---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C.
20549

FORM 20-F/AAmendment No. 2

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

OR

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

For the fiscal year ended February 28, 2009

OR

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

For the transition period from _______________to
_______________

OR

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

Date of event requiring this shell company report
_______________

Commission file number 000-30588

ROCKWELL DIAMONDS
INC.(Exact name of Registrant specified in its charter)

NOT APPLICABLE(Translation of Registrant's
name into English)

BRITISH COLUMBIA, CANADA(Jurisdiction of
incorporation or organization)

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)

COMMON SHARES WITHOUT PAR VALUE(Title of
Class)

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- ii -

Securities registered or to be registered pursuant to Section
12(b) of the Act.

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

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

Number of outstanding shares of Rockwell's only class of capital
stock as at February 28, 2009.

237,924,152  Common Shares without Par Value

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 1934during 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 [X]       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.

|[   ]  Large Accelerated Filer | [   ]   Accelerated Filer | [X]   Non Accelerated Filer
|------------------------------ | ------------------------- | ---------------------------

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- ii -

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

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

If "Other" has been check in response to the previous
question, 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 1934subsequent to the distribution of
securities under a plan confirmed by a court.

NOT APPLICABLE

Currency and Exchange Rates

All monetary amounts contained in this Annual Report are, unless
otherwise indicated, expressed in Canadian dollars. On February 27, 2009 the
Bank of Canada noon rate for Canadian Dollars was US$1.00: Cdn$1.2707 (see Item
3A for further historical Exchange Rate Information).

NOTE REGARDING FORWARD LOOKING STATEMENTS

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.

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- ii -

EXPLANATORY NOTE

This Annual Report on Form 20-F is being amended in response to a comment letter dated November 19, 2009 from the Securities and Exchange Commission in order to:  (i) provide certain information that was inadvertently not included on the cover of the 20-F as originally filed, (ii) revise the Company’s disclosure regarding changes in internal control over financial reporting, (iii) revise the certifications included in Exhibit 12.1 and 12.2 to comply with Rule 13a-14(a), (iv) provide a revised auditor report together with the report from the Company’s predecessor auditor and (v) amend certain of the notes to the Company’s audited financial statements.

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|T A B L E   
O F    C O N T E N T S
|-----------------------------------

|                |                                                                                    | PAGE
|--------------- | ---------------------------------------------------------------------------------- | ----
|ITEM
      1.   | IDENTITY
      OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                        | 1   
|ITEM
      2.   | OFFER
      STATISTICS AND EXPECTED TIMETABLE                                      | 1   
|ITEM
      3.   | KEY
      INFORMATION                                                              | 1   
|ITEM
      4.   | INFORMATION
      ON THE COMPANY                                                   | 11  
|ITEM
      4.A. | UNRESOLVED
      STAFF COMMENTS                                                    | 41  
|ITEM
      5.   | OPERATING
      AND FINANCIAL REVIEW AND PROSPECTS                                 | 45  
|ITEM
      6.   | DIRECTORS,
      SENIOR MANAGEMENT AND EMPLOYEES                                   | 57  
|ITEM
      7.   | MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            | 81  
|ITEM
      8.   | FINANCIAL
      INFORMATION                                                        | 85  
|ITEM
      9.   | THE
      OFFER AND LISTING                                                        | 86  
|ITEM
      10.  | ADDITIONAL
      INFORMATION                                                       | 88  
|ITEM
      11.  | QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 102 
|ITEM
      12.  | DESCRIPTION
      OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 103 
|ITEM
      13.  | DEFAULTS,
      DIVIDEND ARREARAGES AND DELINQUENCIES                              | 104 
|ITEM
      14.  | MATERIAL
      MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 104 
|ITEM
      15.  | CONTROLS
      AND PROCEDURES                                                      | 104 
|ITEM
      16.  | AUDIT
      COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES AND EXEMPTIONS              | 107 
|ITEM
      17.  | FINANCIAL
      STATEMENTS                                                         | 109 
|ITEM
      18.  | FINANCIAL
      STATEMENTS                                                         | 109 
|ITEM
      19.  | EXHIBITS                                                                           | 110 

---

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The following table summarizes selected consolidated financial
data for Rockwell Diamonds Inc. (the "Company" or "Rockwell" or the
"Registrant") for the year ended February 28, 2009, the nine months ended
February 29, 2008 and the year ended May 31, 2007, 2006 and 2005. 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.

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 Page 2 

|(In Canadian Dollars)                 |   | As at       |   |   | As at       |   |   |             |   |   |              |   |   |             |  
|------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | - | - | ------------ | - | - | ----------- | -
|                                      |   | February 28 |   |   | February 29 |   |   |             |   |   | As at May 31 |   |   |             |  
|Balance Sheet Data                    |   | 2009        |   |   | 2008        |   |   | 2007        |   |   | 2006         |   |   | 2005        |  
|Total assets (Cdn GAAP)               | $ | 106,362,416 |   | $ | 133,693,124 |   | $ | 129,606,38  |   | $ | 288,647      |   | $ | 659,577     |  
|Total assets (US GAAP)                |   | 106,362,416 |   |   | 133,693,124 |   |   | 130,135,690 |   |   | 288,646      |   |   | 612,720     |  
|Total liabilities (Cdn GAAP)          |   | 35,941,390  |   |   | 46,578,317  |   |   | 58,013,541  |   |   | 1,146,070    |   |   | 29,976      |  
|Total liabilities (US GAAP)           |   | 35,941,390  |   |   | 46,578,317  |   |   | 58,013,541  |   |   | 1,146,070    |   |   | 29,976      |  
|Share capital (Cdn GAAP)              |   | 119,952,532 |   |   | 112,095,390 |   |   | 88,903,530  |   |   | 11,857,649   |   |   | 11,815,792  |  
|Share capital (US GAAP)               |   | 119,952,532 |   |   | 112,095,390 |   |   | 88,903,530  |   |   | 11,857,649   |   |   | 11,815,792  |  
|(Deficit) (Cdn GAAP)                  |   | (41,982,624 | ) |   | (29,006,662 | ) |   | (19,603,634 | ) |   | (13,238,492  | ) |   | (11,637,819 | )
|(Deficit) (US GAAP)                   |   | (41,982,624 | ) |   | (29,006,662 | ) |   | (20,062,027 | ) |   | (13,696,885  | ) |   | (12,740,977 | )
|Shareholders equity (Cdn
      GAAP) |   | 70,421,026  |   |   | 87,114,807  |   |   | 71,592,842  |   |   | 857,423      |   |   | 629,601     |  
|Shareholders equity (US GAAP)        |   | 70,421,026  |   |   | 87,114,807  |   |   | 71,592,841  |   |   | 857,424      |   |   | 582,744     |  
|Weighted Average No. Shares           |   | 237,924,152 |   |   | 196,428,551 |   |   | 55,418,242  |   |   | 23,640,123   |   |   | 23,776,122  |  

|                               |   |             |  |   | Nine months |  |   |                   |  |   |           |  |   |           | 
|------------------------------ | - | ----------- |  | - | ----------- |  | - | ----------------- |  | - | --------- |  | - | --------- | 
|                               |   | Year ended  |  |   | ended       |  |   |                   |  |   |           |  |   |           | 
|                               |   | February 28 |  |   | February 29 |  |   | Year ended May 31 | 
|                               |   |             |  |   |             |  |   |                   |  |   |           |  |   |           | 
|Statement of Operations Data   |   | 2009        |  |   | 2008        |  |   | 2007              |  |   | 2006      |  |   | 2005      | 
|Revenues (US and Cdn GAAP)     | $ | 34,633,477  |  | $ | 36,149,308  |  | $ | 10,103,328        |  | $ | Nil       |  | $ | Nil       | 
|Loss for the year(1)(Cdn GAAP) |   | 12,975,962  |  |   | 9,403,028   |  |   | 6,365,142         |  |   | 1,600,673 |  |   | 1,485,694 | 
|Loss for the year(1)(US GAAP)  |   | 12,975,962  |  |   | 9,403.028   |  |   | 6,365,142         |  |   | 1,553,817 |  |   | 1,485,694 | 
|Loss per share (Cdn GAAP)      | $ | 0.05        |  | $ | 0.05        |  | $ | 0.11              |  | $ | 0.07      |  | $ | 0.06      | 
|Loss per share (US GAAP)       | $ | 0.05        |  | $ | 0.05        |  | $ | 0.11              |  | $ | 0.07      |  | $ | 0.06      | 

Notes:

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

No cash or other dividends have been declared.

Annual Exchange Rates

Except as otherwise indicated, all dollar amounts are stated in
Canadian dollars, Rockwell's reporting currency. 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:

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 Page 3 

Exchange Rates

|                   |  | Year Ended  |  |  | Nine Months |  |  | Years Ended May 31 | 
|------------------ |  | ----------- |  |  | ----------- |  |  | ------------------ | 
|                   |  | February 28 |  |  | Ended       |  |  |                    | 
|                   |  |             |  |  | February 29 |  |  |                    | 
|                   |  | 2009        |  |  | 2008        |  |  | 2007               | 
|End of Period      |  | 0.7870      |  |  | 1.0206      |  |  | 0.9347             | 
|Average for Period |  | 0.9045      |  |  | 0.8831      |  |  | 0.8800             | 
|High for Period    |  | 1.0006      |  |  | 1.0339      |  |  | 0.9347             | 
|Low for Period     |  | 0.8031      |  |  | 0.9338      |  |  | 0.8437             | 

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:

Exchange Rates

|               |  | High   |  |  | Low    | 
|-------------- |  | ------ |  |  | ------ | 
|March 2008     |  | 1.0241 |  |  | 0.9713 | 
|April 2008     |  | 1.0002 |  |  | 0.9682 | 
|May 2008       |  | 1.0179 |  |  | 0.9761 | 
|June 2008      |  | 1.0052 |  |  | 0.9690 | 
|July 2008      |  | 1.0025 |  |  | 0.9733 | 
|August 2008    |  | 0.9768 |  |  | 0.9332 | 
|September 2008 |  | 0.9711 |  |  | 0.9241 | 
|October 2008   |  | 0.9447 |  |  | 0.7695 | 
|November 2008  |  | 0.8713 |  |  | 0.7721 | 
|December 2008  |  | 0.8423 |  |  | 0.7688 | 
|January 2009   |  | 0.8503 |  |  | 0.7834 | 
|February 2009  |  | 0.8224 |  |  | 0.7855 | 

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

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.

