280,193	475.32	-	3,640.81	4,698,121	1,290.41	576.85
Makoenskloof	-	-	-	-	212.00	1,500,119	7,076.03	-
Saxendrift	8,667.1	17,055,281	1,967.81	533.9	2,069.54	3,656,268	1,766.71	367.21
Total	26,532.5	26,803,556	1,010.21	1,909.6	15,320.40	33,081,311	2,159.30	3,526.19

*Included in the Klipdam sales are 322.02 carats at $122,973 from ERF-1 Windsorton, a prospecting right within the Holpan-Klipdam mining area

*Included in the Klipdam inventories are 322.02 carats from ERF-1 Windsorton, a prospecting right within the Holpan-Klipdam mining area.

Subsequent to the year end, the production for the five months ended July 31, 2010 are tabulated below:

The Company realized a loss of $7.0 million for the twelve month period ended February 28, 2010 compared to a loss of $13.0 million for the prior year. The loss was due to the collapse in the diamond market and precipitous decline in diamond prices that commenced in the fourth quarter of fiscal 2009 due to the ongoing global credit crisis and economic recession. This resulted in on-going weakness of diamond prices through the first two quarters of fiscal 2010 and the slow recovery in the third and fourth quarters. Though prices remained weak during this period there has been an overall improvement in prices of about 49% from the initial sharp fall in prices of about 50% in the last quarter of fiscal 2009. Operations at the Wouterspan Mine are still on care and maintenance in order to preserve the Company’s cash reserves. Proceeds from the capital raise will be used to upgrade the plant at Wouterspan, the re-commissioning of which will coincide with the forcasted recovery of the demand for high quality stones in the final quarter of fiscal 2011.

During the twelve months ended February 28, 2010, the Company realized rough diamond sales of $29.8 million compared to $34.3 million for the comparable period in the prior year. Sales in March 2009 were at US$531.43 per carat, 35% of the pre-October 2008 average sales prices achieved of about US$1,800 per carat. Prices have gradually recovered, climbing to US$1,090.55 per carat in July 2009, US$862.36 per carat in August/September 2009 tenders, US$1,434.33 in November 2009 and US$1,154.11 in the January/February 2010 tender. The lower price per carat received in August and January/February was related to lower grade mixes of stones sold in July and November 2009.

As noted above, the credit crunch and ensuing recession resulted in diamond prices falling sharply in late calendar 2008 (fourth quarter of fiscal 2009). Sales prices achieved in the first quarter of fiscal 2010 were below the cost of production; however, prices achieved in the second quarter covered the cost of production, but were not sufficient to cover fixed overheads in full and lease payments. As the Company was required to maintain liquidity, sales were made below production cost. This resulted in the Company invoking the payment deferral with Komatfin, which ended on November 1, 2009.

Income generated in November 2009 was sufficient to cover all the third quarter costs and significant arrear creditors, including ZAR11.4 million ($1.6 million) for outstanding royalties. The November income resulted in a third quarter operating profit.

Mining costs for the twelve months ended February 28, 2010 amounted to $22.9 million (twelve months ended February 28, 2009 - $25.1 million), which excludes amortization and depletion charges of $9.5 million (twelve months ended February 28, 2009 – $11.3 million). The Wouterspan mine was placed on care and maintenance, and this resulted in less costs being incurred in the current year.

Exploration expenses (excluding stock-based compensation) decreased to $97,805 for the twelve months ended February 28, 2010 compared to $498,739 for the same period in the prior year as a result of the diminished exploration activity due to the recession.

Office and administrative costs for the twelve months ended February 28, 2010 decreased to $3.4 million from $3.5 million incurred for the same period in the prior year. This decrease was primarily the result of controlling costs and reducing overheads.

Travel and conference expenses amounted to $194,544 for the twelve months ended February 28, 2010 compared to $605,812 for the same period in the previous year. Legal, accounting and audit expenses for the twelve months ended February 28, 2010 amounted to $1.4 million compared to $1.9 million incurred for the same period in the prior year. The Company has experienced significant legal costs due to the unsolicited bid by Pala and the capital raising exercise.

Stock-based compensation decreased to $0.3 million for the twelve months ended February 28, 2010 in comparison to $1.8 million for the same period in the previous year as a result of less options being granted, lower share prices, the effect of cancelled share options and the vesting of 2007 options.

Net interest expenses were $1.1 million for the twelve months ended February 28, 2010, compared to $1.9 million for the twelve months ended February 28, 2009, due to the use of the credit facility in fiscal 2009 to maintain working capital and the deferred lease payments.

The following discussion includes references to "indicated resources". Rockwell advises investors that while this term is recognized and required by Canadian securities regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize it. Readers cannot assume that all or any part of mineral deposits in this category will ever be converted into reserves.

In March 2010, the Company announced that it has signed a term sheet with Etruscan Diamonds Limited whereby the Company proposes to purchase Etruscan’s Blue Gum diamond operation in the Ventersdorp region, South Africa. The acquisition is for 74% of the operation with the balance owned pursuant to South Africa’s Black Economic Empowerment initiative. The price to be paid to Etruscan is an amount not exceeding ZAR33.5 million (approximately $4.65 million) payable in Rockwell shares valued at $0.068 each. The Company will also assume certain non-material property maintenance obligations effective, on signature of the term sheet on March 10, 2010, and other financial obligations upon completion of the acquisition.

The Blue Gum alluvial diamond deposit hosts estimated mineral resources of 25 million cubic meters (indicated) with a grade of 2.37 carats/100 cubic metres and 15 million cubic meters (inferred) with a grade of 2.37 carats/100 cubic metres as at October 2009. Tania Marshall, PhD., Pr.Sci.Nat., an independent Qualified Person, is responsible for the resource estimate. A technical report has been filed on the Company’s profile at www.sedar.com.

Completion of the acquisition is subject to a number of conditions including South African mining ministry consent, securities regulatory approvals including TSX, satisfactory due diligence and project development financing and electric power negotiations. The Rockwell shares to be issued will be subject to escrow, resale and voting restrictions and will not materially affect control. Completion is targeted for the third calendar quarter of 2010.

On April 21, 2010 the Company acquired a 20% shareholding in Flawless Diamonds Trading House (Pty) Limited from Hennie van Wyk for the amount of $95,686. Flawless is a registered diamond broker which provides specialist diamond valuation, marketing and tender sales services to the Company.

Through it’s shareholding, Rockwell will have the ability to exercise significant influence over the operations of Flawless and as a result will equity account the results of Flawless in fiscal 2011 from the effective date of acquiring it’s shareholding.

On April 29, 2009, Pala Investments Holdings Limited (“Pala”) called a special shareholders’ meeting of the Company. The meeting was called to remove certain directors of the Company, to appoint and elect certain new directors and to amend and terminate the Company’s shareholders’ rights plan. The special shareholders meeting was held on June 17, 2009 and the proposed resolutions to reconstitute the Board and amend and terminate the shareholders’ rights plan were not approved by the shareholders. Subsequently, two of the Company’s independent directors and Audit Committee members, Messer’s G. Radke and T. Janes resigned from the Board.

During the third quarter of fiscal 2010, Messer’s W. Jacobs and R. Linnell were appointed to the Board of Directors.

In the fourth quarter of fiscal 2010, Mr W. Fisher resigned from the board and Mr G. Yong was appointed to the Rockwell Board of Directors.

The current Audit Committee is comprised of Messer’s W. Jacobs and R. Linnell. The Company is in the process of identifying and appointing additional independent directors to the Company and to the Audit Committee.

In addition, the Company appointed Graham Chamberlain as its Chief Operating Officer as of November 1, 2009.

In December 2007, the Company’s Board of Directors approved a resolution to change the Company’s year end from May to February, resulting in a nine month period for the fiscal period ended February 29, 2008. The information presented below is a comparison of the twelve months year ended February 28, 2009 (“fiscal 2009”) and the nine months fiscal period ended February 29, 2008 (“fiscal 2008”).

The Company had a loss of $13 million for fiscal 2009 compared to a net loss of $9.4 million for the nine months ended February 29, 2008. The loss was due to collapse in the diamond market in the fourth quarter of fiscal 2009, along with a global credit crunch which caused a total collapse in the demand and prices of commodities, with the diamond market being badly hit. Consequently, the Company decided to shut down operations in December and January, and the Wouterspan Mine was put on care and maintenance in order to preserve its cash balances.

During fiscal 2009, the Company realized diamond sales of $34.6 million compared to $36.1 million for fiscal 2008. This decrease was a result of the economic crisis which has caused diamond prices to collapse, resulting in no sales between November 2008 and February 2009. Since February 2009, prices remain approximately 55% below those achieved prior to November 2008.

Mining costs were $25.1 million in fiscal 2009 compared with $22.7 million in fiscal 2008. In fiscal 2009, the Saxendrift mine was commissioned in February. Amortization and depletion for the year was $11.3 million compared to $6.5 million in the prior fiscal period. All commissioning and retention costs were expensed and not capitalised. Due to the economic crisis, the Company decided to restructure the Middle Orange River operations and place the Wouterspan mine on care and maintenance to conserve cash and minimize costs. As part of this restructuring drive some 143 employees were retrenched, and short term contracts for some 40 employees were not renewed. All operations were shut down over December 2008 and January 2009, with all staff paid in full during the shutdown period.

Expenses before other items for fiscal 2009 increased to $9.7 million in comparison to $7 million incurred for fiscal 2008 ($9.3 million annualized). Management have been successful in containing costs, even though the Company experienced significant legal costs due to the unsolicited bid by Pala and also had to make restructuring and retrenchment payments during the last quarter of fiscal 2009.

Significant impairments were made as a result of the economic downturn. Impairments totalling $2.6 million were incurred for mineral rights, property plant and equipment and receivables. As the diamond market is recovering with prices anticipated to be back to 50% of pre crash prices and the appetite for larger stones returning, these investments are anticipated to regain their market value in the next eighteen months.

At February 28, 2010, the Company had cash of $2.5 million and an overdraft balance of $0.7 million, a net balance of $1.8 million and a working capital of $0.3 million, as compared to cash of $4.0 million, an overdraft of $3.5 million and working capital of $0.6 million at February 28, 2009.

The Company had no long-term debt at February 28, 2010, other than asset retirement obligations relating to its Klipdam, Holpan, Wouterspan mines and Saxendrift operations, and capital lease obligations relating to mining equipment with three to four year lease agreements. The Company’s capital lease obligations are denominated in South African Rand (“ZAR”). Capital lease obligations have been presented at an exchange rate of 1 Canadian Dollar = ZAR 7.3153, the closing rate in effect on February 28, 2010.

In light of the current economic environment, the Company’s near-term goal has been to preserve its cash balance to the greatest extent possible, by minimizing operating costs and curtailing capital expenditures. In this regard, the Company is reviewing its operations with a view to optimize efficiencies, putting marginal operations on care-and-maintenance, and reducing costs wherever possible without compromising safety, health or environmental standards.

The Company continues to review its capital expenditure program for 2010, non-core activities and all service provider contracts. Management continues to focus on improved operational practices and efficiencies at each mining operation, and is actively identifying additional cost cutting opportunities.

The Company anticipates the cost reduction and operational efficiency measures taken by the Company along with existing cash flow from operations and the Company’s holdings of cash and cash equivalents will be sufficient to fund current operations and settle obligations as they fall due.

Although the Company has implemented the necessary plans to ensure sufficient financial liquidity in the near term, the Company’s ability to repay or refinance its financial liabilities to their contractual maturities depends on a number of factors such as an improvement in diamond demand and prices and availability of credit and capital markets.

The Company has an overdraft facility available for its operation of ZAR28 million ($3.8million) of which $0.7million have been utilized at February 28, 2010. Current operating income is being used to service this facility. This facility has an interest cost based on prime and is reviewed periodically.

As of May 31, 2010, the Company has unrestricted cash of $8.6 million and has utilized $2.0 million of the $3.8 million overdraft facility to maintain its operational requirements.

Historically, the Company’s sources of funding have been cash flow from operations and the issuance of equity securities for cash, primarily through private placements to sophisticated investors and institutions. The Company has issued common share capital in each of the past few years, pursuant to private placement financings and the exercise of warrants and options. The Company’s access to financing, when the financing is not transaction specific, is always uncertain. There can be no assurance of continued access to significant equity funding.

The Company's access to capital sources is dependent upon general financial market conditions, especially those that pertain to venture capital situations such as mineral exploration and development.

Recent market events and conditions, including disruptions in the international credit markets and other financial systems and the deterioration of global economic conditions have had a significant material adverse impact on a number of financial institutions forcing them into bankruptcy or requiring government authorities to rescue them. These events and a general flight from risk have limited access to capital and credit for many companies. The unprecedented disruptions in the current credit and financial markets, could, among other things, impede access to capital or increase the cost of capital, which would have an adverse effect on the Company’s ability to obtain, or increase its cost of obtaining, capital and financing, if required, for its operations. The Company’s access to additional capital may not be available on terms acceptable to the Company or at all.

During the fourth quarter of fiscal 2010, the Company raised $8.6 million from a private placement to new and existing shareholders. Of this amount, $6.0 million was utilised in fiscal 2010 to strengthen the Company’s balance sheet and was allocated as follows:

Subsequent to February 28, 2010, the Company raised approximately $4.6 million through a fully subscribed rights offering. Further to the rights offering and a Standby Agreement entered into at the outset of the rights offer, funds of $3.4 million were received from Daboll Consultants Limited by way of a private placement. Overall in fiscal 2010, the Company successfully raised a total amount of $16.6 million through the combined private placements and rights offer. The majority of the funds raised by Rockwell will be allocated to further optimize, modernize and re-commission existing operations. Growth and expansion to take advantage of the recovering diamond market is a key priority for Rockwell.

Other than already described above, the Company had no other lines of credit or other sources of financing.

The Company's financial instruments consist of cash and cash equivalents, restricted cash, amounts receivable, reclamation deposits, accounts payable and accrued liabilities and capital lease obligations. The Company has not entered into any derivative or other financial instruments. The fair values of these financial instruments approximate their carrying values, unless otherwise noted.

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board approves and monitors the risk management processes, including treasury policies, counterparty limits, controlling and reporting structures, credit risk, liquidity risk, currency risk, interest risk and diamond price risk.

Credit risk is the risk of potential loss to the Company if a counterparty to a financial instrument fails to meet its contractual obligations. The Company’s credit risk is primarily attributable to its liquid financial assets including cash and equivalents, restricted cash, accounts receivable and trade receivable from a related party. The carrying values of the Company’s cash and cash equivalents, accounts receivable and trade receivable from a related party represents the maximum exposure to credit risk.

The Company limits exposure to credit risk on liquid financial assets through maintaining its cash and equivalents with high-credit quality financial institutions. The Company does not have financial assets that are invested in asset backed commercial paper.

The Company minimizes its credit risk by reducing credit terms to 30 days on its sales.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company raised $8.6 million in a private placement at the end of the current year and a further $8.0 million subsequent to the year end. After taking into account cash flows from operations and the Company’s holdings of cash and cash equivalents, the Company believes that these sources will be sufficient to cover the likely requirements for the foreseeable future. The Company’s cash and cash equivalents are invested in business accounts which are available on demand for the Company’s programs, and which are not invested in any asset backed deposits/investments.

