Rockwell Recommends Shareholders Reject Hostile Pala Bid

Rockwell Recommends Shareholders Reject Hostile Pala Bid

Rockwell Diamonds Inc. announced that its Board of Directors, based on the recommendation of its Special Committee of independent directors, unanimously recommends that Rockwell shareholders reject the unsolicited offer by Pala Investments Holdings Limited (“Pala”) to acquire all of the outstanding shares of Rockwell for $0.36 per share. After careful consideration, including consultation with its independent financial and legal advisors, Rockwell’s Board concluded that the Offer significantly undervalues Rockwell and is not in the best interests of its shareholders.

In its Directors’ Circular, filed today with securities regulators and mailed to security holders, Rockwell’s Board strongly recommends that all Rockwell shareholders reject the Offer and not tender their shares.

“The Offer significantly undervalues Rockwell and would deprive our shareholders of significant upside potential from the strong production growth we anticipate over the next months and years,” said John Bristow, President, Chief Executive Officer and director of Rockwell. “Our track record and strategic plan point to superior value creation for our shareholders than the inadequate premium offered by Pala. Our Special Committee and Board of Directors unanimously determined that the Offer is inadequate and unfair. There is no rationale for accepting the Pala bid and many reasons to reject it.”

Mr. Bristow further commented that “the highly conditional nature of Pala’s Offer, the misleading claims made in their conference call on September 16, 2008 and in their Offering Circular, and Pala’s apparent lack of understanding of Rockwell’s business, leads to questions regarding the seriousness of Pala’s Offer and their intent to follow through.”

“With a proven track record of resource growth and a strong and experienced management team, we believe Rockwell is poised to deliver superior shareholder returns. The Board of Directors is pursuing various options to maximize shareholder value, which include advancing Rockwell’s growth and acquisition strategy, increasing production and discussions with other third parties. We believe that given sufficient time to evaluate alternative options, the Company may be able to source superior value-creating opportunities,” said Mr. Bristow.

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