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 Page 4 

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
very 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.

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 Page 5 

Risks Associated With Mining

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 discovers a mineral reserve, there can
be no assurance that the related property will be developed.

Even if Rockwell eventually discovers a mineral reserve on one
or more of its properties, there can be no assurance that it will be able to
develop the properties into producing mines. Both mineral exploration and
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 a smelter, roads and 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 discovers 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.

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 Page 6 

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 cave-in or similar occurrence, Rockwell's liability may
exceed its resources, which would have an adverse impact on
Rockwell.

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

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 testing) 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. Notwithstanding the above caution, bulk
testing is a straightforward technique that is currently being applied across
all of Rockwell's South African operations. Furthermore, size frequency
distribution curves can be used to accurately predict the relative abundance of
diamonds in terms of stone size, thus mitigating risk.

Mineral prices are subject to dramatic and unpredictable
fluctuations.

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.

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 Page 7 

The mining industry is highly competitive and there is no
assurance that Rockwell will continue to be successful in acquiring 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 metals or concentrates produced should not be an issue
if metals 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.

Risks Related to Rockwell

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 $13 million
during the year ended February 28, 2009 and continue to incur losses subsequent
to year end. Costs have reduced substantially, however sales are irregular. The
risk that the cash and near cash resources will not be sufficient to fund the
continuing losses up to break-even indicates that a material uncertainty exists
which may cast substantial doubt on the ability of the Company and its
subsidiaries to continue as a going concern. Based on the following, the
directors believe that the Company and its subsidiaries will continue as going
concerns for the year ahead:

- At year end the Companys current assets exceeded its current liabilities
  by $0.6 million and the Companys total assets exceeded its total liabilities
  by $70.4 million.
- The cash flow forecasts for the year ahead indicate that additional funds
  of $4 million will be required to enable the Company and its subsidiaries to
  continue as a going concern. The additional funding was calculated on the
  assumption that volumes remain constant with current production, with the new
  plant still operating at below 50% capacity, prices remain at current
  depressed levels which are 55% below pre crisis levels and the South African
  Rand remains at current levels.

The directors have already commenced with plans to raise
finance, and the following plans have been considered to raise these funds:

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 Page 8 

- Private placement.
- Prospectus
- Rights offering

The directors have started the process towards exercising
either a rights offering or a private placement, and have identified and
communicated with current investors and potential new investors to ensure that
the desired investment is raised.

Despite the current economic challenges the directors believe
that the Company will be successful in raising the additional funding as and
when it will be required. The directors will be able to raise up to 25% of
market capital before seeking shareholders approval, which will raise up to $4.1
million.

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 Desmond Morgan, Chief Financial Officer.
The loss of any of these key people could have a material adverse effect on
Rockwell's business. Rockwell does not currently maintain key-man life insurance
on any of its key employees.

Rockwell's properties are located in the Republic of
South Africa

All mineral properties are located in the Republic of South
Africa. Exploration initiatives in the Democratic Republic of the Congo (the
DRC) and Chile have been discontinued due to varying degrees by political
instability and economic uncertainties.

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.

---

 Page 9 

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.

Absence of dividends

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

Rockwell is subject to potentially volatile exchange rate
fluctuations

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.

---

 Page 10 

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.

NASD 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 National Association of Securities Dealers (NASD) 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 NASD believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The NASD 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 and warrants, the exercise of which could result in equity
dilution.

At February 28, 2009, Rockwell had a significant number of
share purchase options (7,956,168) and warrants (161,379,154). On May 9 2009,
121,779,154 share purchase warrants expired with the balance remaining on May 31
2009 being 39,600,000 exercisable at $1.00 per share expiring on November 28
2009. 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 20% of Rockwell's currently issued
shares.

---

 Page 11 

ITEM 4. INFORMATION ON THE COMPANY

SUMMARY

|A. | History and Development of Rockwell                                                                                                                                                                                                                                                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                     
|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 Propertiesbelow. Durnpike held an interest and/or rights in
      four alluvial diamond properties in South Africa and the Democratic
      Republic of the Congo. These were:
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |      | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

---

 Page 12 

| | (iii) | On March 6, 2007, the Company and Trans Hex Group Limited
      (Trans Hex) entered into a conditional agreement whereby the Companys
      wholly owned South African subsidiary, Rockwell Resources RSA (Pty) Ltd.
      (Rockwell RSA), would acquire through Trans Hexs wholly-owned
      subsidiary, Trans Hex Operations (Pty) Ltd. (THO), two open pit alluvial
      diamond mines, namely Saxendrift and Niewejaarskraal, and three alluvial
      diamond exploration projects, namely Kwartelspan, Zwemkuil- Mooidraai and
      Remhoogte-Holsloot, which are located along the southern bank of the
      Middle Orange River in the Northern Cape Province of South Africa
      (Northern Cape) and which are collectively referred to as the Middle
      Orange River Operations and Projects (or MORO). The agreement
      included:
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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.

As at February 28, 2009, the Company
was committed to pay Trans Hex for the acquisition of the remaining
Niewejaarskraal mining rights and thus complete the MORO acquisition. The
Company had placed $2.7 million in trust toward application of the remaining
payment, to be released to Trans Hex upon the anticipated grant of Ministerial
Consent to the cession of each of the Outstanding Mining Rights to the Company
and registration of cession of such rights in its name.

On April 11, 2009 all the conditions
precedent were met and the Company paid ZAR 18.9 million ($2.6 million) in cash
to Trans Hex for the remaining Niewejaarskraal mining rights of which ZAR 16.5
million ($2.0 million) was capitalized. This action completed the
Saxendrift/Remhoogte-Holsloot transaction negotiated during April 2008. The
Company has no further commitments in relation to more acquisitions.

The results of the Saxendrift
operations have been included in the consolidated financial statements since the
date of acquisition on April 11, 2008. The following table summarizes the total
purchase consideration of the Saxendrift assets:

| |                                    |  | Amount     |  |   | Amount     | 
| | ---------------------------------- |  | ---------- |  | - | ---------- | 
| |                                    |  | (ZAR)      |  |   | ($)        | 
| | Cash consideration                 |  | 73,536,000 |  | $ | 9,618,508  | 
| | Acquisition costs and other        |  | 4,912,895  |  |   | 642,607    | 
| | Other commitments                  |  | 2,988,619  |  |   | 390,911    | 
| | Total purchase
      consideration |  | 81,437,514 |  | $ | 10,652,026 | 

---

 Page 13 

The total acquisition price has been
allocated to the net assets acquired and liabilities assumed of Saxendrift as
follows:

| |                            |  | Amount     |   |   | Amount     |  
| | -------------------------- |  | ---------- | - | - | ---------- | -
| |                            |  | (ZAR)      |   |   | ($)        |  
| | Inventory                  |  | 1,000,000  |   | $ | 130,800    |  
| | Plant and equipment        |  | 47,750,000 |   |   | 6,245,700  |  
| | Other assets               |  | 100        |   |   | 12         |  
| | Mineral property interests |  | 40,487,414 |   |   | 5,295,754  |  
| | Reclamation obligation     |  | (7,800,000 | ) |   | (1,020,240 | )
| |                            |  | 81,437,514 |   | $ | 10,652,026 |  

|   | The allocation of purchase price is based on managements
      estimates of the fair value of the assets acquired and liabilities assumed
      at the date of acquisition, April 2008.                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Effective July 1, 2008, a Black Economic Empowerment
      (BEE) company Liberty Lane Investments (Pty) Ltd, part of the African
      Vanguard group, acquired a shareholding of 26% by subscribing for shares
      in Saxendrift. The acquisition was financed by Rockwell Resources RSA
      (Pty) Ltd and will therefore only result in a reduction of shareholding to
      74% once the loan is paid. The Company continues to maintain good standing
      with its BEE partner and is operating under the terms of its BEE
      agreement, including the appointment of a director to its Board.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|8. | Rockwell's principal capital expenditures and exploration
      expenditures in the fiscal years ended February 28, 2009, May 31, 2007,
      and nine months ended February 29, 2008 are as
follows:                                                                                                                                                                                                                                                                                                                                                                                                        

| |      |  |                    |  |   |             |  |   |                 |  |   | Exploration        |  |  |              | 
| | ---- |  | ------------------ |  | - | ----------- |  | - | --------------- |  | - | ------------------ |  |  | ------------ | 
| |      |  | Exploration        |  |   | Mineral     |  |   |                 |  |   | Expenditures       |  |  |              | 
| |      |  | Expenditures       |  |   | Property    |  |   |                 |  |   | Expensed           |  |  | Mineral      | 
| |      |  | Deferred           |  |   | Acquisition |  |   | Property, Plant |  |   | (excluding related |  |  | Property     | 
| |      |  | (capitalized       |  |   | Cost        |  |   | and Equipment   |  |   | stock-based        |  |  | Acquisitions | 
| | Year |  | or
      invested) |  |   | Capitalized |  |   | Acquired        |  |   | compensation)      |  |  | Expensed     | 
| | 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.

|9. | No principal capital expenditures are currently anticipated for the ensuing
year.
|-- | ---------------------------------------------------------------------------------