The Company operates in South Africa. Like other foreign entities operating there, the Company is subject to currency exchange controls administered by the South African Reserve Bank, that country's central bank. A significant portion of the Company's funding structure for its South African operations consists of advancing loans to its South Africa incorporated subsidiaries and it is possible the Company may not be able to acceptably repatriate such funds once those subsidiaries are able to repay the loans or repatriate other funds such as operating profits should any develop. The repatriation of cash held in South Africa is permitted upon the approval of the South African Reserve Bank.

In the normal course of business, the Company enters into transactions for the purchase of supplies and services denominated in South African Rand (“ZAR”). In addition, the Company has cash and certain liabilities denominated in ZAR. As a result, the Company is subject to currency risk from fluctuations in foreign exchange rates. The Company has not entered into any derivative or other financial instruments to mitigate this foreign exchange risk.

The Company is subject to interest rate risk with respect to its investments in cash and cash equivalents. The Company’s policy is to invest cash at floating rates of interest and cash reserves are to be maintained in cash equivalents in order to maintain liquidity, while achieving a satisfactory return for shareholders. Fluctuations in interest rates when the cash equivalents mature impact interest income earned.

The Company has capital lease obligations with several financial institutions. The capital leases bear interest at rates linked to the prevailing prime rate of the relative financial institution, and are subject to interest rate change risk.

The value of the Company's mineral resource properties is dependent on the price and the outlook of diamonds. Diamond demand and prices fluctuate and are affected by numerous factors beyond the control of the Company, including worldwide economic trends, worldwide levels of diamond discovery and production and the level of demand for, and discretionary spending on, luxury goods such as diamonds and jewellery. Low or negative growth in the worldwide economy, prolonged credit market disruptions or activities creating disruptions in economic growth could result in decreased demand for diamonds, thereby negatively affecting the price of diamonds. Similarly, a substantial increase in the worldwide level of diamond production could also negatively affect the price of diamonds. In each case, such developments could materially adversely affect the Company’s results of operations.

The profitability of the Company's operations is highly correlated to the market price of diamonds. If diamond prices decline for a prolonged period below the cost of production of the Company's operating mines, it may not be economically feasible to continue production.

The Company has signed a term sheet on March 10, 2010 with Etruscan diamonds Limited whereby the Company proposes to purchase Etruscan’s Blue Gum diamond operation in the Ventersdorp region, South Africa. The acquisition is for 74% of the operation with the balance owned pursuant to South Africa’s Black Economic Empowerment initiative. The price to be paid to Etruscan is an amount not exceeding ZAR33.5 million (approximately $4.7 million) payable in Rockwell shares valued at $0.068 each. The Company will also assume certain non-material property maintenance obligations effective from March 10, 2010 and other financial obligations upon completion of the acquisition.

Other than the above the Company had no material commitments for capital expenditures as at February 28, 2010 and August 31, 2010.

Following the drastic decline in international diamond prices in late 2008 and the negative impact of the world economic recessions, the prices of rough diamonds have returned to mid 2008 values. During the first two quarters of fiscal 2010, the market experienced shortages due to limited supply of rough diamonds from the larger producers. Subsequently De Beers increased the prices on their boxes and further to this increase sight holders were selling their DTC boxes (“Diamond Trading Company”) for a premium of single and low double digit percentages; this will result in producers increasing their prices until such time as the premiums have been absorbed. The demand for larger stones has improved.

Following a drastic 50% decline in diamond prices in the last quarter of fiscal 2009, rough diamond prices have showed an improvement in price during the last two quarters of fiscal 2010. The effects of the diamond price decline in the first part of fiscal 2009, and the subsequent improvement in prices during the last two quarters are reflected in prices achieved by Rockwell over the fiscal year. The Company sold parcels of diamonds in March, May, June, July, August/September and November 2009, and January/February 2010.

Prices were weak in the first two quarters of fiscal 2010 and strengthened in the last two quarters as indicated in the following average sales prices. The average price per carat received was US$531.43 in March, US$584.69 in May, US$699.75 in June, US$807.20 in early July, US$1,090.55 on July 27, US$862.36 in the August/September, US$1,416.40 in the November, and US$1,154.11 in the January/February sales. The average price received from sales in the fourth quarter of fiscal 2010 was US$1,154.11 per carat, a decrease of 9% from the average price of US$1,268.83 per carat received in the third quarter of fiscal 2010. The decrease was due to a parcel of moderate-quality stones being tendered in February compared to the previous quarter which included several large, high quality gems.

Polished prices showed increases in the latter part of fiscal 2010, although at smaller percentages compared to rough price increases, but these prices are expected to show larger increases consistently throughout the year as the demand at retail level increases. The retail sector has shown year on year increase in trade but still has to show further strengthening to reach the levels from 2008. Margins on polished are still small as a result of the high prices paid for rough diamonds. Credit terms have been reduced in the industry from the exceptional high credit levels that existed prior to the credit crisis of late 2008 which is positive for the business.

The downstream sector of the diamond trade is presently seeing increased activity from Indian traders which are becoming the largest buyers of rough diamonds on the market. This is a result of support from their banks as well as the government which appreciates the importance of supporting their diamond industry. The caution is that speculation on rough diamonds continues to drive the prices of rough, which although a positive for producers in the short term, could possibly be detrimental to the market in the long term.

Overall rough diamond prices showed a strong rebound in the latter half of fiscal 2010 which was important for Rockwell and its financial performance. This situation has persisted into the early part of fiscal 2011. The view of most diamond market analysts, including the likes of Des Kilalea at Royal Bank of Canada (“RBC”) Capital Markets and Ed Sterck of Bank of Montreal (“BMO”), is that the diamond market will continue to show improvement and resilience during calendar 2010 and that in the long term declining supply, and increasing demand related to improvement in world economic conditions, diamond prices will rise to their previous strong levels and show long term growth.

Rockwell does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

The Company has the following payment commitments: (a) minimum lease payments of $3.3 million, with $3.1 million payable in the next 12 months, with installments up to the year 2012 to various financial institutions for plant and equipment.

The following are the contractual maturities of contractual obligations (in thousands of Canadian Dollars):

Other than described above and in the notes of the audited financial statements for the year ended February 28, 2010, the Company has no "Purchase Obligations" defined as any agreement to purchase goods or services that is enforceable and legally binding on the Company that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.

The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Exchange Act applies to forward-looking information provided pursuant to Item 5.E and F above.

The following section sets out the names of members of the Board of Directors, all major offices and positions with the Company and any of its significant affiliates each now holds, each director's principal occupation, the period of time during which each has been a director of the Company and the number of Common Shares beneficially owned by each, directly or indirectly, or over which each exercised control or direction, as at August 31, 2010.

The names and municipalities of residence of the directors and senior officers of the Company, their principal occupations during the past five years, and the period of time they have served as directors or officers of Rockwell are as follows. Except where indicated, each director and senior officer of Rockwell has held the same or similar principal occupation with the organization indicated or a predecessor thereof for the last five years.

Name, Position and Country of Residence	Period a Director of Rockwell	Securities Beneficially Owned or Controlled⁽¹⁾
Mark Bristow ⁶ Director Johannesburg, South Africa	Since March 2007	7,227,242 Common Shares 949,500 Options
John Bristow ⁵ President, Chief Executive Officer and Director Pretoria, South Africa	Since August 2006	1,544,107 Common Shares 1,199,500 Options
David Copeland⁷ Chairman and Director Vancouver, British Columbia, Canada	Since September 2006	1,453,288 Common Shares 1,099,500 Options
Richard J Linnell ^{2, 3, 4, 9} Director Johannesburg, South Africa	Since November 2009	300,000 Options
Willem Jacobs ^{2, 4, 8} Director Pretoria, South Africa	Since November 2009	500,000 Options
Gary Wu Director Beijing, People’s Republic of China	Since August 5, 2010	Nil
Sandile Zungu ^{3, 4, 10} Director Bryanston, South Africa	Since November 2008	300,000 Options
Gerhard Jacobs Chief Financial Officer Johannesburg, South Africa	Since July 2010	Nil
Graham Chamberlain¹¹ Chief Operating Officer Cape Town, South Africa	Since November 2009	450,000 Options
Trevor Thomas¹² Secretary Vancouver, British Columbia, Canada	Since February 2008	315,000 Options

Principal Occupations and Other Information About Rockwell’s Directors and Management

David Copeland is a geological engineer who graduated in economic geology from the University of British Columbia. With over 30 years of experience, Mr. Copeland has undertaken assignments in a variety of capacities in mine exploration, discovery and development throughout the South Pacific, Africa, South America and North America, including alluvial bulk sampling and alluvial start-up operations in the Northwest Territories, Canada. His principal occupation is President and Director of CEC Engineering Ltd., a consulting engineering firm that directs and co-ordinates advanced technical programs for exploration and development on behalf of companies for which Hunter Dickinson Services Inc. (formerly Hunter Dickinson Inc.) provides services. He is also a director of Hunter Dickinson Services Inc.

Mr. Copeland is, or was within the past five years, an officer and/or director of the following public companies:

John Bristow holds a PhD degree in geology from the University of Cape Town and has over 30 years experience in the diamond business, encompassing the exploration, evaluation, and mining of kimberlite and alluvial diamond deposits in Africa and internationally. His career began with De Beers in 1983 in Kimberley and moved to Johannesburg in 1990 where he was Manager of the Anglo American Research Laboratories, prior to establishing an independent international diamond consultancy in 1994.

He was employed by the Anglo American and De Beers Group of companies for 12 years from 1983 – 1994. He served as Head of International Research with De Beers in Kimberley (South Africa), and was subsequently Head of the Geology Laboratory at the Anglo American Research Laboratories in Johannesburg. Thereafter he moved to the New Projects Division of the Anglo American Research Laboratories.

In 1994 John started an international diamond consultancy, and helped establish the Minerals and Energy Policy (MEPC) Johannesburg. This non-Governmental Organization (NGO) was created to build capacity in minerals and mining skills amongst previously disadvantaged role players. In 1996 he raised Cdn$3 million for the MEPC minerals and mining capacity building program.

During 1996 – 1997 he served as technical director to Moonstone Diamonds (an Australian junior), and from 1996 - 1998 was diamond analyst for financial securities company Huysamer Stals - ABN – Amro.

In 1998 John played a key role in creating and listing successful alluvial diamond producer Gem Diamond Mining Corporation on the Johannesburg Stock Exchange, in which Tokyo Sexwale’s Mvelaphanda Diamonds subsequently acquired an interest. Gem Diamonds Saxendrift mining operation consistently produced amongst the worlds highest value alluvial diamonds, and was merged with the Trans Hex Group in 2000.

From 2002 he was a Director and CEO of Kalahari Diamonds Limited and its subsidiary Sekaka Diamonds (Pty) Limited in Botswana until Kalahari was merged with Petra Diamonds in late 2005.

He has provided consulting and contracting services to the local and international minerals industry, specializing in diamonds, and has considerable local (Southern African and African) and international experience in the exploration, prospecting, evaluation and mining of kimberlites, and land and marine alluvial diamond deposits. He has wide ranging management and corporate experience, and has been active in Black Empowerment business ventures in South Africa.

Most recently he was CEO of Kalahari Diamonds plc in Botswana, which successfully merged with Petra Diamonds in 2005.

Dr. Bristow is, or was within the past five years, an officer and/or director of the following public companies:

Dr. Mark Bristow was appointed to the Company’s Board of Directors in October 2006. Dr. Bristow comes to Rockwell with 20 years experience in exploration, development, project and corporate finance and management in the mining sector in Africa.

From 1992 to 1995, Dr. Bristow had executive responsibility for the exploration and new business activities of Randgold & Exploration. In August 1995 he was appointed managing director and subsequently, in October 1995, CEO of Randgold Resources, which he helped establish as Randgold & Exploration’s international mining and exploration subsidiary and subsequently built it into an independent, public gold mining and exploration company which is listed on the London Stock Exchange as well as NASDAQ in New York. He has held director positions on the boards of: Harmony Gold Mining Company Limited; Durban Roodepoort Deep Limited; Blyvooruitzicht Gold Mining Company Limited; Buffelsfontein Gold Mines Limited; and The Grootvlei Proprietary Mines Limited and until recently AFPLATS Plc., the AIM listed, junior Platinum company. Besides his affiliation with Randgold, Dr. Bristow was the Chairman of SOMISY (Syama) until that company was sold to Resolute in 2004.

He is currently the Chairman of the SOMILO Board of Directors (Loulo Gold Mining Company), a non-executive Director of Morila Limited and a member of the President of Senegal’s Economic Advisory Committee as well as the President of Mali’s advisory council. He is also a fellow of the Geological Society of South Africa and he holds a PhD in geology from Natal University.

Dr. Bristow has been CEO of Randgold Resources, a publicly-traded company since it was incorporated in 1995. He currently is, or was within the past five years, an officer and/or director of the following public companies:

Mr. Wu is the managing partner of Godia Capital Partners, one of the first Chinese private equity funds created to focus on investment opportunities in resource projects in Africa. Mr. Wu and his investment partners also have a sound knowledge of the emerging Chinese diamond manufacturing sector and, over the past year, have done an extensive assessment of mining opportunities in southern Africa.

Mr. Wu has been involved in the successful launch and management of Volvo Group. During the period working for Volvo, Mr. Wu pioneered the path for Volvo commercial vehicles to play a major role in China and he was legendary for improving the brand recognition for Volvo commercial vehicles and Volvo’s brand rank. Meanwhile, regarded as a scholar in trade wars, Mr. Wu created a series of modern success theories including Opportunity is enemy, the theory of When Channel is ready, the water will be there, and his philosophy system of Total Success Theory. By practicing these revolutionary theories, he started his new venture as the Chairman and Chief Executive Officer of SureAuto Corporation, which was the first and has become the largest big box retailer in China’s used car market.

Mr. Wu has been studying in Department of International Marketing, Arizona State University of US and obtained his degree in EMBA of Rutgers New Jersey, US.

Mr. Wu is, or was within the past five years, an officer and/or director of the following public companies:

Richard has been active in the mineral resources business for nearly 40 years and has significant global experience in the development and marketing of resources and commodities. He joined Middelburg Steel & Alloys as Marketing Manager for the Stainless Steel division in 1985 and was subsequently involved in the establishment of the Columbus Stainless Steel Project. He then became General Manager of the Manganese Division of Samancor, a joint venture between the then Billiton Plc and the Anglo American Corporation. Samancor had a dominant position globally in manganese and chrome markets. He then moved to head Billiton Plc’s Exploration and Development activities within Africa, and gained considerable experience in Guinea, Mauritania, Sudan, Morocco, Democratic Republic of Congo, Zambia, as well as South Africa.

Richard retired from BHP Billiton in 2001 and made a successful transition to the junior exploration and mining sector where he has been involved in the creation, raising of funds, development, and management of several private and listed junior and mid-tier exploration and mining companies, including the roles of non-Executive Chairman and Director of companies listed on the Sydney, Toronto, London and Johannesburg stock exchanges.

He is currently Non Executive Chairman of Coal of Africa Ltd, Sacoil Holdings Limited, Brinkley Mining Company and Maghreb Minerals Plc. He is non-Executive Director of Centebale Resources limited, GRD Minproc Ltd, GRD Minproc SA Ltd, Mag Industries Corporation Inc, Cuco Resources Ltd, Moydow Mines International Inc, New Kush Exploration and Mining, VML Resources, and Nimag Pty Ltd.

Aside from his direct interests in mineral exploration and mining Company’s Richard was the originator of the Bakubang Initiative, a Forum designed to revive the South African Junior Mining Industry which lead to the establishment of the New Africa Mining Fund and is currently the Chairman of the Trustees of the New Africa Mining Fund. He was also a member of the Electricity Council (representing the mining industry) which was the forerunner of Eskom Ltd before corporatisation.