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 Page 14 

|10. | Pala Takeover bid - September 9, 2008                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | On September 9,2008, Pala Investment limited (Pala), a
      Swiss based investment fund with a significant shareholding holding
      (approximately 17%) 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 following
      key reasons:                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Following concerted efforts by Pala to mobilize existing
      and new shareholders to accept its offer, Pala withdrew its hostile bid in
      November 3, 2008, thereby ending the hostile bid process that they had
      initiated on September 9, 2008.                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | This permitted Rockwell, and its Directors and Management
      to proceed with the normal business of the Company.                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Pala request for a special general meeting  April 29,
      2009                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | In a further effort to take control of Rockwell following
      their previous hostile bid process for Rockwell, Pala announced on April
      29, 2009 that it had called a Special General Meeting (the meeting) of
      the common shareholders of Rockwell to be held on June 17th,
      2009, in Vancouver British Columbia, Canada.                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Pala proposed three resolutions to be passed by
      Shareholders at the meeting. The three Resolutions were as
  follows:                                                                                                                                                                                                                                                                                                                                    

| | 1. | To consider and, if deemed advisable, to pass a special
      resolution of the shareholders to remove all the directors of the Company,
      in particular David Copeland (chairman), Mark Bristow, and John
    Bristow       
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                  
| | 2. | 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.
| |    |                                                                                                                                                                                                                                  
| | 3. | To amend and then terminate the Companys Shareholder
      Rights Plan Agreement                                                                                                                                                

---

 Page 15 

In response to the Pala call for the
Meeting, The Executive Directors of Rockwell comprising David Copeland, John
Bristow, and Mark Bristow issued a circular opposing the Pala Circular and
presenting four Resolutions for the Meeting as follows:

| | 1. | That the shareholders (they) vote against Palas
      proposal to remove any or all of the current directors from
  office.
| | -- | ------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                               
| | 2. | That the they vote against Palas proposal to amend and
      then terminate the                                              
| |    |                                                                                                                               
| | 3. | Shareholder Rights Plan.                                                                                                      
| |    |                                                                                                                               
| | 4. | That shareholders vote to support a fair rights
      offering.                                                               
| |    |                                                                                                                               
| | 5. | That shareholders vote for the denying Pala its expenses
      for requisitioning, calling and holding the
meeting.           

At the Special General Meeting held in
Vancouver on June 17th, 2009, counsel advised that Resolution #3 be
removed from the meeting and vote count, and following the collation of the
results it emerged that all of the proposals put forward by Pala were rejected
by shareholder vote. Approximately 74% of the Companys issued and outstanding
votes were voted by proxy at this meeting, and in summary 57.33% of these
shareholders voted against the removal of one or more of the current Directors,
62.0% voted to continue the Shareholder Rights Plan, and 57.14% voted to direct
Rockwell not to reimburse Pala costs associated with the Meeting.

Given the outcome of the votes cast by
Shareholders at the Meeting Palas proposal to remove the incumbent Directors
and Management of Rockwell was convincingly defeated and the Company and its
Directors thus received a strong mandate to continue with the management of the
Companys business.

Subsequent to this meeting Terence
Janes and Greg Radke, Palas representatives on the Rockwell board, resigned
from the Board of Rockwell.

B. Business Overview

Durnpike Agreement

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.

Pursuant to the Definitive Agreement:

- The Company acquired from the Vendors all of their shares in and claims on
  loan account against Durnpike for consideration of ZAR 39.8 million ($6.1
  million), payable in common shares of the Company on the earlier of (i) the
  date of the JSE listing; and (ii) within approximately 12 months from signature of the Definitive Agreement. By virtue of such
acquisition, the Company acquired Durnpikes interests in the four alluvial
diamond properties in South Africa. The ZAR consideration did not include
payment in respect of the Kwango River Project, which payment stood to be made
by the Company only when (and if) the feasibility study referred to below has
been completed and approved by the board of directors of the Company.
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.

---

 Page 16 

- Durnpikes interest in the Kwango River Project was constituted by an
  agreement concluded in 2006 (Midamines Agreement) with Midamines SPRL
  (Midamines), the holder of the exploration permit on the Kwango River
  Project, to act as contractor on behalf of Midamines to manage and carry out
  exploration and mining. Durnpike was entitled to an 80% share of the net
  revenue from the sale of any diamonds produced from the contract
  area.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$1,200,000
  per annum (commencing on December 31, 2007). During 2008, pursuant to an
  amending agreement to the Midamines Agreement, the Company paid consideration
  of $600,000 to Midamines in order to increase the size of the concession
  (Permit 331). As part of such amending agreement Midamines waived its right to
  payment of the abovementioned US$1,200,000 royalty payment on 31 December
  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 cancelled the
  Midamines Agreement and claimed damages.Midamines has subsequently
  disputed Durnpikes entitlement to cancel the Midamines Agreement and has
  demanded payment of US$1.2 million as well as other amounts which have not yet
  been particularized. Midamines has threatened to refer the dispute to
  arbitration and to joint Rockwell as party thereto, but no formal referral to
  arbitration has as yet been forthcoming.

- 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.

Makoenskloof property acquisition

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.

---

 Page 17 

Middle Orange River Operations (MORO) Agreement

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 MORO include:

- the rights to prospect and explore for and/or mine precious stones and/or
  other minerals and/or metals held directly or indirectly by THO in the
  Saxendrift area (described above);
- substantial indicated and inferred mineral resources;
- the material plant, machinery, equipment and other movable assets owned
  and/or used by THO - These operating assets were independently valued by
  Manhattan Mining Equipment (Pty) Limited in April 2005 at ZAR 53.3 million
  ($8.0 million);
- the employees of THO in terms of Section 197 of South Africas Labour
  Relations Act of 1995; and
- a rehabilitation liability which will be taken over by Rockwell on the
  basis that the tailings and other heaps of unprocessed diamond bearing
  middlings gravel and Rooikoppie gravels will be reprocessed by Rockwell to
  recover contained diamonds. The plan is to process the material and
  simultaneously rehabilitate these areas.

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.

Farhom Property

On July 30, 2007, H.C. Van Wyk Diamonds 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 HCVW on February 24, 2005 and later
amended on July 10, 2007.

Black Economic Empowerment Holdings (BEE) in Holpan,
Klipdam and Wouterspan Properties

During the year ended May 31, 2007, African Vanguard Resources
(Proprietary) Limited (AVR), the holding company of Richtrau No 136
(Proprietary) Limited (Richtrau) purchased through Richtrau a 15% interest in
the VWDG from the Van Wyk Trust for an amount of ZAR22.5 million ($3.4 million).
During November 30, 2008 AVR indicated its commitment to increase its
shareholding in the VWDG to 26% by subscribing for an additional 11% shares in
each of the entities comprising the VWDG. The additional 11% stake was acquired by another subsidiary of AVR
at a subscription price of ZAR 17.5 million.

---

 Page 18 

The AVR group was also contractually committed to inject ZAR
10.5 million in working capital into the VWDG. Given the credit crunch,
depressed economic conditions and fall 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 that it was unable to make these payments and
that it would pursue funding mechanisms to complete its obligations. Rockwell
RSA has endeavoured to identify alternate sources of funding with a view to
assist AVR to complete its investment but these attempts were, unsuccessful.
Rockwell RSA has entered into discussions with AVR and the Department of
Minerals and Energy with the assistance of its legal counsel to address
completion of the BEE participation in the share capital of the entities
comprising the VWDG.

Hunter Dickinson Services Inc.

Hunter Dickinson Services Inc. ("HDSI") provides management
services to Rockwell, pursuant to a geological and administrative services
agreement dated January 1, 2001. 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. The shares of HDSI are owned equally by
each of the participating corporations (including Rockwell) as long as HDSI
services are being provided. However, should the Company terminate the service
agreement, the Company will be required to surrender its single share at the
time of termination pursuant to the terms of the service agreement. HDSI is
managed by certain directors of Rockwell and who are generally also directors of
the other corporate participants in similar arrangements with HDSI.

C. Organizational Structure

Rockwell Diamonds Inc is based in British Columbia, Canada. It
also has corporate offices located in Johannesburg, South Africa. As at August
21, 2009, Rockwell had the following subsidiaries:

| | 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. Rockwell RSA holds a 51% interest
      and Rockwell Diamonds Inc holds 23% in both HC Van Wyk Diamonds Ltd and
      Klipdam Mining Company Ltd.

---

 Page 19 

| | 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 of 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.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | f) | Klipdam Mining Company Ltd. (Klipdam Mining) is a
      subsidiary incorporated under the laws of the South Africa of which
      Rockwell Resources RSA owns a direct 51% interest. Of the VWDG assets.
      Klipdam Mining Company Ltd is a diamond producer that conducts diamond
      exploration and mining on the Klipdam property.                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | g) | Saxendrift Mine (Pty) Ltd a subsidiary incorporated under
      the laws of the Republic of South Africa of which Rockwell RSA, in April
      2008, acquired a 74% interest. Saxendrift Mine (Pty) Ltd is a diamond
      producer that conducts diamond exploration and mining on the Saxendrift
      and Niewejaarskraal properties.                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | h) | The current organization structure of Rockwell is as
      follows:                                                                                                                                                                                                                                                                                                                                                                      



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.

---

 Page 20 

D. Property, Plant and Equipment

Rockwell has plant and equipment located on its Holpan,
Klipdam, Wouterspan, Makoenskloof and Saxendrift properties as at February 28,
2009.

|                                                                    |   | As at February
      28, 2009 | 
|------------------------------------------------------------------- | - | ----------------------------- | 
|                                                                    |   | Cost                          | 
|                                                                    |   |                               | 
|                                                                    |   |                               | 
|                                                                    |   |                               | 
|Land and Buildings                                                  | $ | 5,822,677                     | 
|Processing plant and equipment                                      |   | 52,090,193                    | 
|Processing plant and equipment under
      capital lease obligation |   | 21,374,971                    | 
|Office equipment                                                    |   | 859,678                       | 
|Vehicles and light equipment                                        |   | 1,579,592                     | 
|Vehicles and light equipment under capital lease obligation         |   |                              | 
|                                                                    | $ | 81,727,111                    | 

Glossaryof terms

Geological Terms

|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 | 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 the economic viability of them
      has been established and these are namely resources (economic viability
      not established) and ore 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).

---

 Page 21 

|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.
|SAMREC                     | South African Mineral Resource Code                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Measurement

Conversion of metric units into imperial equivalents is as
follows:

|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
|grams/tonne  | 0.029       | = ounces (troy)/ton  

Mining in the Republic of South Africa

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.