Richard has a BSc (Hons) London External Degree from the University College of Rhodesia and Nyasaland, which was then an External London College.

Mr. Linnell is, or was within the past five years, an officer and/or director of the following companies:

Willem has over 25 years experience in the engineering, mining and investment sectors, including 20 years in executive, Chief Executive and Chief Operating Officer, and Board Level of private and public companies. His experience includes an excellent track record in the Industrial Minerals industry, including mining and production of low grade deposits, marketing, product development, and product and company positioning. He has worked and operated globally in complex and multi-cultural environments which includes seasoned working knowledge of people, systems, legal frameworks in North and South America, Australia, the Far East including China, the Middle East, Japan and India. He also has extensive experience and a proven track record in corporate turnarounds, mergers and acquisitions, and post acquisition alignment and optimizations of combined business entities.

He joined Price Waterhouse in 1984 as a Principal Consultant and managed the Strategy and Corporate Finance Practice in Johannesburg, prior to becoming Executive Director of Cullinan Holdings Limited from 1990 to 1995. During this period he was also the CEO of Cullinan Precision Engineering, Chairman of Cullinan Minerals, and Chairman of Sud Chemie (SA), a joint venture between Sud Chemie (Germany) and Cullinan Holdings Limited. From 1996 to 1998 he was Managing Director of ABB Flexible Automation (Southern Hemsiphere), and thereafter the CEO of IMERYS Africa and Australia from 1998 to March 2001. He subsequently served as a non-Executive Director and Chairman of various private resource investment and industrial minerals company’s, and in May 2007 assumed the role of Country Manager of all Teal Mining and Exploration activities in the Democratic Republic of Congo until December 2008. He is currently a Director of Congo Supply and Maintenance s.p.r.l.

Willem completed a BPL Honours degree at the University of the Orange Free State in 1982, a Master of Commerce at Rand Afrikaans University in 1985, and a PhD in Economics at the University of South Africa in 1998. Research, study and course work towards his Masters in Commerce and PhD degrees was completed at Duke University and the Wharton Business School in the USA respectively. He further completed specialist courses at Wharton Business School in the areas of mergers and acquisitions as well as strategy.

Willem Jacobs is, or was within the past five years, an officer and/or director of the following public companies:

Mr. Sandile Zungu, a mechanical engineer with an MBA and a founding member of Zungu Investments Company (Proprietary) Limited ("Zico"), a diversified investment company which is the majority shareholder of Rockwell's empowerment partner Africa Vanguard Resources ("AVR"), has joined the Board as an independent director.

Sandile Zungu is founder, Chairman and majority shareholder of Zico, a broad-based black empowerment company. Mr. Zungu spent six years in engineering and production at Richards Bay Minerals, Engen Refinery, National Sorghum Breweries and South African Breweries. He subsequently joined the corporate finance division of African Merchant Bank, following which he played a key role in the formation of Sarhwu Investment Holdings growing it from a zero asset base to more than ZAR400 million in the net asset value. Thereafter he assumed the role of Executive Director for Strategy and Empowerment at New Africa Investments Limited. He created Zico in 2002, a broad based and diversified industrial holding organization with interests in financial services, media, health care, and resources, the latter being held in AVR. AVR is Rockwell's empowerment partner and holds 26% of the prospecting and mining rights held in South Africa, with Rockwell holding the remaining 74%. Sandile completed a mechanical engineering degree at the University of Cape Town and an MBA at the Graduate School of Business, University of Cape Town.

Mr Zungu is, or was within the past five years, an officer and/or director of the following public companies:

Trevor Thomas has practiced in the areas of corporate commercial, corporate finance, securities and mining law since 1995, both in private practice environment as well as in-house positions and is currently in-house legal counsel for Hunter Dickinson Services Inc. Prior to joining Hunter Dickinson Services Inc., he served as in-house legal counsel with Placer Dome Inc.

Joined Rockwell Diamonds on July19, 2010 as Chief Financial Officer. He has over 20 years experience in the mining industry. He began his accounting career at Fisher Hoffman Stride in 1985. In 1990, he moved into mining where he fulfilled various accounting, management and consultancy positions within the Billiton group in the Gold, Ferrochrome and Aluminium divisions. In 2002 Gerhard was appointed Financial and Administration Superintendent / Manager of the Placer Dome Western Areas Joint Venture where he assumed sole responsibility for the financial, information technology and commercial functions. He was seconded to Vancouver where he led the roll-out of the business improvement process and implementation of Sarbanes Oxley. He joined Simmers in November 2005 as Chief Financial Officer and Financial Director and played a key role in the recapitalization process at Simmers as well as with the listing of First Uranium on the TSX in 2006. He holds a B.Acc and MBA both from North West University and a MDP from Unisa.

Graham Chamberlain is a mining engineer with mineral resource and financial skills and some 26 years of engineering, operational and management experience in the mining industry. He was employed by the Anglo American Group of Companies from 1982 to 2002 and, during this period, gained extensive experience in various engineering fields pertaining to gold and base metal mining, primarily in underground mines.

Graham completed a Higher Diploma in Mining Engineering in 1988 from Technicon of the Witwatersrand and a Master of Science in Mineral Economics, from the then University of the Witwatersrand in 1998. Further to this, he has a Management diploma from the University of South Africa (1993) and an Advanced Management Diploma from the Gordon Institute of Business Science (2003).

Within the last 10 years no director or executive officer of the Company was a director, chief executive officer, or chief financial officer of any company (including in respect of the Company) that was:

(a) subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or

(b) subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer, or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer,

except as disclosed under “General Development of the Business – Recent Developments – Late Filing of Audited Financial Statements”.

Except as set out below, no director or executive officer, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, is, at the date of this Annual Information Form, or has been within 10 years before the date of the Annual Information Form, a director or executive officer of any company (including in respect of the Company) that:

Several Directors of Rockwell also serve as directors of other similar companies involved in natural resource development. Accordingly, it may occur that properties will be offered to both Rockwell and such other companies. Furthermore, those other companies may participate in the same properties as those in which Rockwell has an interest. As a result there may be situations which involve a potential conflict of interest or issues in connection with the doctrine of “corporate opportunity”. In that event, a financially interested director would not be entitled to vote at meetings of directors in respect of a transaction involving the Company if it evokes any such conflict. The directors will attempt to avoid dealing with such other companies in situations where conflicts or corporate opportunity issues might arise and will at all times use their best efforts to act in the best interests of Rockwell.

“Named Executive Officer” (“NEO”) means each of the following individuals:

(c) each of the three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity, other than the CEO and CFO, at the end of the most recently completed financial year whose total compensation was, individually, more than $150,000 for that financial year; and

(d) each individual who would be a NEO under paragraph (c) but for the fact that the individual was neither an executive officer of the company, nor acting in a similar capacity, at February 28, 2010.

The following disclosure sets out the compensation that the Board intended to pay, make payable, award, grant give or otherwise provide to each NEO and director for the financial year ended February 28, 2010.

The Board had established a Compensation Committee consisting of Mr. Richard Linnell, Mr. Sandile Zungu and Mr. Willem Jacobs. The Compensation Committee recommends compensation for the directors and executive officers of the Company. The charter for the Compensation Committee plan was adopted on February 28, 2008 as part of the Company’s Corporate Governance Policies and Procedures Manual (the “Manual”). This charter as well as the Manual are available for viewing at the Company’s website at www.rockwelldiamonds.com.

The function of the Compensation Committee is to review, on an annual basis, the compensation paid to the Company’s executive officers and directors, to review the performance of the Company’s executive officers and to make recommendations on compensation to the Board.

The Compensation Committee periodically considers the grant of stock options. Options have been granted to the executive officers and directors and certain other service providers taking into account competitive compensation factors and the belief that options help align the interests of executive officers, directors and service providers with the interests of shareholders.

The purposes and responsibilities of the Compensation Committee with respect to compensation matters are to assist the Board of Directors in carrying out its responsibilities relating to executive and director compensation. In furtherance of this purpose, the Compensation Committee has the following duties, responsibilities and authority:

(a) The Committee shall recommend to the Board of Directors the form and amount of compensation to be paid by the Company to directors for service on the Board and on Board committees. The Committee shall review director compensation at least annually.

(b) The Committee shall annually review the Company’s base compensation structure and the Company's incentive compensation, stock option and other equity-based compensation programs and recommend changes in or additions in such structure and plans to the Board of Directors as needed.

(c) The Committee shall recommend to the Board of Directors the annual base compensation of the Company's executive officers and senior managers (collectively the "Officers").

(d) The Committee shall recommend to the Board of Directors the range of increase or decrease in the annual base compensation for non-Officer personnel providing services to the Company.

(e) The Committee shall recommend to the Board of Directors annual corporate goals and objectives under any incentive compensation plan adopted by the Company for Officers and non-Officer personnel providing services to the Company, and recommend incentive compensation participation

levels for Officers and non-Officer personnel providing services to the Company under any such incentive compensation plan. In determining the incentive component of compensation, the Committee will consider the Company’s performance and relative shareholder return, the values of similar incentives at comparable companies and the awards given in past years.

(f) The Committee shall evaluate the performance of Officers generally and in light of annual corporate goals and objectives under any incentive compensation plan.

(g) The Committee shall periodically review with the Chairman and Chief Executive Officer their assessments of corporate officers and senior managers and succession plans, and make recommendations to the Board regarding appointment of officers and senior managers.

(h) The Committee shall provide oversight of the performance evaluation and incentive compensation of non-Officer personnel providing services to the Company.

(i) The Committee shall administer the Company's stock option and other equity based compensation plans and determines the annual grants of stock options and other equity based compensation.

(j) The Committee shall recommend to the Governance and Nominating Committee the qualifications and criteria for membership on the Committee.

The Board assumes responsibility for reviewing and monitoring the long-range compensation strategy for the senior management of the Company although the Compensation Committee guides it in this role. As part of its mandate, the Board determines the type and amount of compensation for the President and Chief Executive Officer and other executive officers.

The Company’s Compensation Committee receives independent competitive market information on compensation levels for executives, if necessary, in determining the level of compensation for the executive officers and directors.

Mr. Copeland does not serve the Company solely on a full-time basis, and his compensation from the Company is allocated based on the estimated amount of time spent providing services to the Company. Dr. John Bristow, Mr. Gerhard Jacobs (Previously Mr Desmond Morgan) and Mr. Brenner work on the Company's activities on a full-time basis. The Company’s compensation policies and programs are designed to be competitive with similar junior mining exploration companies and to recognize and reward executive performance consistent with the success of the Company’s business.

The compensation program for the senior management of the Company is designed to ensure that the level and form of compensation achieves certain objectives, including:

(a) attracting and retaining talented, qualified and effective executives;
(b) motivating the short and long-term performance of these executives; and
(c) better aligning their interests with those of the Company’s shareholders.

In compensating its senior management, the Company has employed a combination of base salary, bonus compensation and equity participation through its stock option plan.

In the Board’s view, paying base salaries which are competitive in the markets in which the Company operates is a first step to attracting and retaining talented, qualified and effective executives. The NEOs are paid a salary in order to ensure that the compensation package offered by the company is in line with that offered by other companies in our industry, and as an immediate means of rewarding the NEO for efforts expended on behalf of the company.

The salary to be paid to a particular NEO is determined by gathering competitive salary information on comparable companies within the industry from a variety of sources, including surveys conducted by independent consultants and national and international publications. Payment of a cash salary fits within the objective of the compensation program since it rewards the NEO for performance of his or her duties and responsibilities.

The compensation of the Chief Executive Officer is approved annually by the Board. Base salary and bonus levels are determined taking into account independent market survey data.

The Company's objective is to achieve certain strategic objectives and milestones. The Board will consider executive bonus compensation dependent upon the Company meeting those strategic objectives and milestones and sufficient cash resources being available for the granting of bonuses. Bonuses are awarded at the discretion of the Board. The Board approves executive bonus compensation dependent upon compensation levels based on recommendations of the Compensation Committee, and such recommendations are generally based, if necessary, on survey data provided by independent consultants. There were no bonuses awarded in the financial year.

The Company has in place a share option plan dated for reference August 14, 2008 (the “Plan”). The Plan has been established to provide incentive to qualified parties to increase their proprietary interest in the Company, encourage the alignment of interests with its shareholders and foster their continued association with the Company.

The Company believes that encouraging its executives and employees to become Shareholders is the best way of aligning their interests with those of its Shareholders. Equity participation is accomplished through the Company’s stock option plan. Stock options are granted to senior executives taking into account a number of factors, including the amount and term of options previously granted, base salary and bonuses and competitive factors. Options are generally granted to senior executives and vest on terms established by the Compensation Committee.

At least annually, the Compensation Committee reviews the grants of stock options to directors, management, employees and consultants. Options have been granted in prior years taking into account competitive compensation factors and the belief that options help align the interests of such persons with the interests of Shareholders.

The Company commenced trading on the TSX Exchange (the “TSX”) on February 22, 2008. Prior thereto it was listed on the TSX Venture Exchange (the “TSXV”). In 2007 the Company changed its year end from May 31 to February 28. The following graph compares the cumulative total return to a shareholder who invested $100 in Common Shares of the Company on May 31, 2005 until February 28, 2010 with the cumulative total return of the TSX and TSXV.

The Company’s compensation policies and programs are designed to be competitive with similar junior mining exploration companies and to recognize and reward executive performance consistent with the success of the Company’s business.

As a result of the credit crisis, commodities prices collapsed, with diamonds being particularly hard hit. This, coupled with uncertainty raised from an unsolicited take over attempts resulted in a collapse in the share price.

The performance of management cannot be measured on the share price, but in maintaining liquidity, increasing production and reducing costs. The fact that the company is still in operation where many of its peers have failed completely is evidence of the commitment and creativity of management in ensuring that the company is still operational.

No salary increases, bonuses or incentives of any nature have been awarded in the past financial year due to the financial challenges faced by the Company as a consequence of the economic recession and sharp decline in diamond prices.

The Company has in place a share option plan dated for reference August 14, 2008 (the “Plan”). The Plan has been established to provide incentive to qualified parties to increase their proprietary interest in the Company and thereby encourage their continuing association with the Company. The maximum aggregate number of Common Shares that may be reserved for issuance under the Plan at any point in time is 10% of the outstanding Common shares at the time the options are granted, less any Common Shares reserved for issuance under any other arrangements. The Plan is administered by the Compensation Committee of the Company. The Plan provides that options will be issued pursuant to option agreements to directors, officers, employees or consultants of the Company or a subsidiary of the Company. All options expire on a date not later than five years after the issuance of such option. Previous grants of option-based awards are taken into account when considering new grants of options. Subject to the requirements of the policies of the TSX and the prior receipt of any necessary regulatory approval, the Board may, in its absolute discretion, amend or modify the Plan or any outstanding option granted under the Plan, as to the provisions set out in the Plan.

Options are generally granted to corporate executives in the first quarter of each year as part of the annual compensation review. Any special compensation is typically granted in the form of options. Options are granted at other times of the year to individuals commencing employment with the Company. The exercise price for the options is based on the volume weighted average of the closing price of the shares of the Company on the TSX for the 5 days prior to the date of grant.

The Company is of the view that the Plan provides the Company with the flexibility necessary to attract and maintain the services of senior executives and other employees and reflects in competing compensation to other companies in the industry.