---

 Page 22 

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.

Government Regulation

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 of 5%
from the sales of those metals, 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).

---

 Page 23 

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.

Inferred Resource:

An Inferred Mineral Resource is that 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 Resource:

An Indicated Mineral Resource is that 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.

Rockwell Resource Determination Methodology:

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 a 100 percent of the
  mineral area and not for the ownership percentage of Rockwell Diamonds Inc in
  the underlying subsidiary.

---

Procedure
      CommentsDesktop 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
            salesField 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
          volumeBulk-sampling minimum of 0.5% of
        intended declared resource
      To estimate gradeRecovery of 500 carats
      To estimate diamond value
        & size frequencyIndicated Resource Estimation
      Infill drilling on a close
        spacing (50x50m)
      To improve geological
        knowledge, construct detailed 3D resource models and improve
          the confidence in the estimate of gravel volumeBulk-sampling minimum of 5% of
        the intended declared resource
      To estimate gradeRecovery of 3,000  5,000cts
      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 on these resources and has demonstrated that the grades and
diamond quality diamond values remain fairly consistent.

Reserves:

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 bulk samples the various mineral areas and when sufficient bulk
  sampling has 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.

---

Unit of Measurement:

Rockwell Diamonds Inc reports all resources and depletion of resources in cubic metres. This is due to the variable nature of 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. Rockwell on a bi weekly basis 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 a
  Qualified Person and the Mineral Resource Manager a Qualified Person. This data and its accompanying diamond production is then reconciled on a bi weekly and entered into the Companys database. This database is then used for the compilation of
the annual depletion.

No guidelines have been established for mineral reserves in
alluvial diamond deposits because diamond distribution in the deposit is not
uniformly distributed. In addition, the size and quality of the diamonds (and
hence the value) may vary.

Diamond resources are established by drilling on a regular
pattern across an area to assess the volume of gravel units and taking several
bulk samples that are processed to assess the number of diamonds, ie estimate
the grade over the volume of gravel drilled. Detailed assessments of the
distribution of the size and quality of diamonds in the bulk samples  are also
done.

- Rockwell uses a 2mm size cut off to establish grade for resource
    estimates.
- Rockwells grades for resource estimates incorporate losses due to mining
    dilution and process efficiencies.
- Mineral resources are sate for 100% ownership. All mines are owned 74% by
    Rockwell as indicated in the Form 20-F on Page 19 Section B Business Overview.
- The achieved value of the diamonds sales from bulk sampling or mining is
    used to represent the average diamond value for the resource at the time of
    the estimate.

Trial mining (and processing) commonly occurs after drilling to
increase the comfort that the gravel unit is adequately diamondiferous to
support the cost of extraction and processing.

Once mining is underway, the information from processing each
year is used to inform the resource estimate, and the grade (and value per carat
received) is adjusted to reflect the actual results. Depletion of mineral
resources is calculated using the carats produced as the numerator and estimated
carat resource available as the denominator.

HCVW1and
Klipdam

|Period                       | Calculation     | Depletion 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 Feruary 2009   | 15,066 /387,921 | 3.88%               
|Total                        | 39,820 /387,921 | 10.26%              

Saxendrift

|Period                       | Calculation    | Depletion Percentage
|---------------------------- | -------------- | --------------------
|February 1, 2007 to May 2007 | 0/103,155      | 0.00%               
|June 2007 to February 2008   | 0/103,155      | 0.00%               
|March 2008 to Feruary 2009   | 2,437 /103,155 | 2.36%               
|Total                        | 2,437 /103,155 | 2.36%               

---

 Page 24 

Annual Production

|Productiion Periods (Carats) | 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 Feruary 2009   | 15,066               | 2,437      | 17,503          
|                             | 39,820               | 2,437      | 42,257          

1HCVW are operations acquired from HC van Wyk,
including Holpan and Wouterspan mines and Makoenskloof project.

Estimated resources available at Rockwell Mines as at
February 28, 2009

|Holpan and Klipdam Mineral Resources               |                    |                           |             |                    |  |                                |                    
|-------------------------------------------------- | ------------------ | ------------------------- | ----------- | ------------------ |  | ------------------------------ | -------------------
|                                                   |                    |                           |             |                    |  | Deemed  Carats
      Available
|                                                   | Inferred Resources | Indicated Resources       |             |                    |  | Inferred Resources             | Indicated Resources
|Description of
      Gravel Resource               | Volume             | Volume                    | Grade       | Value              |  |                                |                    
|(cubic meters)                                     | (cubic meters)     | (carats/100 cubic meters) | (US$/carat) |                    |  |                                |                    
|Holpan
      Fluvial-
      alluvial
      Gravel  | 294,000            |                           | 0.74        | 2008 -
      1,157 |  |                                |                    
|                                                   |                    | 2,176                     |             | 2,176             
|Holpan
      Rooikoppie
      gravel               | 5,643,000          | 1,137,273                
|2009#- 671                                         |                    | 41,758                    | 8,416       | 50,174            
|Klipdam
      Fluvial-
      alluvial
      Gravel | 1,504,163          |                           | 0.91        | 2008 -
      3,892 |  |                                |                    
|                                                   |                    | 13,688                    |             | 13,688            
|Klipdam
      Rooikoppie
      gravel              | 1,312,000          | 1,135,229                
|2009#- 915                                         |                    | 11,939                    | 10,331      | 22,270            
|TOTAL                                              | 8,753,163          | 2,272,502                 | 0.84        |                    |  | 69,561                         | 18,746             
|                                                   |                    |                           |             |                    |  |                                |                    

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 Page 25 

|Wouterspan Mineral Resources   |                    |                           |             |         |        |                          |                    
|------------------------------ | ------------------ | ------------------------- | ----------- | ------- | ------ | ------------------------ | -------------------
|                               |                    |                           |             |         |        | Deemed  Carats Available
|                               | Inferred Resources | Indicated Resources       |             |         |        | Inferred Resources       | Indicated Resources
|Description of Gravel Resource | Volume             | Volume                    | Grade2      | Value3  |        |                          |                    
|(cubic meters)                 | (cubic meters)     | (carats/100 cubic meters) | (US$/carat) |         |        |                          |                    
|Rooikoppie                     | 5,911,000          | 716,769                   | 0.7         | 1,511   |        | 41,377                   | 5,017              
|Fluvial-
      alluvial        | 31,863,000         | 4,311,167                 |             | 223,041 | 30,178 | 253,219                 
|TOTAL                          | 37,774,000         | 5,027,936                 | 0.7         | 1,511   |        | 264,418                  | 35,196             
|                               |                    |                           |             |         |        |                          |                    
|                               |                    |                           |             |         |        | 333,979                  | 53,942             

|Saxendrift Mineral Resources |                |                           |             |       |                    |                          |        |       
|---------------------------- | -------------- | ------------------------- | ----------- | ----- | ------------------ | ------------------------ | ------ | ------
|                             |                |                           |             |       |                    | Deemed  Carats Available
|MINING AREA                  | RESOURCE       | Volume                    | Grade       | Value |                    |                          |        |       
|CLASSIFICATION               | (cubic meters) | (carats/100 cubic meters) | (US$/carat) |       | Inferred Resources | Indicated Resources      | Total 
|Saxendrift
      Terrace A   | Indicated 1    | 804,945                   | 1.32        | 2,154 |                    |                          | 10,625 | 10,625
|Indicated 2                  | 2,483,494      | 0.8                       |             |       | 19,868             | 19,868                  
|Saxendrift
      Terrace B   | Indicated      | 1,774,660                 | 1.15        | 1,540 |                    |                          | 20,409 | 20,409
|                             |                |                           |             |       |                    |                          |        |       
|TOTAL Indicated              | 5,063,099      | 1.01                      |             |       |                    |                          | -     
|Saxendrift
      Terrace A   | Inferred       | 3,629,127                 | 0.8         | 1,540 |                    | 29,033                   |        | 29,033
|Saxendrift
      Terrace B   | Inferred       | 86,476                    | 0.68        | 1,540 |                    | 588                      |        | 588   
|Stockpiles                   | Inferred       | 642,540                   | 0.29        | 2,154 |                    | 1,863                    |        | 1,863 
|TOTAL Inferred               | 4,358,143      | 0.72                      |             |       | 31,484             | 50,902                   | 82,386

---

 Page 26 

|Kwartelspan Mineral Resources |                           |             |       |                         |                         |        |        
|----------------------------- | ------------------------- | ----------- | ----- | ----------------------- | ----------------------- | ------ | -------
|                              |                           |             |       |                         | Deemed Carats Available
|Resource classification       | Volume                    | Grade       | Value |                         |                         |        |        
|(cubic meters)                | (carats/100 cubic meters) | (US$/carat) |       | Inferred Resource **$** | Indicated Resources     | Total 
|Inferred                      | 1,384,577                 | 1.5         | 793   |                         | 20,768.66               |        | 20,769 
|                              |                           |             |       |                         |                         |        |        
|                              |                           |             |       |                         | 52,253                  | 50,902 | 103,155

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).

Technical Summary

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.

---

 Page 27 

Properties in South Africa

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

---

 Page 28 

Climate and Topography

All of Rockwells principle properties are located in central
South Africa, an arid semi desert 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

Location, Access and Infrastructure

The Holpan/Klipdam property is located 45 km from Kimberley in
the Northern Cape Province of central South Africa.

The property has ready access to all required infrastructure.
Given that the operations are located next to an irrigation canal, the
operations have year-round water supply and the necessary pumping stations and
water supply pipelines are 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.

Property Description and Ownership

The Holpan/Klipdam property consists of the adjacent Holpan 161
and Klipdam 157 farms, covering an area of 3,836 hectares. Details are provided
in Table 1.