The compensation paid to the NEOs during the Company’s two most recently completed financial years of February 28 is as set out below and expressed in Canadian Dollars unless otherwise noted:

Name and principal position	Year	Salary⁽¹⁾ ($)	Share- based awards⁽²⁾ ($)	Option- based awards⁽²⁾ ($)	Non-equity incentive plan compensation⁽³⁾ ($)		Pension value⁽⁵⁾ ($)	All other compensation⁽⁶⁾ ($)	Total compensation⁽⁷⁾ ($)
Name and principal position	Year	Salary⁽¹⁾ ($)	Share- based awards⁽²⁾ ($)	Option- based awards⁽²⁾ ($)	Annual incentive plans⁽³⁾	Long-term incentive plans⁽⁴⁾	Pension value⁽⁵⁾ ($)	All other compensation⁽⁶⁾ ($)	Total compensation⁽⁷⁾ ($)
John Bristow ⁽¹⁰⁾ President and CEO	2010 2009	290,665 333,455	Nil Nil	32,000 121,900	Nil Nil	Nil Nil	Nil Nil	Nil Nil	322,665 455,355
Desmond Morgan CFO ^(8)(10)	2010 2009	124,571 44,043	Nil Nil	24,000 Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	148,571 44,043
Jeffrey Brenner Manager – Diamond Marketing and Sales	2010 2009	212,580 206,470	Nil Nil	24,000 81,266	Nil Nil	Nil Nil	Nil Nil	Nil Nil	236,580 287,736
Graham Chamberlain COO	2010 2009	69,206 Nil	Nil Nil	24,000 Nil	Nil Nil	Nil Nil	Nil Nil	Nil Nil	93,206 Nil

The following table sets out all share-based awards and option-based awards outstanding as at February 28, 2010, for each NEO:

The following table sets out all incentive plan (value vested or earned) during the year ended February 28, 2010, for each NEO:

Dr. John W. Bristow’s employment commenced effective January 1, 2007, , Jeffrey Brenner’s employment commenced effective November 21, 2007, Graham Chamberlain employment commenced effective November 1, 2009 and Gerhard Jacobs employment commenced effective July 19, 2010. Desmond Morgan’s employment commenced effective October 17, 2008 and he resigned on July 16, 2010.

Under these agreements they are required to work full time for the Company and are eligible to receive stock options and a performance based bonus at the discretion of the Compensation Committee and the Board and other standard benefits made available by the Company.

There are no other compensatory plans or arrangements, with respect to the NEO resulting from the resignation, retirement or any other termination of employment of the officers’ employment or from a change of any NEOs’ responsibilities following a change in control.

The following table provides information concerning the value of payments and benefits following the termination of employment of the NEO’s under various circumstances. Payments vary based on the reason for termination and the timing

of a departure. The below amounts are calculated as if the NEO’s employment had been terminated on February 28, 2010. Receipt of payments on termination is contingent on the NEO delivering a release to the Company.

Except as outlined above, there are no contracts, agreements, plans or arrangements that provide for payments to an NEO at, following or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of the Company or a change in an NEO’s responsibilities.

Director Compensation Table
Each independent director of the Company, who is not an executive officer, is paid an annual director’s fee of $20,000. Each director who is a member of a committee receives either an additional $5,000 for acting as Chairperson or $3,000 for being a member of a committee.

The compensation provided to the directors, excluding a director who is included in disclosure for an NEO for the Company’s most recently completed financial year of February 28, 2010 is:

Name	Fees earned ($)	Share- based Awards ($)	Option- based awards ($)	Non-equity incentive plan compensation ($)	Pension value ($)	All other compensation ($)	Total ($)
David Copeland⁽¹⁾	17,818	Nil	31,999	Nil	Nil	Nil	49,817
Mark Bristow	21,750	Nil	26,666	Nil	Nil	Nil	48,416
Terrence Janes⁽²⁾	9,333	Nil	Nil	Nil	Nil	Nil	9,333
William Fisher⁽³⁾	30,917	Nil	Nil	Nil	Nil	Nil	30,917
Greg Radke⁽⁴⁾	8,667	Nil	Nil	Nil	Nil	Nil	8,667
Sandile Zungu	27,167	Nil	15,999	Nil	Nil	Nil	43,166
Richard John Linnell⁽⁵⁾	12,917	Nil	15,999	Nil	Nil	Nil	28,916
Willem Jacobus Jacobs⁽⁶⁾	11,667	Nil	26,666	Nil	Nil	Nil	38,333
Yong Guo⁽⁷⁾	Nil	Nil	Nil	Nil	Nil	Nil	Nil
Gary Wu⁽⁸⁾	Nil	Nil	Nil	Nil	Nil	Nil	Nil

The following table sets out all share-based awards and option-based awards outstanding as at February 28, 2010, for each director, excluding a director who is already set out in disclosure for a NEO for the Company:

	Option-based Awards				Share-based Awards
Name	Number of securities underlying unexercised options (#)	Option exercise price ($)	Option expiration date	Value of unexercised in-the-money options ($)⁽¹⁾	Number of shares or units of shares that have not vested (#)	Market or payout value of share- based awards that have not vested ($)
David Copeland	499,500 600,000	0.62 0.06	Sept 24, 2012 Dec 7, 2014	Nil 6,000	Nil 400,000	Nil 4,000
Mark Bristow	449,500 500,000	0.62 0.06	Sept 24, 2012 Dec 7, 2014	Nil 5,000	Nil 333,333	Nil 3,333
Sandile Zungu	300,000	0.06	Dec 7, 2014	3,000	200,000	2,000
Richard John Linnell	300,000	0.06	Dec 7, 2014	3,000	200,000	2,000
Willem Jacobjus Jacobs	500,000	0.06	Dec 7, 2014	5,000	333,333	3,333
Gary Wu	Nil	Nil	Nil	Nil	Nil	Nil

There was no value vested or earned under any incentive plan during the year ended February 28, 2010.

The following table sets out equity compensation plan information for the year ended February 28, 2010.

All directors were either elected at the annual general meeting held in November 2009 or were appointed by the directors after such meeting to fill vacancies in the board, and have a term of office expiring at the next annual general meeting of Rockwell expected to be held in September 2010. There are no contracts or arrangements under which directors are compensated or provided benefits upon termination of employment.

Directors are considered to be independent if they have no direct or indirect material relationship with the Company. A "material relationship" is a relationship which could, in the view of the Company’s board of directors, be reasonably expected to interfere with the exercise of a director’s independent judgment.

The Board facilitates its independent supervision over management in a number of ways including: by holding regular meetings without the presence of management; by retaining independent consultants; and by reviewing corporate developments with larger shareholders, analysts and potential industry partners, where it deems necessary.

The directors of the Company, except Dr. John Bristow and Mr David Copeland are independent. The Company is taking steps to ensure that the duties generally performed by independent directors are being performed by the current directors. The Board members have extensive experience as directors of public companies and are sensitive to the related corporate governance and financial reporting obligations associated with such positions. Thus the Board members are reasonably well versed in the obligations of directors and the expectations of independence from management.

The following committees have been established by the members of Rockwell’s board of directors. The mandate of each committee is included in the Company’s corporate governance manual and can be viewed on the Company’s website (www.rockwelldiamonds.com):

The audit committee is selected annually by the directors of Rockwell at the first meeting of the Board held after Rockwell's annual general meeting. Its primary function is to review the financial statements of the Company before they are submitted to the Board for approval and the audit committee is also available to assist the Board if required with matters relating to the appointment of Rockwell's auditor and the overall scope and results of the audit, internal financial controls, and financial information for publication for various purposes.

The section entitled Item 6 – Directors, Senior Management and Employees in this Annual Report gives details of other reporting issuers of which each director is a director or officer.

The Company has traditionally retained experienced mining people as directors and hence the orientation needed is minimized. When new directors are appointed, they are acquainted with the Company’s mineral project and the expectations of directors. Board meetings generally include presentations by the Company’s senior management and project staff in order to give the directors full insight into the Company’s operations.

The Board has adopted an ethics policy which is available on the Company’s website, www.rockwelldiamonds.com. The Board also understands that the fiduciary duties placed on individual directors by the Company’s governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual director’s participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company.

The Board considers its size each year when it considers the number of directors required, taking into account the number required to carry out the Board’s duties effectively and to maintain a diversity of views and experience. The Board has a Nominating and Governance Committee, though the full Board retains responsibility for the recommendation of directors to the Shareholders for election.

The Compensation Committee considers compensation for the directors and senior executive officers and submits its compensation recommendations to the Board for approval.

The Board has no committees other than the Audit Committee, Nominating and Governance Committee and Compensation Committee.

The Board monitors the adequacy of information given to directors, communication between the Board and management and the strategic direction and processes of the Board and its committee.

The audit committee has adopted a charter that sets out its mandate and responsibilities. A copy of the audit committee charter is available at www.sedar.com and the Company’s website, www.rockwelldiamonds.com.

The current members of the audit committee are Mr. Willem Jacobs and Mr Richard Linnell. All members are and were considered to be financially literate and are independent members of the audit committee. The Company is currently in the process of searching for additional audit committee members

A member of the audit committee is independent if the member has no direct or indirect material relationship with the Company. A material relationship means a relationship which could, in the view of the Company’s Board of Directors, reasonably interfere with the exercise of a member’s independent judgment.

As a result of their education and experience, each member of the audit committee has familiarity with, an understanding of, or experience in:

A member of the audit committee is considered financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company.

The audit committee has not made any recommendations to the Board to nominate or compensate any external auditor that was not adopted by the Board.

The Company’s auditors, KPMG Inc., have not provided any material non-audit services.

The Company has adopted specific policies and procedures for the review and pre-approval of any services performed by its auditors. The procedures require that all proposed engagements of its auditors for audit and non-audit services be submitted to the audit committee for approval prior to the beginning of any such services. The audit committee considers such requests, and, if acceptable to a majority of the audit committee members, pre-approves such audit and non-audit services by a resolution authorizing management to engage the Company’s auditors for such audit and non-audit services, with set maximum Dollar amounts for each itemized service. During such deliberations, the audit committee assesses, among other factors, whether the services requested would be considered "prohibited services" as contemplated by the regulations of the US Securities and Exchange Commission, and whether the services requested and the fees related to such services could impair the independence of the auditors.

At February 28, 2010, Rockwell has 447 direct employees. The Company's administrative and operational functions are primarily administered in South Africa.

See the table in Item 6.A above for beneficial share ownership information of our executive officers and directors as of July 31, 2010.

At the Company's Annual and Extraordinary General Meeting held in August 2008, shareholders of the Company approved a Share Incentive Plan (the “Plan”) in accordance with the policies of the TSX.

Incentive stock options may be issued to directors, officers, employees or consultants of the Company at the discretion of the board of directors, subject to an aggregate maximum of 10% of the issued capital of the Company. This type of share option plan is called a “rolling” plan. Pursuant to the Plan, if outstanding options are exercised, or expire, or the number of issued and outstanding common shares of the Company increases, the number of options available to grant under the Plan increases proportionately. Options can have a maximum term of five years and typically terminate 90 days following the termination of the optionee's employment or engagement, except in the case of retirement or death. Vesting of options is at the discretion of the board of directors at the time the options are granted.

Options under the Option Plan must be granted at a price no lower than the five day volume weighted average trading price of the shares, which is calculated by dividing the total value of the securities traded for the relevant period by the total volume. Where appropriate, the TSX may exclude internal crosses and certain other special terms trades from the calculation.

As at May 31, 2010, 12,563,296 of the stock options outstanding with a weighted average exercise price of $0.39 per share have vested with grantees.

Rockwell's securities are recorded on the books of its transfer agent in registered form, however, the majority of such shares are registered in the name of intermediaries such as brokerage houses and clearing houses on behalf of their respective brokerage clients, and Rockwell does not have knowledge of or access to information about of the beneficial owners thereof. To the best of its knowledge, Rockwell is not directly or indirectly owned or controlled by a foreign government. As of February 28, 2010, Rockwell had authorized an unlimited number of common shares without par value of which 370,843,069 were issued and outstanding.

"Beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. A person is deemed to have beneficial ownership of any securities that such person has a right to acquire within 60 days of the fiscal period through the exercise of any option or warrant. Any security that any person has the right to acquire within 60 days is deemed outstanding for the purpose of calculating the ownership of such person, but is not deemed to be outstanding for the purpose of calculating the ownership percentage of any other person.

Under the British Columbia Securities Act insiders (generally officers, directors, and holders of 10% or more of Rockwell's shares) are required to file insider reports of changes in their ownership within ten days of a trade in Rockwell's securities. Copies of such reports are available for public inspection at the offices of the British Columbia Securities Commission, 9th Floor, 701 West Georgia Street, Vancouver, British Columbia V7Y 1L2 (phone (604) 899-6500) or at Canadian Securities Administrators website for Insiders' Disclosure, www.sedi.ca.

As at July 31, 2010 the current registered filed shareholding positions of greater than 5% are:.

As of July 31, 2010, directors and officers of Rockwell in total (10 persons) own or control an aggregate of 10,224,637 common shares of the Company (1.97%) . These directors or officers do not have any different voting rights with respect to the common shares held by them. Under the British Columbia Securities Act, insiders (generally officers, directors, holders of 10% or more of the Company's shares) are required to file insider reports of changes in their ownership in the first 10 days following a trade in Rockwell's securities. Under British Columbia securities laws, insider trading information is available at www.sedi.ca

As at July 31, 2010, to the best of the Company's knowledge, the following is the geographic distribution of shareholders. Shares registered in intermediaries were assumed to be held by residents of the same country in which the clearing house was located.

To management's knowledge, there are no arrangements of which may at a subsequent date result in a change of control.

Since the beginning of Rockwell’s last fiscal year ended February 28, 2010. no director or senior officer, and no associate or affiliate of the foregoing persons, and no insider has or has had any material interest, direct or indirect, in any other transactions, or in any other proposed transaction, which in either such case has materially affected or will materially affect Rockwell or its predecessors except as follows:

Related Party transactions are explained below. These arrangements and transactions have typically been established to provide professional and cost effective services and resources to Rockwell. In particular these services relate to the remote areas in which some of Rockwell’s operations are located and have also been established to address security and social responsibility requirements. In remote areas it is difficult to obtain key services and make purchases of certain supplies on an as needed basis. Likewise security consideration is paramount given the high value product produced by the Company.

All related party transactions are arms length transaction in the normal course of business.

Rockwell’s subsidiary, Durnpike Investments (Proprietary) Limited’s (“Durnpike”) interest in the Kwango River Project was constituted by an agreement (“Midamines Agreement”) concluded during 2006 with Midamines SPRL (“Midamines”), the holder of the exploration permit on the Kwango River Project, to act as independent contractor on behalf of Midamines to manage and carry out exploration activities and potentially, mining activities. Durnpike was entitled to an 80% share of the net revenue from the sale of any diamonds produced from the contract area.

During the course of 2008 and prior to the prospecting and mining rights having been transferred from Trans Hex to Rockwell, a representative of the land owner of Niewejaarskraal asserted a claim of ownership over the equipment located on Niewejaarskraal. This claim was ostensibly based on a surface rights agreement entered into between Trans Hex and the owner of Niewejaarskraal and an allegation that Trans Hex had abandoned the mining equipment concerned. This Contract expired prior to Rockwell receiving the Niewejaarskraal mining rights. Since the transfer of the prospecting and mining rights associated with and the mining equipment located on Niewejaarskraal to Rockwell, it has not received any formal approach from the land owner of Niewejaarskraal to progress this claim.

Discussions with the landowner have indicated that he would be happy to enter into amenable and workable landowner agreements with Rockwell, subject to appropriate land use agreements being entered into between the Parties. In addition, Rockwell has had sight of the legal advice provided by external legal counsel to Trans Hex to the effect that the merits of this claim are limited. In the event that a claim were to made by the owner of Niewejaarskraal against Rockwell in respect of this mining equipment, Rockwell will vigorously defend its ownership of that equipment and will also seek to rely on certain protective warranties and indemnities that were given to it by Trans Hex in the Sale of Shares and Claims Agreement.

Rockwell has not paid any dividends on its outstanding common shares since its incorporation and does not anticipate that it will do so in the foreseeable future. All funds of the Company are being retained for exploration of its projects.

There have been no significant changes to the accompanying financial statements since February 28, 2010, except as disclosed in this Annual Report on Form 20-F.

	TSX Exchange		OTC Bulletin Board		JSE
	RDI		RDIAF		RDI
	High	Low	High	Low	High	Low
	CAD	CAD	USD	USD	ZAR	ZAR
Annual
Fiscal 2006	$0.70	$0.28	$0.64	$0.22	–	–
Fiscal 2007	$0.85	$0.38	$1.98	$0.25	–	–
Fiscal 2008	$0.80	$0.50	$0.75	$0.30	R4.50	R4.00
Fiscal 2009	$0.64	$0.03	$0.70	$0.03	R4.25	R0.30
Fiscal 2010	$0.12	$0.03	$0.10	$0.02	R0.99	R0.23

Fiscal 2009
Quarter ended May 31, 2008	$0.64	$0.42	$0.70	$0.35	R4.25	R3.33
Quarter ended August 31, 2008	$0.54	$0.16	$0.53	$0.16	R4.00	R1.45
Quarter ended November 30, 2008	$0.34	$0.03	$0.32	$0.03	R3.01	R0.75
Quarter ended February 28, 2009	$0.08	$0.03	$0.09	$0.04	R0.90	R0.30

Fiscal 2010
Quarter ended May 31, 2009	$0.08	$0.03	$0.07	$0.05	R0.47	R0.23
Quarter ended August 31, 2009	$0.12	$0.03	$0.10	$0.02	R0.99	R0.23
Quarter ended November 30, 2009	$0.10	$0.05	$0.10	$0.04	R0.65	R0.40
Quarter ended February 28, 2010	$0.09	$0.05	$0.09	$0.04	R0.58	R0.32

Monthly
February 2010	$0.08	$0.07	$0.07	$0.06	R0.56	R0.45
March 2010	$0.08	$0.07	$0.08	$0.06	R0.50	R0.35
April 2010	$0.08	$0.07	$0.08	$0.07	R0.50	R0.42
May 2010	$0.07	$0.06	$0.07	$0.05	R0.50	R0.45
June 2010	$0.07	$0.06	$0.07	$0.06	R0.50	R0.30
July 2010	$0.08	$0.06	$0.07	$0.06	R0.50	R0.35

The transfer of the Company's common shares is managed by its transfer agent, Computershare Trust Company of Canada of Vancouver.

The shares of Rockwell trade in Canada on the TSX Venture Exchange ("TSX Venture"), under the trading symbol RDI, in South Africa on the Johannesburg Stock Exchange (“JSE”) and are quoted on the National Association of Securities Dealers Over-The-Counter Bulletin Board ("OTCBB").

Copies of Rockwell's memorandum and articles of incorporation, as registered with the British Columbia Registrar of Companies under Corporation No. 354545, were filed with the Company's initial registration statement on Form 20-F filed in 2000. The Business Corporations Act (British Columbia) (the "BCA") came into force on March 29, 2004. As a result, the Company Act (British Columbia) was repealed, and the Company became a "pre-existing company" subject to the provisions of the BCA. Every pre-existing company is required under the BCA to file a Transition Application containing a notice of articles with the British Columbia Registrar of Companies, as a result of which the notice of articles supersedes and replaces the company's memorandum. The Company has caused a Transition Application to be filed with the British Columbia Registrar of Companies, and its notice of articles and the related articles are being filed as exhibits to this Annual Report.

Rockwell's Notice of Articles do not specify objects or purposes. Under British Columbia law, a British Columbia corporation has all the legal powers of a natural person; however corporations may not undertake certain limited business activities such as operating as a trust company or railroad without alterations to its form of articles and specific government consent.

Rockwell's articles do not specify a maximum number of directors (the minimum under British Columbia law for a public company is three). The articles specify that the number of directors shall be the number of directors fixed by shareholders annually or the number that are actually elected at a general shareholders meeting. The number of directors is determined annually by shareholders at the annual Shareholders meeting and all directors are elected at that time, there are no staggered directorships. Under the articles the directors are entitled between successive annual general meeting to appoint one or more additional directors but not more than one-third of the number of directors fixed at a shareholders meeting or actually elected at the preceding annual general meeting. Directors automatically retire at the commencement of each annual meeting subject to being re-elected.

Under the articles, a director who is any way directly or indirectly interested in a proposed contract or transaction with Rockwell or who holds any office or possesses any property whereby directly or indirectly a duty might be created which would conflict with his duty or interest as a director shall declare the nature and extent of such interest in such contract or transaction. A director shall not vote in respect of any such contract or transaction if the company in which he is interested and if he should vote his vote shall not be counted but shall be counted in the quorum present at the meeting. Similarly, under the BCA directors are obligated to abstain from voting on matters in which they may be financially interested after fully disclosing such interest. Directors must abstain in such circumstances both under the articles and under the BCA.

Directors must be of the age of majority (18), and meet eligibility criteria including not being mentally infirm, an undischarged bankrupt and no fraud related convictions in the previous five years. There is no mandatory retirement age either under Rockwell's articles or under the BCA.

The directors may from time to time at their discretion authorize the Company to borrow any sum of money for the purposes of the Company and may raise or secure the repayment of that sum in such manner upon such terms and conditions, in all respects, as they think fit, and in particular, and without limiting the generality of the foregoing, by the issue of bonds or debentures, or any mortgage or charge, whether specific or floating, or other security on the undertaking or the whole or any part of the property of the Company, both present and future. Directors need not own any shares of the Company in order to qualify as directors.

The directors may declare dividends and fix the date of record therefore and the date for payment thereof. No notice need be given of the declaration of any dividend.

Subject to the terms of shares with special rights or restrictions, all dividends shall be declared according to the number of shares held and no dividend shall bear interest against Rockwell.

The directors may direct payment of any dividend wholly or partly by the distribution of specific assets or of paid-up shares, bonds, debentures or other debt obligations of Rockwell, or in any one or more of those ways, and where any difficult arises in regard to the distribution, the directors may settle the same as they think expedient, and in particular may fix the value for distribution of specific assets or of paid-up shares, bonds, debentures or other debt obligations of Rockwell, or in any one or more of those ways, and, where any difficulty arises in regard to the distribution, the directors may settle the same as they think expedient, and in particular may fix the value for distribution of specific assets, and may determine the cash payments shall be made to a member upon the basis of the value so fixed in place of fractional shares, bonds, debentures or other debt obligations in order to adjust the rights of all parties, and may vest any of those specific assets in trustees upon such trusts for the persons entitled as may seem expedient to the directors.

Notwithstanding anything contained in Rockwell's articles the directors may from time to time capitalize any undistributed surplus on hand of Rockwell and may from time to time issue as fully paid and non-assessable any unissued shares or any bonds, debentures or other debt obligations of Rockwell as a dividend representing such undistributed surplus on hand or any part thereof.

Any dividend, interest or other moneys payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder, or, in the case of joint holders, to the registered address of that one of the joint holders who is first named on the register or to such person and to such address as the holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any dividends, bonuses or other moneys payable in respect of the shares held by them as joint holders.

A transfer of a share shall not pass the right to any dividend declared thereon before the registration of the transfer in the register.

Notwithstanding any other provisions of the articles should any dividend result in any shareholders being entitled to a fractional part of a share of Rockwell, the directors shall have the right to pay such shareholders in place of that fractional share, the cash equivalent thereof calculated on the par value thereof, or in the case of shares without nominal or par value, calculated on the price or consideration for which such shares were or were deemed to be issued, and shall have the further right and complete discretion to carry out such distribution and to adjust the rights of the shareholders with respect thereto on as practical and equitable a basis as possible including the right to arrange through a fiscal agent or otherwise for the sale, consolidation or other disposition of those fractional shares on behalf of those shareholders of Rockwell.

The directors may, before declaring any dividend, set aside out of the profits of Rockwell such sums as they think proper as appropriations from income which shall at the discretion of the directors, be applicable for meeting contingencies, or for equalizing dividends, or for any other purpose to which the profits of Rockwell may be properly applied, and pending such application may, either be employed in the business of Rockwell or be invested in such investments as the directors in their discretion may from time to time determine.

Changes to the articles and memorandum of Rockwell can be changed by a "special resolution", being a resolution passed by not less than 75% of the shares voted in person or by proxy at a duly convened shareholders meeting. Some corporate changes including amalgamation with another company, sale of substantially all of Rockwell's assets, re-domiciling out of the jurisdiction of British Columbia, creation of new classes of shares not only require such 75% approval but generally also give rise to a dissent right which is the right to be paid the fair value of the stockholder's shares in cash if the required special resolution is actually passed and Rockwell elects to proceed with the matter notwithstanding receipt of dissent notices. A notice of a shareholders meeting at which such an action is intended to be effected must include a prominent notice of the dissent right. Dissent provisions governed by the BCA and not by the articles of Rockwell.

Shareholders meetings are only peripherally governed by the articles of Rockwell with most shareholder protections contained in the Securities Act (British Columbia) and the BCA. The articles provide that Rockwell will hold an annual general meeting, will provide at least 21 days' notice and will provide for certain procedural matters and rules of order with respect to conduct of the meeting. The Securities Act (British Columbia) and the BCA superimpose requirements that generally provide that shareholders meetings require not less than a 60 day period from initial public notice that Rockwell makes a thorough advanced search of intermediary and brokerage registered shareholdings to ascertain location of beneficial shareholders so that materials can be sent, the form and content of information circulars and proxies and like matters typically governed by such securities legislation. This legislation specifies the disclosure requirements for various corporate actions, background information on the nominees for election for director, executive compensation paid in the previous year and full details of any unusual matters. Rockwell must hold an annual shareholders meeting within 13 months of the previous annual shareholders meeting and must present audited statements that are no more than 180 days old at that meeting.

Subject to the special rights and restrictions attached to any class of shares, Rockwell may, by a resolution of the directors and in compliance with the BCA, redeem any of its shares that have a right of redemption attached thereto at the price and upon the terms specified in such resolution and where Rockwell purposes to redeem some, but not all, of its shares of a particular class or kind, it shall not be obligated to redeem them pro rata but may redeem them in any manner the directors in their absolute discretion may deem fit.

There are no pre-emptive rights applicable to Rockwell which provide a right to any person to participate in offerings of Rockwell's securities

All common shares of Rockwell participate ratably in any available assets in the event of a winding up or other liquidation.

There are no limitations under Rockwell's Articles or in the BCA on the right of persons who are not citizens of Canada to hold or vote common shares. (See also "Exchange Controls" – below.)

Dividends may be declared by the Board out of available assets and are paid rateably to holders of common shares. No dividend may be paid if Rockwell is, or would thereby become, insolvent.

Each Rockwell share is entitled to one vote on matters to which common shares ordinarily vote including the election of directors, appointment of auditors and approval of corporate changes and other matters requiring shareholder approval.

Rockwell has not implemented any shareholders' rights against possible take-overs. Rockwell does not have any agreements which are triggered by a take-over or other change of control. There are no provisions in its articles triggered by or affected by a change in outstanding shares which gives rise to a change in control.

The articles of Rockwell do not require disclosure of share ownership. Share ownership of director nominees must be reported annually in proxy materials sent to Rockwell's shareholders. There are no requirements under British Columbia corporate law to report ownership of shares of Rockwell but the British Columbia Securities Act requires disclosure of trading by insiders including holders of 10% of voting shares within 10 days of the trade. Controlling shareholders (generally those in excess of 20% of outstanding shares) must provide seven days advance notice of share sales.

Rockwell is a Canadian corporation incorporated under the laws of British Columbia. There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of Common Shares, other than withholding tax requirements. Any such remittances to United States residents are generally subject to withholding tax. See "Taxation" below.

There is no limitation imposed by the laws of Canada or by the charter or other constituent documents of Rockwell on the right of a non-resident to hold or vote the Common Shares, other than as provided in the Investment Canada Act (Canada) (the "Investment Act"). The following discussion summarizes the material features of the Investment Act for a non-resident who proposes to acquire a controlling number of Common Shares. It is general only, it is not a substitute for independent advice from an investor's own advisor, and it does not anticipate statutory or regulatory amendments. Rockwell does not believe the Investment Act will have any affect on it or on its non-Canadian shareholders due to a number of factors including the nature of its operations and Rockwell's relatively small capitalization.

The Investment Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture (each an "entity") that is not a "Canadian" as defined in the Investment Act (a "non-Canadian"), unless after review the Director of Investments appointed by the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. The size and nature of a proposed transaction may give rise to an obligation to notify the Director to seek an advance ruling. An investment in the Common Shares by a non-Canadian other than a "WTO Investor" (as that term is defined in the Investment Act and which term includes entities which are nationals of or are controlled by nationals of member states of the World Trade Organization) when Rockwell was not controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of Rockwell and the value of the assets of Rockwell, as determined in accordance with the regulations promulgated under the Investment Act, was $5 million or more, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada's cultural heritage or national identity, regardless of the value of the assets of Rockwell. An investment in the Common Shares by a WTO Investor, or by a non-Canadian when Rockwell was controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of Rockwell and the value of the assets of Rockwell, as determined in accordance with the regulations promulgated under the Investment Act, was not less than a specified amount, which for 2005 exceeds $250 million. A non-Canadian would acquire control of Rockwell for the purposes of the Investment Act if the non-Canadian acquired a majority of the Common Shares. The acquisition of less than a majority but one-third or more of the Common Shares would be presumed to be an acquisition of control of Rockwell unless it could be established that, on the acquisition, Rockwell was not controlled in fact by the acquiror through the ownership of the Common Shares.

The foregoing assumes Rockwell will not engage in the production of uranium or own an interest in a producing uranium property in Canada, or provide any financial service or transportation service, as the rules governing these businesses are different.

Certain transactions relating to the Common Shares would be exempt from the Investment Act, including

(a) an acquisition of the Common Shares by a person in the ordinary course of that person's business as a trader or dealer in securities,

(b) an acquisition of control of Rockwell in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Act, and

(c) an acquisition of control of Rockwell by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of Rockwell, through the ownership of the Common Shares, remained unchanged.

Material Canadian Federal Income Tax Consequences for United States Residents

The following, in management's understanding, summarizes the principal Canadian federal income tax consequences generally applicable to the holding and disposition of Common Shares by a holder (in this summary, a "U.S. Holder") who, at all relevant times, (a) for the purposes of the Income Tax Act (Canada) (the "Tax Act"), is not resident in Canada, deals at arm's length with Rockwell, holds the Common Shares as capital property and does not use or hold the Common Shares in the course of carrying on, or otherwise in connection with, a business in Canada, and (b) for the purposes of the Canada-United States Income Tax Convention, 1980 (the "Treaty"), is a resident solely of the United States, has never been a resident of Canada, and has not held or used (and does not hold or use) Common Shares in connection with a permanent establishment or fixed base in Canada. This summary does not apply to traders or dealers in securities, persons who acquired their Common Shares in a transaction considered for purposes of the Tax Act to be an adventure or concern in the nature of trade, limited liability companies, tax-exempt entities, insurers, financial institutions (including those to which the mark-to-market provisions of the Tax Act apply), or any other U.S. Holder to which special considerations apply.