Table 1: Summary of Holpan-Klipdam landholding

|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          | November 09, 2014 (Old Order ML conversion
      application lodged on July 07, 2008. Accepted by DME on July 18, 2008  in
      progress)       
|Remaining extent of Klipdam 157, | 1,466.0095 | (NC)003MRC              | Protocol 266/2007* | December 06, 2022 (This permit is currently
      under Section 11 cession from Klipdam Mining (Pty) Ltd to HCVWD. Submitted
      on May 16 2008)
|Erf 1, Windsorton                | 183.8177   | (NC) 30/5/1/1/2/1193PR  |                    | The Prospecting Right was granted on 07
      November 07, 2008                                                                                   

---

 Page 29 

The surface rights (as well as the land ownership) of the farms
Holpan and Klipdam are held by HCVW 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 are paid to the State of
5% of the gross proceeds of all diamonds sold. This will be replaced by what is
ultimately provided for in the Mineral and Petroleum Royalty Act once enacted,
initially expected from May 1, 2009, but now deferred at the finance ministers
discretion until March 2010.

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

History

Holpan and Klipdam have been the focus of intermittent mining
since the early 1900s and have consistently been known for yielding large
diamonds. There are regular references to this in historic records such as the
work of George Beet (1931), who discusses the Broderick diamond  a perfect
Cape white, weighing 412.5 carats. VWDG produced in excess of 90,000 carats of
diamonds from Holpan and Klipdam since 1994.

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.

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 done 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 an independent estimate of the inferred mineral
resources for Holpan and Klipdam was completed, based on operational statistics,
drilling and other sampling completed to that time as 12,339,700 m3grading 1.16 carats per 100 m3, with an average value of
US$848/carat. Potential for an additional 4,800,000 m2of gravel, that is similar,
visually, to the Rooikoppie gravels, surrounds the area of the inferred resource
and that this gravel feature, was also identified 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. Exploration work in fiscal 2008 and fiscal 2009 was
assessing this area.

---

 Page 30 

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
m3was 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 m3grading 0.95 carats per 100 m3.

During the period of April 1, 2007 and February 29, 2008,
1,591,429 m3were mined at Holpan and Klipdam. At February 29, 2008
the total inferred mineral resources were estimated to be 8,858,000 m3grading 0.84 carats per 100 m3.

During 2007/2008, 774 Reverse Circulation (RC) boreholes were
drilled on Klipdam/Holpan for a total of 4,890.5 m. A total of 3,490 holes
(16,754 m) were used in the resource estimate, the results of which are reported
under Estimates of Mineralizationbelow. The boreholes were drilled on a
100 x 50 m grid over an area of 150 ha. Since regional gravel grades are,
typically, less than 0.5carat/100 m3and average diamond sizes are
typically >1carat per stone, boreholes are not sampled for diamonds.
Furthermore, no other minerals or elements that can be assayed are known to show
positive (or negative) relationships with diamonds in alluvial deposits, so no
analytical procedures are described. Grades are estimated from actual results
from mining and processing.

During the period January 2008  February 2009, some 876,972
m3of 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 m3and
13,139.75 carats, with average grade recoveries of 0.91 carat/100 m3and 0.74 carat/100 m3, respectively.

Geology

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 cm up to
about 2 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.

---

 Page 31 

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.

Estimates of Mineralization

The Resources estimated to be present on Klipdam/Holpan are
shown below. They 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.R. Marshall, PhD, (Pr. Sci. Nat.), a qualified person who is
independent of the Company and is responsible for the estimate.

|Cautionary Note to Investors
  Concerning Estimates of Indicated Resources                                                                                                                                                                                                                                                                                                                                                                                                                        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.

Table 2a. Holpan and Klipdam Indicated Mineral Resources

|Description of Gravel Resource | (1) Volume (cubic
      meters) | Grade (carats/100 cubic
      meters) | Value (US$/carat)              
|------------------------------ | ------------------------------- | ------------------------------------- | -------------------------------
|Holpan Rooikoppie              | 1,137,300                       | 0.74                                  | 2008 -1,157 2009(2)-
      671 
|Klipdam Rooikoppie             | 1,135,200                       | 0.91                                  | 2008 - 3,892 2009(2)-
      915
|TOTAL                          | 2,272,500                       | 0.84                                  |                                

---

 Page 32 

|Cautionary Note to Investors
      Concerning Estimates of Inferred Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.

|Table 2b. Holpan and Klipdam Inferred Mineral Resources
|-------------------------------------------------------

|Description of GravelResource | (1)Volume(cubic meters) | Grade(carats/100 cubicmeters) | **Value** **(US$/carat)**       
|----------------------------- | ----------------------- | ----------------------------- | --------------------------------
|Holpan Fluvial-alluvial       | 294,000                 | 0.74                          | 2008 -1,157
      2009(2) -671  
|Holpan Rooikoppie             | 5,643,000              
|Klipdam Fluvial-alluvial      | 1,504,000               | 0.91                          | 2008 - 3,892
      2009(2) - 915
|Klipdam Rooikoppie            | 1,312,000              
|TOTAL                         | 8,753,000               | 0.84                          |                                 

Notes to Tables 2a and 2b:(1) Volumes
fully diluted of sampling and mining for the period 2008-Feb 2009

Mining and Processing

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.

---

 Page 33 

Production and sales from Holpan and Klipdam for fiscal 2009,
as well as production so far in fiscal 2010, are discussed under Results of
Operations (Item 5.A).

Planned Program

Currently, mining is taking place concurrently on both Klipdam
and Holpan.

Rockwell plans to continue operations at Holpan and Klipdam
during the fiscal year. Some efficiency improvements are planned for the Klipdam
Mine as well as adding an additional dewatering unit at the Holpan Mine. There
are no capital costs associated with these upgrades as any fabrication work will
take place within Rockwells mine workshops within existing maintenance and
repair budgets.

There is a large amount of existing drill data, much of which
requires analysis and integration with mining results and will take place during
normal operations. No new drilling or bulk sampling is planned for Holpan and
Klipdam. If, market should improve during 2009, then some 540 m of
reconnaissance drilling/pitting (~360 pits) would be considered for Erf 1
Windsorton, the prospecting right adjacent (to the east) to Klipdam. The
estimated cost of ZAR50,000 (US$5,500), would be derived from operations
budget.

The Wouterspan Property

Location, Access and Infrastructure

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 200 km from the town of Kimberley, where
comprehensive back up services for mining, spares and other supplies are
available. The property is connected to the national electricity grid. Staff
quarters have been built on site and transport provisions have been made for
personnel to work on a two week on, four day off basis.

Property Description and Ownership

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

---

 Page 34 

Table 3. Summary of Current Mineral and Surface Rights Holdings
on Wouterspan

|Portion                                               | Permit/right holder              | Surface right
    holder | Size (hectares)           
|----------------------------------------------------- | -------------------------------- | ------------------------ | --------------------------
|Portion 16, a Portion of Portion 9                    | Farhom Mining & Construction Ltd | HCVWD                    | 188.7926                  
|A surveyed Portion of Remainder of Portion 9 (Wouter) | Okapi Diamonds (Pty) Ltd         | A C Vlok Trust           | 780.61                    
|Portion 14 (Stofdraai)                                | HCVWD                            | A C Vlok Trust           | 1,369.9544                
|Remainder of Portion 9 (Wouter)                       | HCVWD                            | HCVWD                    | 1,640.6412                
|Portion 16 (a portion of Portion 9)                   | HCVWD                            | HCVWD                    | 240.4480                  
|Remainder of Portion 18                               | HCWVD                            | Johan Gerber             | 271,5347                  
|Portion 7 Portion 11 (De Hoek)                        | HCWVD                            | CJ Coetzee               | 1628,9209
       1288,5227

History

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; 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 m3of Primary gravel and 24,013 m3of 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 m3of Rooikoppie gravel and
43,259,000 m3of primary gravel was indicated as exploration
potential from this work.

---

 Page 35 

Additional drilling was done in 2006, 2007 and 2008. An
independent resource estimate was done at February 2009. Results of the estimate
are shown under Estimates of Mineralizationbelow. 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 m3of 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.

Geology

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 lower lying terraces along the MOR (middle orange river)
are farmed extensively by means of centre-pivot irrigation systems. In addition,
much of the area is blanketed by younger Kalahari sands which support scattered
vegetation. As a result, aerial photographs and satellite images are of limited
use for delineating potential gravel target areas. Further, the mostly
shale bedrock, combined with extensive post-depositional calcretisation of the
gravels makes it difficult to identify bedrock channels on the terraces using
geophysical surveys. Consequently, neither geophysics, nor satellite images are
used extensively as primary exploration tools along the MOR.

---

 Page 36 

All historic exploration has been by drilling and
bulk-sampling, which are described in detail in the next two sections. No
additional exploration has taken place on Wouterspan during the period October
2007 February 2009.

Estimates of Mineralization

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.

|Cautionary Note to Investors
      Concerning Estimates of Indicated Resources                                                                                                                                                                                                                                                                                                                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.

Table 4a. Wouterspan Indicated Mineral Resources

|Description of Gravel Resource | Volume (cubic meters) | Grade(2)
      (carats/100 cubic meters) | Value3(US$/carat)
|------------------------------ | --------------------- | ---------------------------------------- | -----------------
|Rooikoppie                     | 714,400               | 0.70                                     | 1,511            
|Fluvial-alluvial               | 4,311,100            
|TOTAL                          | 5,025,500             | 0.70                                     | 1,511            

|Cautionary Note to Investors
    Concerning Estimates of Inferred Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.

---

 Page 37 

Table 4b. Wouterspan Inferred Mineral Resources

|Description of Gravel Resource | Volume (cubic meters) | Grade(2)
      (carats/100 cubic meters) | Value(3)
      (US$/carat)
|------------------------------ | --------------------- | ---------------------------------------- | --------------------------
|Rooikoppie                     | 5,911,000             | 70                                       | 1,511                     
|Fluvial-alluvial               | 31,863,000           
|TOTAL                          | 37,774,000            | 0.70                                     | 1,511                     

Notes to tables 4a and 4b:

| | (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.

Planned Program

At the end of November 2008, Wouterspan was put on Care &
Maintenance. Mining and an upgrade of the processing plant are deferred pending
an increase in the diamond price.