This summary is based on the current provisions of the Tax Act including all regulations there under, the Treaty, all proposed amendments to the Tax Act, the regulations and the Treaty publicly announced by or on behalf of the Minister of Finance to the date hereof, and the current published administrative practices of the Canada Customs and Revenue Agency. It has been assumed that all currently proposed amendments will be enacted as proposed and that there will be no other relevant change in any governing law or administrative practice, although no assurances can be given in these respects. This summary does not take into account provincial, U.S., state or other foreign income tax law or practice. The tax consequences to any particular U.S. Holder will vary according to the status of that holder as an individual, trust, corporation or other entity, the jurisdictions in which that holder is subject to taxation, and generally according to that holder's particular circumstances. Accordingly, this summary is not, and is not to be construed as, Canadian tax advice to any particular U.S. Holder. U.S. Holders should consult with their own tax advisors for advice with respect to their own particular circumstances.

Dividends paid or credited or deemed to be paid or credited to a U.S. Holder by Rockwell will normally be subject to Canadian withholding tax. Under the Treaty, the rate of withholding tax on dividends paid to a U.S. Holder that beneficially owns such dividends is generally limited to 15% of the gross amount of the dividend (or 5% if the U.S. Holder is a corporation and beneficially owns at least 10% of Rockwell's voting shares). Rockwell will be required to withhold the applicable withholding tax from any such dividend and remit it to the Canadian government for the U.S. Holder's account.

A U.S. Holder is not subject to tax under the Tax Act in respect of a capital gain realized on the disposition of a Common Share provided that the share is not "taxable Canadian property" to the holder thereof. If the Common Shares are listed on a prescribed stock exchange, which currently includes the American Stock Exchange, a Common Share generally will not be taxable Canadian property to a U.S. Holder if, at any time during the 60 months preceding the disposition, the U.S. Holder or persons with whom the U.S. Holder did not deal at arm's length alone or together owned, or had an interest or option in respect of 25% or more of Rockwell's issued shares of any class or series.

A U.S. Holder whose Common Shares do constitute taxable Canadian property, and who might therefore be liable for Canadian income tax under the Tax Act on a disposition or deemed disposition of such shares, will generally be relieved from such liability under the Treaty unless the value of the shares of the Company at the time of disposition is derived principally from real property situated in Canada within the meaning of the Treaty. Management of Rockwell believes that the value of Rockwell's Common Shares is not currently derived principally from real property situated in Canada. U.S. Holders whose Common Shares are taxable Canadian property should consult their own advisors regarding filing and other Canadian federal tax considerations.

The following is, in the opinion of Rockwell after consultation with its professional advisors, a general discussion of material United States federal income tax consequences, under current law, generally applicable to a U.S. Holder (as hereinafter defined) of common shares of Rockwell. This discussion does not address all potentially relevant federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder.

In addition, this discussion does not cover any state, local or foreign tax consequences, (see Item 10E "Taxation – Material Canadian Federal Income Tax Consequences for United States Residents" above). Accordingly, holders and prospective holders of common shares of Rockwell are urged to consult their own tax advisors about the specific federal, state, local, and foreign tax consequences to them of purchasing, owning and disposing of common shares of Rockwell, based upon their individual circumstances.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations, published Internal Revenue Service ("IRS") rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations. This discussion does not consider the potential effects, both adverse and beneficial, of any proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.

As used herein, a "U.S. Holder" means a holder of common shares of Rockwell who is a citizen or individual resident of the United States, a corporation or partnership created or organized in or under the laws of the United States or of any political subdivision thereof, an entity created or organized in or under the laws of the United States or of any political subdivision thereof which has elected to be treated as a corporation for United States federal income tax purposes (under Treasury Regulation Section 301.7701 -3), an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described in Section 7701(a)(30) of the Code. This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to specific provisions of federal income tax law, such as tax-exempt organizations, qualified retirement plans, individual retirement accounts and other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a "functional currency" other than the U.S. Dollar, shareholders subject to the alternative minimum tax, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services. This summary is limited to U.S. Holders who own common shares as capital assets and who own (directly and indirectly, pursuant to applicable rules of constructive ownership) no more than 5% of the value of the total outstanding stock of Rockwell. This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares. In addition, this summary does not address special rules applicable to United States persons (as defined in Section 7701(a)(30) of the Code) holding common shares through a foreign partnership or to foreign persons holding common shares through a domestic partnership.

To the extent that a distribution paid to a U.S. holder on its common stock is not an excess distribution and is not a non-taxable distribution paid from earnings and profits previously included in income by a U.S. holder that has made a QEF election, the gross amount of such distribution (including any amount deducted in respect of withholding taxes) will generally be subject to U.S. federal income tax as foreign source ordinary dividend income to the extent such a distribution is paid out of the Company's current or accumulated earnings and profits. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder's federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder's federal taxable income by those who itemize deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the extent that distributions exceed current or accumulated earnings and profits of Rockwell, they will be treated first as a return of capital up to the U.S. Holder's adjusted basis in the Common Shares and thereafter as gain from the sale or exchange of property. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. Dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. Dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. Dollars, will be ordinary income or loss. However, an individual whose realized gain does not exceed $200 will not recognize that gain, provided that there are no expenses associated with the transaction that meet the requirements for deductibility as a trade or business expense (other than travel expenses in connection with a business trip) or as an expense for the production of income.

Dividends paid on the common shares of Rockwell generally will not be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. A U.S. Holder which is a corporation and which owns shares representing at least 10% of the voting power and value of Rockwell may, under certain circumstances, be entitled to a 70% (or 80% if the U.S. Holder owns shares representing at least 20% of the voting power and value of Rockwell) deduction of the United States source portion of dividends received from Rockwell (unless Rockwell qualifies as a "foreign personal holding company" or a "passive foreign investment company," as defined below). Rockwell does not anticipate that it will earn any United States income, however, and therefore does not anticipate that any U.S. Holder will be eligible for the dividends received deduction.

Under current Treasury Regulations, dividends paid on Rockwell's common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the proceeds from a sale of Rockwell's common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 28% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder's U.S. federal income tax liability, provided the required information is furnished to the IRS.

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of common shares of Rockwell may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a Dollar-for-Dollar basis, while a deduction merely reduces the taxpayer's income subject to tax. This election is made on a year-by-year basis and generally applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder's United States income tax liability that the U.S. Holder's foreign source income bears to his or its worldwide taxable income. In the determination of the application of this limitation, the various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process. In addition, this limitation is calculated separately with respect to specific classes of income such as "passive income," "high withholding tax interest," "financial services income," "shipping income," and certain other classifications of income. Dividends distributed by Rockwell will generally constitute "passive income" or, in the case of certain U.S. Holders, "financial services income" for these purposes. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific, and U.S. Holders of common shares of Rockwell should consult their own tax advisors regarding their individual circumstances.

In general, U.S. Holders will recognize gain or loss upon the sale of common shares of Rockwell equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder's tax basis in the common shares of Rockwell. Preferential tax rates apply to long-term capital gains of U.S. Holders that are individuals, estates or trusts. In general, gain or loss on the sale of common shares of Rockwell will be long-term capital gain or loss if the common shares are a capital asset in the hands of the U.S. Holder and are held for more than one year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders that are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders that are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Set forth below are certain material exceptions to the above-described general rules describing the United States federal income tax consequences resulting from the holding and disposition of common shares:

United States income tax law contains rules governing "passive foreign investment companies" ("PFIC") which can have significant tax effects on U.S. Holders of foreign corporations. These rules do not apply to non-U.S. Holders. Section 1297 of the Code defines a PFIC as a corporation that is not formed in the United States if, for any taxable year, either (i) 75% or more of its gross income is "passive income," which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the corporation is not publicly traded and either is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of "passive income" is 50% or more. In the event that Rockwell qualifies as a PFIC for the fiscal year ending February 28, 2009 as well as in future fiscal years each U.S. Holder of Rockwell is urged to consult a tax advisor with respect to how the PFIC rules affect such U.S. Holder's tax situation.

Each U.S. Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC is subject to United States federal income taxation under one of three alternative tax regimes at the election of such U.S. Holder. The following is a discussion of such alternative tax regimes applied to such U.S. Holders of Rockwell. In addition, special rules apply if a foreign corporation qualifies as both a PFIC and a "controlled foreign corporation" (as defined below) and a U.S. Holder owns, actually or constructively, 10% or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation (See more detailed discussion at "Controlled Foreign Corporation" below).

A U.S. Holder who elects to treat Rockwell as a qualified electing fund ("QEF") will be subject, under Section 1293 of the Code, to current federal income tax for any taxable year to which the election applies in which Rockwell qualifies as a PFIC on his pro rata share of Rockwell's (i) "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), which will be taxed as long-term capital gain, and (ii) "ordinary earnings" (the excess of earnings and profits over net capital gain), which will be taxed as ordinary income, in each case, for the shareholder's taxable year in which (or with which) Rockwell's taxable year ends, regardless of whether such amounts are actually distributed. A U.S. Holder's tax basis in the common shares will be increased by any such amount that is included in income but not distributed.

The procedure a U.S. Holder must comply with in making an effective QEF election, and the consequences of such election, will depend on whether the year of the election is the first year in the U.S. Holder's holding period in which Rockwell is a PFIC. If the U.S. Holder makes a QEF election in such first year, i.e., a "timely" QEF election, then the U.S. Holder may make the QEF election by simply filing the appropriate documents at the time the U.S. Holder files his tax return for such first year. If, however, Rockwell qualified as a PFIC in a prior year during the U.S. Holder's holding period, then, in order to avoid the Section 1291 rules discussed below, in addition to filing documents, the U.S. Holder must elect to recognize under the rules of Section 1291 of the Code (discussed herein), (i) any gain that he would otherwise recognize if the U.S. Holder sold his stock on the qualification date or (ii) if Rockwell is a controlled foreign corporation, the U.S. Holder's pro rata share of Rockwell's post-1986 earnings and profits as of the qualification date.

The qualification date is the first day of Rockwell's first tax year in which Rockwell qualified as a QEF with respect to such U.S. Holder. For purposes of this discussion, a U.S. Holder who makes (i) a timely QEF election, or (ii) an untimely QEF election and either of the above-described gain-recognition elections under Section 1291 is referred to herein as an "Electing U.S. Holder." A U.S. Holder who holds common shares at any time during a year of Rockwell in which Rockwell is a PFIC and who is not an Electing U.S. Holder (including a U.S. Holder who makes an untimely QEF election and makes neither of the above-described gain-recognition elections) is referred to herein as a "Non-Electing U.S. Holder". An Electing U.S. Holder (i) generally treats any gain realized on the disposition of his Company common shares as capital gain; and (ii) may either avoid interest charges resulting from PFIC status altogether, or make an annual election, subject to certain limitations, to defer payment of current taxes on his share of Rockwell's annual realized net capital gain and ordinary earnings subject, however, to an interest charge. If the U.S. Holder is not a corporation, any interest charge imposed under the PFIC regime would be treated as "personal interest" that is not deductible.

In order for a U.S. Holder to make (or maintain) a valid QEF election, Rockwell must provide certain information regarding its net capital gains and ordinary earnings and permit its books and records to be examined to verify such information. Rockwell intends to make the necessary information available to U.S. Holders to permit them to make (and maintain) QEF elections with respect to Rockwell. Rockwell urges each U.S. Holder to consult a tax advisor regarding the availability of, and procedure for making, the QEF election.

A QEF election, once made with respect to Rockwell, applies to the tax year for which it was made and to all subsequent tax years, unless the election is invalidated or terminated, or the IRS consents to revocation of the election. If a QEF election is made by a U.S. Holder and Rockwell ceases to qualify as a PFIC in a subsequent tax year, the QEF election will remain in effect, although not applicable, during those tax years in which Rockwell does not qualify as a PFIC. Therefore, if Rockwell again qualifies as a PFIC in a subsequent tax year, the QEF election will be effective and the U.S. Holder will be subject to the rules described above for Electing U.S. Holders in such tax year and any subsequent tax years in which Rockwell qualifies as a PFIC. In addition, the QEF election remains in effect, although not applicable, with respect to an Electing U.S. Holder even after such U.S. Holder disposes of all of his or its direct and indirect interest in the shares of Rockwell. Therefore, if such U.S. Holder reacquires an interest in Rockwell, that U.S. Holder will be subject to the rules described above for Electing U.S. Holders for each tax year in which Rockwell qualifies as a PFIC.

In the case of a Non-Electing U.S. Holder, special taxation rules under Section 1291 of the Code will apply to (i) gains realized on the disposition (or deemed to be realized by reasons of a pledge) of his Rockwell common shares and (ii) certain "excess distributions," as defined in Section 1291(b), by Rockwell.

A Non-Electing U.S. Holder generally would be required to pro rate all gains realized on the disposition of his Rockwell common shares and all excess distributions on his Rockwell common shares over the entire holding period for the common shares. All gains or excess distributions allocated to prior years of the U.S. Holder (excluding any portion of the holder's period prior to the first day of the first year of Rockwell (i) which began after December 31, 1986, and (ii) for which Rockwell was a PFIC) would be taxed at the highest tax rate for each such prior year applicable to ordinary income. The Non-Electing U.S. Holder also would be liable for interest on the foregoing tax liability for each such prior year calculated as if such liability had been due with respect to each such prior year. A Non-Electing U.S. Holder that is not a corporation must treat this interest charge as "personal interest" which, as discussed above, is wholly non-deductible. The balance, if any, of the gain or the excess distribution will be treated as ordinary income in the year of the disposition or distribution, and no interest charge will be incurred with respect to such balance. In certain circumstances, the sum of the tax and the PFIC interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the U.S. Holder.

If Rockwell is a PFIC for any taxable year during which a Non-Electing U.S. Holder holds Rockwell common shares, then Rockwell will continue to be treated as a PFIC with respect to such Rockwell common shares, even if it is no longer definitionally a PFIC. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules discussed above for Non-Electing U.S. Holders) as if such Rockwell common shares had been sold on the last day of the last taxable year for which it was a PFIC.

Effective for tax years of U.S. Holders beginning after December 31, 1997, U.S. Holders who hold (actually or constructively) marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market annually (a "mark-to-market election"). If such an election is made, such U.S. Holder will generally not be subject to the special taxation rules of Section 1291 discussed above. However, if the mark-to-market election is made by a Non-Electing U.S. Holder after the beginning of the holding period for the PFIC stock, then the Section 1291 rules will apply to certain dispositions of, distributions on and other amounts taxable with respect to Rockwell common shares. A U.S. Holder who makes the mark-to-market election will include in income for each taxable year for which the election is in effect an amount equal to the excess, if any, of the fair market value of the common shares of Rockwell as of the close of such tax year over such U.S. Holder's adjusted basis in such common shares. In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holder's adjusted tax basis in the common shares over the fair market value of such shares as of the close of the tax year, or (ii) the excess, if any, of (A) the mark-to-market gains for the common shares in Rockwell included by such U.S. Holder for prior tax years, including any amount which would have been treated as a mark-to-market gain for any prior tax year but for the Section 1291 rules discussed above with respect to Non-Electing U.S. Holders, over (B) the mark-to-market losses for shares that were allowed as deductions for prior tax years. A U.S. Holder's adjusted tax basis in the common shares of Rockwell will be adjusted to reflect the amount included in or deducted from income as a result of a mark-to-market election. A mark-to-market election applies to the taxable year in which the election is made and to each subsequent taxable year, unless Rockwell common shares cease to be marketable, as specifically defined, or the IRS consents to revocation of the election. Because the IRS has not established procedures for making a mark-to-market election, U.S. Holders should consult their tax advisors regarding the manner of making such an election. No view is expressed regarding whether common shares of Rockwell are marketable for these purposes or whether the election will be available.

Under Section 1291(f) of the Code, the IRS has issued Proposed Treasury Regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by Non-Electing U.S. Holders that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. Generally, in such cases the basis of Rockwell common shares in the hands of the transferee and the basis of any property received in the exchange for those common shares would be increased by the amount of gain recognized. Under the Proposed Treasury Regulations, an Electing U.S. Holder would not be taxed on certain transfers of PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. The transferee's basis in this case will depend on the manner of the transfer. In the case of a transfer by an Electing U.S. Holder upon death, for example, the transferee's basis is generally equal to the fair market value of the Electing U.S. Holder's common shares as of the date of death under Section 1014 of the Code. The specific tax effect to the U.S. Holder and the transferee may vary based on the manner in which the common shares are transferred. Each U.S. Holder of Rockwell is urged to consult a tax advisor with respect to how the PFIC rules affect his or its tax situation.

Whether or not a U.S. Holder makes a timely QEF election with respect to common shares of Rockwell, certain adverse rules may apply in the event that both Rockwell and any foreign corporation in which Rockwell directly or indirectly holds shares is a PFIC (a "lower-tier PFIC"). Pursuant to certain Proposed Treasury Regulations, a U.S. Holder would be treated as owning his or its proportionate amount of any lower-tier PFIC shares, and generally would be subject to the PFIC rules with respect to such indirectly-held PFIC shares unless such U.S. Holder makes a timely QEF election with respect thereto. Rockwell intends to make the necessary information available to U.S. Holders to permit them to make (and maintain) QEF elections with respect to each subsidiary of Rockwell that is a PFIC.

Under the Proposed Treasury Regulations, a U.S. Holder who does not make a timely QEF election with respect to a lower-tier PFIC generally would be subject to tax (and the PFIC interest charge) on (i) any excess distribution deemed to have been received with respect to his or its lower-tier PFIC shares and (ii) any gain deemed to arise from a so-called "indirect disposition" of such shares. For this purpose, an indirect disposition of lower-tier PFIC shares would generally include (i) a disposition by Rockwell (or an intermediate entity) of lower-tier PFIC shares, and (ii) any other transaction resulting in a diminution of the U.S. Holder's proportionate ownership of the lower-tier PFIC, including an issuance of additional common shares by Rockwell (or an intermediate entity). Accordingly, each prospective U.S. Holder should be aware that he or it could be subject to tax even if such U.S. Holder receives no distributions from Rockwell and does not dispose of its common shares. Rockwell strongly urges each prospective U.S. Holder to consult a tax advisor with respect to the adverse rules applicable, under the Proposed Treasury Regulations, to U.S. Holders of lower-tier PFIC shares.

Certain special, generally adverse, rules will apply with respect to Rockwell common shares while Rockwell is a PFIC unless the U.S. Holder makes a timely QEF election. For example under Section 1298(b)(6) of the Code, a U.S. Holder who uses PFIC stock as security for a loan (including a margin loan) will, except as may be provided in regulations, be treated as having made a taxable disposition of such shares.

If more than 50% of the total combined voting power of all classes of shares entitled to vote or the total value of the shares of Rockwell is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships or corporation, or estates or trusts other than foreign estates or trusts (as defined by Code Section 7701(a)(31)), each of which own, actually or constructively, 10% or more of the total combined voting power of all classes of shares entitled to vote of Rockwell ("United States Shareholder"), Rockwell could be treated as a controlled foreign corporation ("CFC") under Subpart F of the Code. This classification would effect many complex results, one of which is the inclusion of certain income of a CFC which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFC's Subpart F income and are also subject to current U.S. tax on their pro rata shares of increases in the CFC's earnings invested in U.S. property. The foreign tax credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of Rockwell which is or was a United States Shareholder at any time during the five-year period ending on the date of the sale or exchange is treated as ordinary income to the extent of earnings and profits of Rockwell attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to United States Shareholders of the CFC. This rule generally will be effective for taxable years of United States Shareholders beginning after 1997 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders. Special rules apply to United States Shareholders who are subject to the special taxation rules under Section 1291 discussed above with respect to a PFIC. Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion. Rockwell does not believe that it currently qualifies as a CFC. However, there can be no assurance that Rockwell will not be considered a CFC for the current or any future taxable year.

Exhibits attached to this Form 20-F are also available for viewing at the offices of Rockwell, Suite 1020 – 800 West Pender Street, Vancouver, British Columbia V6C 2V6 or on request of Rockwell at 604-684-6365. Copies of Rockwell's financial statements and other continuous disclosure documents required under the British Columbia Securities Act are available for viewing on the internet at www.sedar.com.

The Company's operations do not employ financial instruments or derivatives that are market sensitive and the Company does not have financial market risks.

The Company minimizes its credit risk by reducing credit terms to 30 days on its sales.

The Company is equity financed and does not have any debt which would be subject to interest rate change risks other than capital lease obligations secured over plant and equipment.

The Company has capital lease obligations with several financial institutions.. The capital leases bear interest at rates linked to the prevailing prime rate of the relative financial institution, and are subject to interest rate change risk.

The Company operates in South Africa, and like other foreign entities operating there, is subject to currency exchange controls administered by the South African Reserve Bank, the country's central bank. A significant portion of the Company's funding structure for its South African operations consists of advancing loans to its subsidiaries incorporated in South Africa. The Company's ability to repatriate such funds once those subsidiaries are able to repay the loans, or to repatriate other funds such as operating profits should any develop, may be adversely affected by such exchange controls.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by our Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our company’s management, including our company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer evaluated our Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this annual report on Form 20-F. Based on this evaluation, these officers concluded that as of the end of the period covered by this Annual Report on Form 20-F, our disclosure controls and procedures were effective.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected.

Our Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our company’s internal control over financial reporting is designed to provide reasonable assurance, regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in Canada.

Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in Canada, and that our company’s receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the design and operation of our internal control over financial reporting as of February 28, 2010 based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation.

At February 28, 2010, management evaluated the effectiveness of the Company’s internal control over financial reporting and concluded that such internal control over financial reporting was effective and there were no material weaknesses identified by management.

This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

There were changes in internal control over financial reporting in the year ended February 28, 2010 that have materially affected or are reasonably likely to materially affect internal control over financial reporting.

Management remediated the material weakness that existed as at February 28, 2009 during the period ended February 28, 2010 by implementing the following remediation plans:

These programs were designed to reduce, although they may not completely eliminate, the risk of a material misstatement. The full effect of the extent of these measures will only be fully realised in the 2011 financial year.

Management is of the opinion that by implementing the above items and other actions it has taken to improve internal control over financial reporting, the material weaknesses in the Company’s internal control over financial reporting identified in the Company’s Annual Report on Form 20-F for the year ended February 28, 2009 have been remediated.

The current members of the audit committee are Mr. Willem Jacobs and Mr Richard Linnell The Board of Directors has determined that each of the members of the audit committee qualifies as a “financial expert” under the rules of the Securities and Exchange Commission, based on his education and experience. Each member of the audit committee is “independent”, as that term is defined in Section 803 of the NYSE Amex Company Guide. The Company is currently in the process of searching for additional audit committee members.

Rockwell has adopted a code of ethics that applies to Rockwell's chief executive officer, the chief financial officer, and other members of senior management, which can be viewed at the Company’s website www.rockwelldiamonds.com.

The following table discloses the aggregate fees billed for each of the last two fiscal years for professional services rendered by the Company's audit firm for various services.

Management of the Company requests approval from the audit committee for all audit and non-audit services to be provided by the Company's auditors. The audit committee pre-approves all such services with set maximum dollar amounts for each itemized service. During such deliberations, the audit committee assesses, among other factors, whether the services requested would be considered "prohibited services" as contemplated by the US Securities and Exchange Commission, and whether the services requested and the fees related to such services could impair the independence of the auditors.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

As previously disclosed in the Company’s Annual Report on Form 20-F for its fiscal year ended February 28, 2009, on December 16, 2008 the Board of Rockwell Diamonds Inc. resolved:

Davidson & Co. was asked to resign as auditor of the Company to facilitate the appointment of KPMG South Africa. Neither of Davidson & Co.’s reports on the Company’s financial statements for either of the past two years in which it provided such a report contained an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope, or accounting principles. The resignation of Davidson & Co. and appointment of KPMG as auditor of the Company was considered and approved by the Audit Committee of the Company. During the Company’s two most recent fiscal years any subsequent interim period preceding such resignation, there were no disagreements between the Company and Davidson & Co. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Title of Each Class	Name of each exchange on which registered
None	Not applicable

	International Financial Reporting Standards as issued
U.S. GAAP [ ]	by the International Accounting Standards Board [ ]	Other [X]

		PAGE

PART 1		2

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	2

ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	2

ITEM 3.	KEY INFORMATION	2

ITEM 4.	INFORMATION ON THE COMPANY	12

ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	55

ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	70

ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	95

ITEM 8.	FINANCIAL INFORMATION	99

ITEM 9.	THE OFFER AND LISTING	101

ITEM 10.	ADDITIONAL INFORMATION	103

ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	116

ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	117

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	118

ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	118

ITEM 15.	CONTROLS AND PROCEDURES	118

ITEM 16		120

ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	120

ITEM 16B.	CODE OF ETHICS	120

ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	120

ITEM 16D.	EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES	120

ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS .	120

ITEM 16F.	CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT	121

ITEM 16G.	CORPORATE GOVERNANCE	121

ITEM 17.	FINANCIAL STATEMENTS	122

ITEM 18.	FINANCIAL STATEMENTS	122

ITEM 19.	EXHIBITS	123

(In Canadian Dollars)		As at			As at			As at
		February 28			February 28			February 29			As at May 31
Balance Sheet Data		2010			2009			2008			2007			2006

Total assets (Cdn GAAP)	$	105,243,386		$	106,362,416		$	133,693,124		$	129,606,383		$	288,647
Total assets (US GAAP)		105,243,386			106,362,416			133,693,123			130,135,690			288,646
Total liabilities (Cdn GAAP)		27,400,354			34,059,381			34,643,769			52,564,080			1,146,070
Total liabilities (US GAAP)		27,400,354			34,059,381			34,643,769			52,034,772			1,146,070
Share capital (Cdn GAAP)		127,999,040			119,952,532			112,095,390			88,903,530			11,857,649
Share capital (US GAAP)		127,999,040			119,952,532			112,095,390			88,903,530			11,857,649
(Deficit) (Cdn GAAP)		(49,020,317	)		(41,982,624	)		(29,006,662	)		(19,603,634	)		(13,238,492	)
(Deficit) (US GAAP)		(49,020,317	)		(41,982,624	)		(29,006,662	)		(19,603,634	)		(13,696,885	)
Shareholders’ equity (Cdn GAAP)		77,194,091			70,421,026			87,114,807			71,592,842			(857,423	)
Shareholders’ equity (US GAAP)		77,843,032			72,303,035			99,049,355			77,571,611			(857,424	)
Weighted Average No. Shares		267,164,309			237,924,152			196,428,551			55,418,242			23,640,123

						Nine months
		Year ended		Year ended		ended
		February 28		February 28		February 29		Year ended May 31

Statement of Operations Data		2010		2009		2008		2007		2006
Revenues (US and Cdn GAAP)	$	29,776,933	$	34,330,078	$	36,038,106	$	10,103,328	$	Nil
Loss for the period⁽¹⁾(Cdn GAAP)		7,037,693		12,975,962		9,403,028		6,365,142		1,600,673
Loss for the period⁽¹⁾(US GAAP)		7,037,693		12,975,962		9,403.028		6,365,142		1,553,817
Loss per share (Cdn GAAP)	$	0.03	$	0.05	$	0.05	$	0.11	$	0.07
Loss per share (US GAAP)	$	0.03	$	0.05	$	0.05	$	0.11	$	0.07

	Years Ended February 28		Nine Months	Years Ended May 31
			Ended
			February 29
	2010	2009	2008	2007	2006
End of Period	0.9596	0.7870	1.0206	0.9347	0.9079
Average for Period	0.8996	0.9056	0.9831	0.8800	0.8521
High for Period	0.9755	1.0161	1.0905	0.9347	0.9099
Low for Period	0.7692	0.7711	0.9298	0.8437	0.7951

	High	Low
February 2010	0.9597	0.9316
March 2010	0.9888	0.9596
April 2010	1.0039	0.9803
May 2010	0.9885	0.9278
June 2010	0.9805	0.9429
July 2010	0.9724	0.9381

1.	The legal name of the Registrant is "Rockwell Diamonds Inc."

2.	Rockwell was incorporated under the Company Act (British Columbia) (the predecessor legislation to the Business Corporations Act (British Columbia)) on November 10, 1988 under the name "Annabel Gold Mines Inc."

3.	The Company changed its name to "Carissa Mining Corporation" on January 24, 1994. On October 26, 1995, the Company changed its name to "Rockwell Ventures Inc.", consolidated its share capital on the basis of five shares to one and subsequently increased its authorized share capital to 200,000,000 Common Shares without par value.

4.	On December 29, 2004, Rockwell increased its authorized share capital to consist of an unlimited number of Common Shares without par value.

5.	At the Company's Annual and Extraordinary General Meeting held on November 28, 2005, the Company's shareholders approved the creation of a class of preferred shares and the consolidation of the Company's Common Shares on a four old shares for one new basis. Regulatory approval of this capital reorganization was received on January 27, 2006.

6.	The Company changed its name from "Rockwell Ventures Inc." on May 14, 2007 to "Rockwell Diamonds Inc."

7.	The principal events in the development of Rockwell's business are:

	(i)	In June 2006, Rockwell entered into an agreement to acquire (the "Durnpike Acquisition") all of the shares and loans in Durnpike Investments (Pty) Limited ("Durnpike"), a private South African company, from eight arm's length individuals (the "Vendors"), for consideration payable in the common shares of Rockwell ("Common Shares") on specified dates described in Item B. Business Overview – Alluvial Diamond Properties below. Durnpike held an interest and/or rights in four alluvial diamond properties in South Africa and the Democratic Republic of the Congo. These were:

		•	Holpan/Klipdam Property in South Africa ("RSA or "South Africa")
		•	Wouterspan Property in South Africa
		•	Galputs Mineral Project in South Africa.
		•	Kwango River Project in the Democratic Republic of the Congo ("DRC"), which was subsequently cancelled for Rockwell to focus solely on it’s South African operation.

		On January 31, 2007, all the conditions precedent to implementation of the Durnpike Acquisition were fulfilled. The Company also received the necessary regulatory approvals in Canada and South Africa.

	(ii)	As a result of the acquisition of Durnpike, the Company assumed the option to purchase the Makoenskloof property.

	•	the rights to prospect, explore and/or mine precious stones and/or other minerals and/or metals held directly or indirectly by THO in the Saxendrift area of the Northern Cape;
	•	a series of large remnant alluvial diamond terraces;
	•	the plant, machinery, equipment and other movable assets owned and/or used by THO;
	•	certain employees of THO; and
	•	a rehabilitation liability which will be taken over by the Company.