Saxendrift

Location, Access and Infrastructure

The Saxendrift project is located along the south bank of the
middle Orange River between Douglas and Prieska in the Northern Cape Province of
South Africa, which area has been the site of intense alluvial diamond activity
since the 19thcentury. Saxendrift Mine is situated approximately 66
km southwest of Douglas, which lies 110 km southwest of Kimberley, the
administrative capital of the Northern Cape Province and the historic centre of
the South African diamond mining industry. The Kwartelspan prospect is located
some 4 km east of the mine property.

The Saxendrift Mine 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 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. To deal with power outages,
maintenance is scheduled during power outages and a 1 megawatt generator was
acquired to run the plant. A backup generator is 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.

Property Description and Ownership

Together the Saxendrift properties comprise 5,142.52 hectares
as show in Table 5 below. The mining area of Saxendrift Mine constitutes
1,368.17 hectares.

---

 Page 38 

Table 5. Saxendrift and Kwartelspan Property Holdings

|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 Saxesdrift 21 
      Re/Ptn, and Ptn (Ptn
      1)
|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  | HC van Wyk
      Diamonds Ltd         | 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)                       | 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)
|Kwartelspan 25
      (Re/Ptn)                           

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 had 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.

.

History

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 Trans Hex, Saxendrift comprised
three mining areas: Brakfontein (not included in the disposal to Rockwell),
Saxendrift Terrace A and Saxendrift Terrace B. 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.

---

 Page 39 

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 during 2006 as a result of a variety of economic aspects.

Geology

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 5m 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.

Estimates of Mineralization

Rockwell re-modelled the resources according to the Company
standards, and identified differences in volumes based on an incomplete dataset
supplied to Rockwell by Trans Hex, and different to that supplied to Venmyn in
2006/7. Overall, the indicated resources have increased and the inferred
resources have decreased from the previous estimate.

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.

|Cautionary Note to Investors
  Concerning Estimates of Indicated Resources                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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

---

 Page 40 

Table 6a. Saxendrift Indicated Mineral Resources

|MINING AREA | Volume(cubic meters) | Grade(1)(carats/100 cubicmeters) | Value(US$/carat)                    
|----------- | -------------------- | -------------------------------- | ------------------------------------
|Terrace A   | 804,945 2,483,494    | 1.32 0.8                         |                                     
|Terrace B   | 1,774,660            | 1.15                             |                                     
|Total       | 5,063,099            | 1.01                             | 2008(3)2,154**2009**(2)******1,075**

|Cautionary Note to Investors
      Concerning Estimates of Inferred Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 inferredresource
      exists, or is economically or legally mineable.

Table 6b. Saxendrift Inferred Mineral Resources

|MINING AREA | Volume(cubic meters) | Grade(1)(carats/100 cubicmeters) | Value(US$/carat)        
|----------- | -------------------- | -------------------------------- | ------------------------
|Terrace A   | 3,629,127            | 0.8                              |                         
|Terrace B   | 86,476               | 0.68                             |                         
|Stockpiles  | 642,540              | 0.29                             |                         
|Total       | 4,358,143            | 0.72                             | 2008(3)2,1542009(2)1,075

| | Notes to tables 6a and 6b:                                                             
| | ---------------------------------------------------------------------------------------
| | (1) At 2 mm cut-off                                                                    
| | (2) Value modelled by Rockwell for 2009                                                
| | (3) Value received for sale of 1,520.17 carats during May
      through to October 2008

Kwartelspan

A single terrace was identified by Trans Hex 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.

---

 Page 41 

|Cautionary Note to Investors
  Concerning Estimates of Inferred Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.

Table 7. Kwartelspan Inferred Mineral Resources

|Volume (cubic meters) | Grade
      **(carats/100 cubic** **meters)** | Value
    (US$/carat)
|--------------------- | --------------------------------------------- | ---------------------
|1,385,000             | 1.50                                          | 793                  

Planned Program

During Trans Hexs tenure, a number of tailings-, oversize-,
and rock- dumps were created. Based on visual inspection, it is thought likely
that many of these might prove viable gravel resources  either they were too
wet to process initially, or they are full of calcreted lumps of gravel due to
the mining method practiced at the time, or the BIF content is extremely high,
or for various combinations of the above. Rockwell has identified each of these
dumps and will sample them systematically over the 2009/2010 period to determine
whether or not they should be included in the Saxendrift resource. These samples
will be batch processed through the old pan-plant. Following commissioning of
the new plant in late 2008, virgin gravels from Terrace A were mined and
processed on a trial-production basis Rockwell will focus on reviewing and
integrating drill data received from Trans Hex on the Saxendrift and Kwartelspan
properties prior to planning any additional drilling programs. Supplementary
geological mapping also is planned for Kwartelspan under current operational
budget.

Rockwell proposes to upgrade the screening and final recovery
sections of the plant at Saxendrift in fiscal 2010, using one of three
fully-functional rotary screens on the Wouterspan property. There are only
relocation and installation costs of some ZAR 100,000 (approximately
US$12,500).

With respect to the planned upgrade of the final recovery plant
which will be improved to process Saxendrift concentrate as well as that from
Niewejaarskraal and Wouterspan when these properties come on-stream. Rockwell
plans utilise existing, spare X-Ray FLOWSORT machines to expand the throughput
capacity of the existing facility.

Niewejaarskraal

Location and Access

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 of South Africa Douglas lies 110 km southwest of Kimberley.
Niewejaarskraal is situated approximately 66 km southwest of Douglas, some 13 km
beyond Saxendrift Mine (to the south).

---

 Page 42 

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.

Property Description and Ownership

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 ha. The Surface Rights are held by Die
Nuwejaarskraal Testamentere Trust (MT1601/2000) and Redivuvus Louw, with whom
Rockwell has land-use agreements in place.

Table 8. Niewejaarskraal Mineral Rights and Permits

|Property Name                  | **Area** **(ha)** | Mineral Right                      | Permit Number                                 | Renewal Date                                                                                   
|------------------------------ | ----------------- | ---------------------------------- | --------------------------------------------- | -----------------------------------------------------------------------------------------------
|Niewejaarskraal 40 Ptn (Ptn 6) | 1766.390          | New Order Mining Right             | 22/2006(MR)
      
    NIEWEJAARSKRAAL MR     | MR Conversion
      
    Granted 12/04/06 - valid until 11/04/16                               
|Niewejaarskraal 40 Ptn (Ptn 4)
|Niewejaarskraal 40 Ptn (Ptn 2)
|Viegelandsput 39 Ptn Re/farm  
|Viegelandsput 39 Ptn Re/farm   | 324.105           | New Order 
      Prospecting Right | (NC)30/5/1/1/2/465PR 
      100/2007
    (PR) | Granted 30/11/06 - 29/11/08
      
    Renewal was submitted 09/09/08 Renewal accepted 22/09/08
|Niewejaarskraal 40 Ptn (Ptn 6) | 995.200           | New Order 
      Prospecting Right | (NC)30/5/1/1/2/209PR 
      214/2007
    (PR) | Granted.30/11/06- 29/11/08
      
      Renewal Submitted 09/09/08 Renewal accepted 22/09/08   

History

The first alluvial diamond discovery in South Africa was on the
farm De Kalk on the banks of the Upper Orange River, some 55 km upstream from
Saxendrift in 1866. Recoveries of several large diamonds over 100 carat in size led to initial enthusiastic mining of shallow
Rooikoppie gravels by artisanal diggers, who flocked to the area mining diamonds
from the high level terraces. Since the late 1800s, numerous properties along
the middle Orange River have been prospected/mined for alluvial diamonds the
majority of which have been derived from the Rooikoppie gravels.

---

 Page 43 

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.

Trans Hex commissioned Venmyn to complete mineral resource
estimates in conjunction with its plans to sell the MORO properties. The March
2007 estimate showed indicated resources of 5,967,500 m3grading 0.91
carats per 100 m3and inferred resources of 8,080,000 m3grading 0.73 carats per 100 m3.

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

Geology

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 lower lying terraces along the MOR are farmed extensively
by means of centre-pivot irrigation systems. In addition, much of the area is
blanketed by younger Kalahari sands which support scattered vegetation. As a
result, aerial photographs and satellite images are of limited use for
delineating potential gravel target areas. Further, the mostly shale bedrock,
combined with extensive post-depositional calcretisation of the gravels makes it
difficult to identify bedrock channels on the terraces using geophysical
surveys. Consequently, neither geophysics, nor satellite images are used
extensively as primary exploration tools along the MOR.

Estimates of Mineralization

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. R.Marshall, PhD, Pr.Sci.Nat.,
a qualified person who is independent of the Company, is responsible for the estimate.

---

 Page 44 

|Cautionary Note to Investors Concerning
  Estimates of Inferred Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.

Table 9. Niewejaarskraal Inferred Mineral Resources

|Area      | Gravel Type                        | Volume (cubic meters) | Grade (carats/100 cubic meters) | (1) Value (US$/carat)
|--------- | ---------------------------------- | --------------------- | ------------------------------- | ---------------------
|Terrace A | Fluvial- alluvial
      Rooikoppie | 11,831,500 1,840,000  | 0.84                            | 1,075                
|Terrace B | Fluvial- alluvial
      Rooikoppie | 5,990,000 969,000     | 0.84                            | 1,075                
|Total     |                                    | 20,630,500            | 0.84                            | 1,075                

(1) Value modelled by Rockwell for
2009.

Planned Program

The current plan, given the depressed state of the
international diamond market and weak diamond prices is for the Niewejaarskraal
mine to remain on care and maintenance for the period 2009 to 2010 due to market
circumstances. However, this operation has in the past produced high value and
exceptional stones and on this basis the Company plans to modernize and re-open
the mine once the diamond market improves.

Item 4A Unresolved staff comments

Not applicable as the Company is a non-accelerated filer.

---

 Page 45 

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis of Rockwell's financial
condition and results of operations for the fiscal year ended February 28, 2009,
the nine months ended February 29, 2008 and the fiscal year ended May 31, 2007
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.