Year	Exploration Expenditures Deferred (capitalized or invested)		Mineral Property Acquisition Cost Capitalized		Property, Plant and Equipment Acquired		Exploration Expenditures Expensed (excluding related stock-based compensation)		Mineral Property Acquisitions Expensed
2010	nil	$	1,703,195	$	981,561	$	97,805	$	657,634
2009	nil	$	5,351,500	$	18,937,995	$	498,739		nil
2008	nil	$	1,822,138	$	26,751,592	$	604,169		nil
2007	nil	$	18,696,487	$	46,340,914	$	1,371,351		nil

	The Company held a 100% interest in the Ricardo Property, a copper prospect located within the Calama Mining District, Chile that it acquired in 1998. Exploration was carried out by two companies who optioned the property in 2000 and 2004. Since that time, Rockwell has sought partners to continue exploration or to divest of the property. In July 2008, the Ricardo property was acquired by Hunter Dickinson Acquisitions Inc., a company with certain directors and officers in common with Rockwell. No significant divestitures have occurred in the years presented.

10.	Etruscan Diamonds Limited

	The Company has signed a term sheet on March 10, 2010 with Etruscan Diamonds Limited whereby the Company proposes to purchase Etruscan’s Blue Gum diamond operation in the Ventersdorp region, South Africa. The acquisition is for 74% of the operation with the balance owned pursuant to South Africa’s Black Economic Empowerment regime. The price to be paid to Etruscan is an amount not exceeding ZAR33.5 million (approximately $4.7 million) payable in Rockwell shares valued at $0.068 each. The Company will also assume certain non-material property maintenance obligations effective on signature of the term sheet and other financial obligations upon completion of the acquisition.

11.	Flawless Diamonds Trading House (Pty) Limited

	On April 21, 2010 the Company acquired a 20% shareholding in Flawless Diamonds Trading House (Pty) Limited (“Flawless”) from Hennie van Wyk for the amount of $95,686. Flawless is a registered diamond broker which provides specialist diamond valuation, marketing and tender sales services to the Company.

	Through it’s shareholding, Rockwell will have the ability to exercise significant influence over the operations of Flawless and as a result will equity account the results of Flawless in fiscal 2011 from the effective date of acquiring it’s shareholding.

Summarised financial information of Flawless

Financial Position as at February 28, 2010
Total Assets		5,159,027
Total Liabilities		4,672,164
Net Assets		486,863

Financial Performance for the year ended February 28, 2010
Total Revenue		36,813.912
Total profit for the period		168,712
Capital commitments and contingent liabilities of associate		Nil

12.	(i) PALA TAKE-OVER BID - September 9, 2008

	On September 9, 2008, Pala Investments Holding Limited (“Pala”), a Swiss based investment fund with an approximately 17% shareholding in Rockwell through its indirect wholly-owned subsidiary 0833824 B.C. Ltd., made an unsolicited offer to purchase all of the outstanding common shares of Rockwell for $0.36 per share.

	In response to the offer, the Board of Directors established a Special Committee of its independent directors. The Special Committee, assisted by its independent financial and legal advisors, carefully reviewed and considered all aspects of Pala’s offer and, based on that review, unanimously recommended that Rockwell shareholders should reject the offer as it fell significantly short of providing fair value.

	The Board of Directors’ rejected the bid for the following key reasons:
	•	The offer significantly undervalued Rockwell’s assets and growth potential;
	•	The Special Committee’s independent financial advisor had determined that the consideration under the Offer was inadequate, from a financial point of view, to Shareholders;
	•	The Offer was highly conditional; and
	•	The timing of the offer was opportunistic given the turndown in the diamond business.

	Pala withdrew its bid on November 3, 2009 after further discussions with the Company. The Company subsequently appointed a Pala nominee and two new independent directors to the Board.

		As at February 28, 2010
		Cost		Accumulated		Net book
				Amortization		value
				and
				Impairments
Land and Buildings	$	7,226,428	$	598,462	$	6,627,966
Processing plant and equipment		66,230,352		25,074,689		41,155,663
Processing plant and equipment under capital lease obligation		13,553,529		3,782,247		9,771,282
Office equipment		946,759		492,287		454,472
Vehicles and light equipment		1,675,705		894,352		781,353
	$	89,632,773	$	30,842,037	$	58,790,736

Metric Units	Multiply by	Imperial Units
hectares	2.471	= acres
meters	3.281	= feet
kilometers	0.621	= miles (5,280 feet)
grams	0.032	= ounces (troy)
tonnes	1.102	= tons (short) (2,000 lbs)
grams/tonne	0.029	= ounces (troy)/ton

Period	Calculation² (Production/Deemed Carats Available)	Depletion³ Percentage
February 1, 2007 to May 2007	7007 /387,921	1.80%
June 2007 to February 2008	17,746 /387,921	4.58%
March 2008 to February 2009	15,066 /387,921	3.88%
March 2009 to February 2010	16,068 /387,921	4.14%
Total	55,887 /387,921	14.40%

Period	Calculation² (Production/Deemed Carats Available)	Depletion³ Percentage
March 2008 to February 2009	2,437 / 103,155	2.36%
March 2009 to February 2010	8,834 / 103,155	8.56%
Total	11,271/103,155	10.92%

	1.	To consider and, if deemed advisable, to pass a special resolution of the shareholders to remove all the directors of the Company;

	2.	If Resolution #1 passed, then to elect new directors of the Company in place of the removed directors comprising: of Marthinus Von Wielligh, Phillip Reynolds, Sandile Zungu, Hennie van Wyk, William Fisher, Terrence Janes, and Greg Radke. The effect of these two resolutions would be to remove the executive directors from office, namely David Copeland (chairman), Mark Bristow, and John Bristow- CEO and replace them with Messrs Von Wielligh, Reynolds and van Wyk.

	3.	To amend and then terminate the Company’s Shareholder Rights Plan Agreement

	a)	N9C, a wholly owned subsidiary incorporated under the laws of the Cayman Islands of which Rockwell owns a direct 100% interest

	b)	N10C, a wholly owned subsidiary incorporated under the laws of the Cayman Islands of which N9C owns a direct 100% interest

	c)	Rockwell Resources RSA (Pty) Ltd. (“Rockwell RSA”), a wholly owned subsidiary incorporated under the laws of the South Africa of which N10C owns a direct 100% interest.

	d)	Durnpike Investments (Pty) Ltd (“Durnpike”) a wholly owned subsidiary incorporated under the laws of the South Africa of which Rockwell Resources RSA owns a direct 100% interest.

	e)	HC Van Wyk Diamonds Ltd (“HCVW”) is a subsidiary incorporated under the laws of the South Africa of which Rockwell Resources RSA owns a direct 51% interest and RDI holds a 23% interest in the Van Wyk Diamond Group (“VWDG”) assets. HC Van Wyk Diamonds Ltd is a diamond producer that conducts diamond exploration and mining on the Holpan/Klipdam properties, as well as mining on the Wouterspan and Makoenskloof properties.

		A minority interest of 15% is recognized with the consolidation of Klipdam Mining until such time as the outstanding loan by the BEE group is fully repaid, at which time the Company will increase the non-controlling interest to 26%. As a consequence the outstanding loan has not been recognized as a receivable in the accounting records of the Group.

	g)	Saxendrift Mine (Pty) Ltd a subsidiary incorporated under the laws of the Republic of South Africa in which Rockwell RSA acquired a 74% interest in April 2008. Saxendrift Mine (Pty) Ltd is a diamond producer that conducts diamond exploration and mining on the Saxendrift and Niewejaarskraal properties.

		No minority interest is recognized with the consolidation of Saxendrift Mine (Pty) Ltd until such time as the outstanding loan by the BEE group is fully repaid, at which time the Company will increase the non-controlling interest to 26% and consolidate 74% of the results of operations. As a consequence the outstanding loan has not been recognized as a receivable in the accounting records of the Group.

Production Periods	HCVW¹& Klipdam	Saxendrift	Total Production
February 1, 2007 to May 2007	7,007	-	7,007
June 2007 to February 2008	17,746	-	17,746
March 2008 to February 2009	15,066	2,437	17,503
March 2009 to February 2010	16,068	8,834	24,902
	55,887	11,271	67,158

Holpan and Klipdam Mineral Resources
				Deemed Carats Available
	Inferred Resources	Indicated Resources (1)		Inferred Resources	Indicated Resources	Total
Description of Gravel Resource	Volume	Volume	Grade
Description of Gravel Resource	(cubic meters)	(cubic meters)	(carats/100 cubic meters)
Holpan Fluvial- alluvial Gravel	294,000		0.74	2,176		2,176
Holpan Rooikoppie gravel	5,643,000	331,348	0.74	41,758	2,452	44,210
Klipdam Fluvial- alluvial Gravel	1,504,163		0.91			-
Klipdam Fluvial- alluvial Gravel	1,504,163			13,688		13,688
Klipdam Rooikoppie gravel	1,312,000	239,560		11,939	2,180	14,119
TOTAL	8,753,163	570,908	0.84	69,561	4,632	74,193

Wouterspan Mineral Resources
				Deemed Carats Available
	Inferred Resources	Indicated Resources		Inferred Resources	Indicated Resources	Total
	Volume	Volume	Grade²
Description of Gravel Resource	(cubic meters)	(cubic meters)	(carats/100 cubic meters)
Rooikoppie	5,911,000	716,769		41,377	5,017	46,394
Fluvial-alluvial	31,863,000	4,311,167	0.7	223,041	30,178	253,219
TOTAL	37,774,000	5,027,936	0.7	264,418	35,195	299,613

				333,979	39,827	373,806

Saxendrift Mineral Resources
				Deemed Carats Available
	RESOURCE	Volume ⁽¹⁾	Grade
MINING AREA	CLASSIFICATION	(cubic meters)	(carats/100 cubic meters)	Inferred Resources	Indicated Resources	Total
Saxendrift	Indicated 1	-	1.32		-	-
Terrace A	Indicated 2	2,071,936	0.8		16,575	16,575
Saxendrift	Indicated	1,774,660	1.15
Terrace B					20,409	20,409
TOTAL Indicated		3,846,596	1.01		36,984	36,984
Saxendrift	Inferred	3,629,127	0.8
Terrace A				29,033		29,033
Saxendrift	Inferred	86,476	0.68
Terrace B				588		588
Stockpiles	Inferred	642,540	0.29	1,863		1,863
TOTAL Inferred		4,358,143	0.72	31,484	36,984	68,468

Kwartelspan Mineral Resources
			Deemed Carats Available
Resource classification	Volume	Grade
Resource classification	(cubic meters)	(carats/100 cubic meters)	Inferred Resources	Indicated Resources	Total
Inferred	1,384,577	1.5	20,769		20,769

			52,253	36,984	89,237

Property Name	Area (ha)	Mineral Right	Permit Number	Renewal Date
Remaining extent of Holpan 161	2,370.0518	Mineral Lease K55/2000S	ML 1/2002	09 November 2014 (Old Order ML conversion application lodged on 07 July 2008. Accepted by DME on 18 July 2008 – in progress)
Remaining extent of Klipdam 157	1,466.0095	(NC)003MRC	Protocol 266/2007	06 December 2022 (This permit is currently under Section 11 cession from Klipdam Mining (Pty) Ltd to HCVWD. Submitted on 16 May 2008)
Erf 1, Windsorton	183.8177	(NC) 30/5/1/1/2/119 3PR		The Prospecting Right was granted on 07 November 2008, and extends to February 2011.

Description of Gravel Resource	RESOURCE CLASSIFICATION	Volume⁽¹⁾⁽³⁾(cubic meters)	Grade (carats/100 cubic meters)	Value (US$/carat)
Holpan Rooikoppie gravel	Indicated	331,348	0.74	2008 -1,157 2009⁽²⁾- 671
Klipdam Rooikoppie gravel	Indicated	239,560	0.91	2008 - 3,892 2009⁽²⁾- 915
TOTAL	Indicated	570,908	0.84

(1)	Volumes fully diluted of sampling and mining for the period 2008-Feb2009
(2)	Modelled values for 2009 (by Rockwell, 2009)
(3)	The resource estimated per technical report dated February 28, 2009, adjusted for production volume during fiscal 2010.

Description of Gravel Resource	RESOURCE CLASSIFICATION	Volume ⁽¹⁾(cubic meters)	Grade (carats/100 cubic meters)	Value (US$/carat)
Holpan Fluvial- alluvial Gravel	Inferred	294,000	0.74	2008 -1,157 2009⁽²⁾- 671
Holpan Rooikoppie gravel	Inferred	5,643,000	0.74	2008 -1,157 2009⁽²⁾- 671
Klipdam Fluvial- alluvial Gravel	Inferred	1,504,163	0.91	2008 - 3,892 2009⁽²⁾- 915
Klipdam Rooikoppie gravel	Inferred	1,312,000	0.91	2008 - 3,892 2009⁽²⁾- 915
TOTAL	Inferred	8,753,163	0.84

(1)	Volumes fully diluted of sampling and mining for the period 2009-Feb2010
(2)	Modelled values for 2010 (by Rockwell, 2009)

	(1)	A new order Mining Right was granted April 6, 2009 but has not yet been executed.

	(2)	An application (208MR) to convert to a Mining Right, along with the consolidation of all the Wouterspan permits, was submitted to the DME on 21 November, 2008.

	(3)	The renewal was accepted by the DME on 04/09/2007 and is being processed.

	(4)	Granted. 08/08/2007-07/08/2009

	(5)	Granted. 08/08/2007-07/08/2009

	(6)	Granted. 09/11/2007 -08/11/2009

Description of Gravel Resource	Resource Classification	Volume (cubic meters)	Grade⁽²⁾(carats/100 cubic meters)	Value ³ (US$/carat)
Rooikoppie	INDICATED	716,769	0.70	1,511
Fluvial-alluvial	INDICATED	4,311,167	0.70	1,511
TOTAL	INDICATED	5,027,936	0.70	1,511

(1)	Although the volumes of Rooikoppie and Fluvial-Alluvial gravels are estimated separately, the processing combines them, so separate grade determinations are not possible.

(2)	The average diamond value given relates to October 2008, as this is the figure that prices will have to achieve before the new process plant will be constructed and the mine is put back into full production.

(1)	“Total” figure rounded off in table 4a.

(2)	Although the volumes of Rooikoppie and Fluvial-Alluvial gravels are estimated separately, the processing combines them, so separate grade determinations are not possible).

(3)	The average diamond value given relates to October 2008, as this is the figure that prices will have to achieve before the new process plant will be constructed and the mine is put back into full production.

Saxendrift Mine	Kwartelspan Project
• Saxendrift 20 (Ptn 12, 13, 16, 20, 24, 25, Re/Farm, and Re/Ptn) • Annex Saxesdrift 21 (Re/Ptn and PaardePan Ptn(Ptn 1)	* Kransfontein 19 (Ptn (Ptn1)) * Kwartelspan 25 (Re/Ptn)

MINING AREA	Resource Classification	Volume⁽²⁾ (cubic meters)	Grade⁽¹⁾ (carats/100 cubic meters)	Value (US$/carat)
Saxendrift Terrace A	Indicated 1	-	1.32	2,154
Saxendrift Terrace A	Indicated 2	2,071,936	0.80	2,154
Saxendrift Terrace B	Indicated	1,774,660	1.15	1,075
Total/Average Saxendrift Mine Indicated		3,846,596	1.01

Resource Classification	Volume (cubic meters)	Grade (carats/100 cubic meters)	Value (US$/carat)
INFERRED	1,384,577	1.50	793