Overview

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 of the Annual Report on Form
20-F

Going Concern

Rockwell Diamonds Inc. (Rockwell or the Company) is
incorporated under the British Columbia Business Corporations Act(formerly the Company Actof British Columbia), and is engaged in the
business of diamond production and the acquisition and exploration of natural
resource properties. The Companys principal 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.

The Company incurred losses of $13 million during the year
ended February 28, 2009 and continues to incur losses subsequent to year end.
Although the Company has reduced costs substantially, sales of diamonds have
also decreased. The risk that cash and working capital will not be sufficient to
fund the continuing losses indicates that a material uncertainty exists which
may cast substantial doubt on the ability of the Company to continue as a going
concern. The directors believe that the Company will continue as a going concern
for the fiscal year 2010 due to the following:

- At year end, the Companys current assets exceeded its current liabilities
  by $0.6 million and the Companys total assets exceeded its total liabilities
  by $70.4 million.
- The cash flow forecasts for the fiscal year 2010 indicate that additional
  funds of US$4 million will be required to enable the Company to continue as a
  going concern. The additional funding was calculated on the assumption that
  volumes remain constant with current production, with the new plant still
  operating at below 50% capacity, prices remaining at current depressed levels,
  which are 55% below pre crisis levels and the South African Rand remains at
  current levels relative to the United States and Canadian dollar.

The directors have commenced plans to raise financing, and the
following plans have been considered to raise these funds:

- Private placement
- Prospectus
- Rights offering

The directors have started the process towards exercising
either a rights offering or a private placement, and have identified and communicated with current investors and
potential new investors to ensure that the desired investment is raised.

---

 Page 46 

Accordingly, the financial statements have been prepared on the
basis of accounting policies applicable to a going concern. Should the Company
and its subsidiaries be unsuccessful in raising the additional funds of US$4
million, they may be unable to realise their assets and discharge their
liabilities in the normal course of business. If the going concern basis is not
appropriate for these consolidated financial statements, then significant
adjustments would be necessary in the carrying value of assets and liabilities,
the reported revenues and expenses, and the balance sheet classifications
used.

Critical Accounting Policies

The Company's significant accounting policies are presented in
note 3 of the accompanying audited consolidated financial statements for the
year ended February 28, 2009. 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.

A. Results of Operations

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 2009, 2008 or 2007. The
Company's financial position and results of operations are summarized below:

|                                                 |  | As at        |  |  | As at        |  |  | As at       | 
|------------------------------------------------ |  | ------------ |  |  | ------------ |  |  | ----------- | 
|                                                 |  | February 28, |  |  | February 29, |  |  | May 31,     | 
|Balance
      Sheet                              |  | 2009         |  |  | 2008         |  |  | 2007        | 
|Current assets                                   |  | 15,099,971   |  |  | 38,596,562   |  |  | 56,142,572  | 
|Mineral properties                               |  | 28,894,477   |  |  | 25,247,937   |  |  | 24,121,855  | 
|Other assets                                     |  | 62,367,968   |  |  | 69,848,625   |  |  | 49,341,956  | 
|Total assets                                     |  | 106,362,416  |  |  | 133,693,124  |  |  | 129,606,383 | 
|                                                 |  |              |  |  |              |  |  |             | 
|                                                 |  |              |  |  |              |  |  |             | 
|Current liabilities                              |  | 14,462,800   |  |  | 12,502,301   |  |  | 29,399,774  | 
|Other liabilities                                |  | 21,478,590   |  |  | 34,076,016   |  |  | 28,613,767  | 
|Shareholders equity                             |  | 70,421,026   |  |  | 87,114,807   |  |  | 71,592,842  | 
|Total liabilities
      and shareholders equity |  | 106,362,416  |  |  | 133,693,124  |  |  | 129,606,383 | 

---

 Page 47 

|                                                                |  |              |   |  | Nine months  |   |  |            |  
|--------------------------------------------------------------- |  | ------------ | - |  | ------------ | - |  | ---------- | -
|                                                                |  | Year ended   |   |  | ended        |   |  | Year ended |  
|                                                                |  | February 28, |   |  | February 29, |   |  | May 31,    |  
|Statements of Operations                                        |  | 2009         |   |  | 2008         |   |  | 2007       |  
|Revenue                                                         |  | 34,633,477   |   |  | 36,149,308   |   |  | 10,103,328 |  
|Mine site operating costs                                       |  | (25,113,363  | ) |  | (22,730,271  | ) |  | (8,974,742 | )
|Amortization and depletion                                      |  | (11,287,197  | ) |  | (6,533,941   | ) |  | (2,074,415 | )
|Operating profit (loss)                                         |  | (1,767,083   | ) |  | 6,885,096    |   |  | (945,829   | )
|                                                                |  |              |   |  |              |   |  |            |  
|Expenses                                                        |  |              |   |  |              |   |  |            |  
|Accretion of reclamation obligation                             |  | 1,072,389    |   |  | 464,316      |   |  | 55,471     |  
|Exploration                                                     |  | 498,739      |   |  | 604,169      |   |  | 1,371,351  |  
|Foreign exchange loss (gain)                                    |  | (350,485     | ) |  | (751,318     | ) |  | (3,580,364 | )
|Legal, accounting and audit                                     |  | 1,863,261    |   |  | 790,725      |   |  | 691,759    |  
|Office and administration                                       |  | 3,489,460    |   |  | 2,697,077    |   |  | 2,993,453  |  
|Shareholder communications                                      |  | 453,489      |   |  | 198,985      |   |  | 200,574    |  
|Stock-based compensation                                        |  | 1,834,422    |   |  | 1,826,317    |   |  | 79,623     |  
|Travel and conference                                           |  | 605,812      |   |  | 654,705      |   |  | 666,194    |  
|Transfer agent filings                                          |  | 250,878      |   |  | 544,232      |   |  | 176,530    |  
|Subtotal                                                        |  | 9,717,965    |   |  | 7,029,208    |   |  | 2,654,591  |  
|                                                                |  |              |   |  |              |   |  |            |  
|Loss on disposal of equipment                                   |  | 364,918      |   |  | 402,411      |   |  | 94,621     |  
|Loss on disposal of mineral properties                          |  | 203,339      |   |  |             |   |  |           |  
|Interest (income)                                               |  | (2,672,021   | ) |  | (1,118,396   | ) |  | (372,149   | )
|Interest on capital leases                                      |  | 1,592,001    |   |  | 1,289,385    |   |  | 433,125    |  
|Convertible note accretion and interest
      expense           |  | 3,009,680    |   |  | 270,976      |   |  | 2,466,839  |  
|Loss on early extinguishment convertible
      promissory notes |  |             |   |  |             |   |  | 137,957    |  
|Write down of assets                                            |  | 2,590,958    |   |  |             |   |  |           |  
|Write-off of amounts receivable                                 |  | 291,063      |   |  | 18,360       |   |  | 224,942    |  
|Write-down of marketable securities                             |  |             |   |  |             |   |  | 1          |  
|Subtotal                                                        |  | 5,379,938    |   |  | 862,736      |   |  | 2,985,336  |  
|                                                                |  |              |   |  |              |   |  |            |  
|Loss before income taxes                                        |  | 16,864,986   |   |  | 1,006,848    |   |  | 6,585,756  |  
|Income tax expense                                              |  | 7,000        |   |  | 179,290      |   |  |           |  
|Future income tax (recovery) expense                            |  | (3,347,000   | ) |  | 2,261,110    |   |  | (635,773   | )
|Loss before non-controlling interest                            |  | 13,524,986   |   |  | 3,447,248    |   |  | 5,949,983  |  
|Non-controlling interest                                        |  | (549,024     | ) |  | 5,955,779    |   |  | 415,159    |  
|Loss for the period                                             |  | 12,975,962   |   |  | 9,403,027    |   |  | 6,365,142  |  
|Other comprehensive loss                                        |  | 13,409,383   |   |  |             |   |  |           |  
|Total comprehensive loss                                        |  | 26,385,345   |   |  | 9,403,027    |   |  | 6,365,142  |  
|                                                                |  |              |   |  |              |   |  |            |  
|Basic and diluted loss per common share                         |  | 0.05         |   |  | 0.05         |   |  | 0.11       |  
|Weighted average number of common shares
      outstanding      |  | 237,924,152  |   |  | 196,428,551  |   |  | 55,418,242 |  

---

 Page 48 

Production and Sales

The following is a comparison of the twelve months of fiscal
2009 (ending February 28, 2009) with the nine months ending February 29,
2008.

|PRODUCTION                 
|---------------------------
|Operation                  
|Volume (cubic
      meters)
|Holpan                     
|Klipdam                    
|Wouterspan                 
|Makoenskloof               
|Saxendrift                 
|Total                      

|SALES, REVENUE AND
      INVENTORY
|----------------------------------
|Operation                         
|Sales (carats)                    
|Holpan                            
|Klipdam                           
|Wouterspan                        
|Makoenskloof                      
|Saxendrift                        
|Total                             

Subsequent to the year end, the production and costs for the
five months ending July 31, 2009 are tabulated below:

|PRODUCTION                           
|-------------------------------------
|Five months ended July 31,
      2009
|Mine                                 
|Holpan                               
|Klipdam*                             
|Saxendrift                           
|Total                                

The average cash costs of production from March 1 to July 31,
2009 (over the Companys 2010 fiscal year) for the group has been approximately
US$2.64 per tonne. A combination of restructuring, efficiency and plant
throughput improvements, cost control measures, and increasing production are
successfully keeping monthly cash costs below the Companys target range of
US$3.00 3.50 per tonne. This unit cost is expected to remain at the low end of
the range as the Company continues to increase production at existing operations
and improve processing plant efficiencies.

---

 Page 49 

Fiscal 2009 compared to nine months ended Fiscal
2008

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 into 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 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.

|Impairments included:       |   |             | 
|--------------------------- | - | ----------- | 
|                            |   |             | 
|Loan by DME for reclamation | $ | 0.5 Million | 
|Processing Plant            | $ | 1.6 Million | 
|Mineral Rights              | $ | 0.3 Million | 
|Mine buildings              | $ | 0.2 Million | 

Fiscal 2008 Compared to Fiscal 2007

The Company had a loss of $9,403,027 for the nine month period
ended February 29, 2008 compared to a net loss of $6,365,142 for the year ended
May 31, 2007. The biggest component of this loss is attributable to the non-controlling interest of $5,955,779 for this year
compared to the $415,159 for the year ended May 31, 2007. Of this $5,955,779 an
amount of $4,463,261 related to an exchange gain as a result of the 49%
non-controlling interest being held at the South African operating subsidiaries
rather than at the consolidated entity level whereby they would have shared in a
net foreign exchange gain of only $751,358 thereby reducing the loss by
$4,095,096 to $5,307,931. The further increase in net losses during the period
resulted from stock based compensation expenses recognized on stock options
granted during the nine months ended February 29, 2008, lower foreign exchange
gains, interest expense on the Companys capital leases, increased accretion of
reclamation obligations, loss on disposal of assets and future income tax
expenses which was offset by lower exploration and convertible note accretion
expenses incurred in the year ended May 31, 2007. The Company recorded a loss of
$0.05 per share for the nine months ended February 29, 2008, compared to a loss
of $0.11 per share for the year ended May 31, 2007.

---

 Page 50 

During the nine months ended February 29, 2008 the Company
realized rough diamond sales of $36,038,106 of which $9,802,308 was earned
during the third quarter of fiscal 2008 compared to $12,125,363 for the second
quarter of fiscal 2008 and to $nil for the comparable period in the prior year.
Mine site operating costs for the nine months ended February 29, 2008 amounted
to $29,264,212 (three months ended February 29, 2008 - $9,768,420, three months
ended November 30, 2007 - $11,712,135), which includes amortization and
depletion charges of $6,533,941 (six months ended November 30, 2006  nil).

Exploration expenses (excluding stock-based compensation)
decreased to $604,169 for the nine months ended February 29, 2008 compared to
$1,371,351 for the year ending May 31, 2007. This decrease is due to higher
exploration activities incurred during the year ended May 31, 2007 performed on
the African diamond properties which included the Holpan/Klipdam property. The
exploration expenses for the nine months ended February 29, 2008 were mainly
incurred on the Kwango River Project in the DRC and the Ricardo property in
Chile.

The Company incurred a foreign exchange gain of $751,318 for
the nine months ended February 29, 2008 compared to a foreign exchange gain of
$3,580,364 for the year ended May 31, 2007 due to a higher amount of South
African denominated liabilities and the strengthening of the Canadian dollar.
Foreign exchange gains to the amount of $11,900,802 were realized in Durnpike
and in Minera Ricardo (of which the non-controlling interests share of this
gain was $4,463,261), while foreign exchange losses of $11,149,484 were
accounted for in Rockwell RSA, Cayman Islands and Rockwell Canada (the
non-controlling interest did not share in these losses) for the period ended
February 29, 2008. Because the non-controlling interest did not share in the
loss, this increased the loss for the consolidated Company.

Office and administrative costs for the nine months ended
February 29, 2008 amounted to $2,697,077 in comparison to $2,993,453 incurred in
for the year ended May 31, 2007, the variance is primarily due to reduced
consulting and salary expenses as the Company has completed its major corporate
financing, acquisition, and operational management and property investigation
activities. Travel and conference expenses amounted to $654,705 for the nine
months ended February 29, 2008 compared to $666,194 for the year ended May 31,
2007, largely due to reduced travel as the acquisition activities have been
completed. Legal, accounting and audit expenses for the nine months ended
February 29, 2008 amounted to $790,725 compared to $691,759 incurred for the
year ended May 31, 2007. This increase was primarily due to increased legal and
accounting services related the listing on both the Johannesburg Stock Exchange
and the TSX, these increases were however partially offset by reduced legal and
accounting services as the Companys acquisition activities of Durnpike and HC
Van Wyk have been completed.

---

 Page 51 

Stock-based compensation increased to $1,826,317 for the nine
months ended February 29, 2008 in comparison to $79,623 for the year ended May
31, 2007 due to an increase in the number of options granted during fiscal
2008.

B. Liquidity and Capital Resources

Liquidity

At February 28, 2009, the Company had cash of $4.0 million,
restricted cash of $2.7 million and an overdraft balance of $3.5 million, a net
balance of $3.1million, with available cash of $0.4 million and a working
capital of $0.6 million, as compared to cash and cash equivalents of $19.6
million and working capital of $26.1 million at February 29, 2008.

The Company had no long-term debt at February 28, 2009, 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
7.8, the closing rate in effect on February 28, 2009. Since then, the South
African Rand has further strengthened to 1 Canadian dollar = ZAR 7.3 by mid May
2009.

The significant decline in the prices of diamonds in recent
months has had a negative impact on the Companys profitability. With the
current global financial crisis and economic downturn, the Company anticipates
diamond prices will remain depressed in the near term.

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. Specific initiatives taken include:

- Restructuring and retrenchments were undertaken to reduce costs;
- The high cost, low grade Wouterspan operation was placed on care and
  maintenance in January 2009;
- Introduction of a smart mining program to modernize earth moving
  procedures, and the initiation of a comprehensive review of processing and
  recovery plant to ensure optimization and lowering of operating costs;
- The operations team and mine managers, assisted by a professional engineer,
  have implemented significant technical and operational improvements at the
  Holpan DMS to reduce costs, and improve throughput;
- The progressive implementation of wide ranging optimization and
  de-bottlenecking of the new high volume Saxendrift processing and final
  recovery plant by a dedicated engineering task force to ensure improved
  throughput and lowering of costs; and
- Improving utilization of the earth moving fleet which, in addition to
  reducing costs, has given the Company the ability to develop new operations
  without outlays of large amounts of capital on new earth moving equipment.

---

 Page 52 

- The Company also continues to review its capital expenditure program for
  2009, 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 satisfy obligations as they come
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 unfreezing of credit and capital markets, some of which are beyond
the Companys control. There is no assurance that our expected cash flows from
operations in combination with other steps being taken will allow the Company to
meet these obligations as they become due.

The Company has an overdraft facility in the amount of ZAR28
million ($3.8million) available for its operations. 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 the end of June 10, 2009, the Company has unrestricted
cash of $1.4 million and has utilized $2.8 million of the $3.5 million overdraft
facility to maintain its operational requirements. The cash available of $2.1
million is available to finance the shortfall in operations until the
anticipated breakeven point in the market prices anticipated in September
2009.

The average expenditures in the first few months of the current
2010 fiscal year is approximately ZAR5 million per month and has been decreasing
as sales have been increasing. This recovery has been slowed by the
strengthening of the ZAR in relation to sales achieved in US$.

To ensure the continuation of operations, and develop existing
and new opportunities, the Board of Directors of Rockwell have proposed a
financing to strengthen the Companys balance sheet through a rights
offering.

Capital Resources

The Company's sources of capital are primarily equity
investment and debt.

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.

---

 Page 53 

Furthermore, in recent months, worldwide securities markets
have experienced a high level of price and volume volatility, and the market
price of securities of many companies have experienced unprecedented declines in
price which have not necessarily been related to the operating performance,
underlying asset values or prospects of such companies. In addition,
significantly higher redemptions by holders of mutual and hedge funds has forced
many of such funds (including those holding the Companys securities) to sell
such securities at any price. Therefore, there can be no assurance that
significant fluctuations in the trading price of the Companys common shares
will not occur, or that such fluctuations will not materially adversely affect
the Companys ability to raise equity funding without significant dilution to
its existing shareholders, or at all.

During the year ended February 28, 2009, the Company did not
complete any debt financings. The Company anticipates that it has sufficient
funding facilities and funds available (Ref 1.6 above) to meet its working
capital requirements, provided that the diamond market recovers and sales
achieve over US$917 per carat on the near future and the exchange rate remains
constant. At an exchange rate of ZAR8.8 / US$1 and current volumes and grade
being achieved, breakeven point is anticipated to be reached when the Sales
price per carat recovers to the US$1000  US$1,100 per carat range.

The Company intends to raise additional funds and are
investigating various available options at this stage to ensure adequate working
capital should the recovery in the markets be delayed beyond our estimations and
to complete capital projects to expand production.

Other than already described above, the Company had no other
lines of credit or other sources of financing which have been arranged but as
yet unused as at February 28, 2009.

Financial Instruments

The Company's financial instruments consist of cash and cash
equivalents, restricted cash, amounts receivable, security deposit, reclamation
deposit, accounts payable and accrued liabilities, reclamation obligation,
capital leases, amounts owing pursuant to acquisition and balances receivable
from or due to related parties. In addition, the Company has cash and certain
liabilities denominated in South African rand. As a result, the Company is
subject to foreign exchange 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 limits exposure to credit risk on liquid financial
assets through maintaining its cash and cash equivalents with high-credit
quality financial institutions. The Company does not have financial assets that
are invested in asset backed commercial paper. The Company's minimize its credit
risk by settling the receivables on its diamond sales in the month following the
sale.

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.

---

 Page 54 

The fair values of these financial instruments approximate
their carrying values, unless otherwise noted.

Material Commitments for Capital Expenditures

At February 28, 2009 and August 21, 2009, the Company had no
material commitments for capital expenditures.

C. Research and Development, Patents and License,
etc.

Not applicable.

D. Trend Information

The months from November 2008 to February 2009 were the most
testing times for prices and the overall diamond industry since the Great
Depression. In response, Rockwell cancelled all sales for November and December
2008, embarked on a cost cutting program and also suspended all operations for
the months December 2008 and January 2009. The immediate decisions which
Rockwell management took during this period assisted the Company to address the
challenges of the credit crunch and related depressed diamond prices.

The diamond industrys financial stability was severely tested
during this period and resulted in a few operations being liquidated as the
industry and banks worked together to avoid liquidations as this would have had
a detrimental ripple effect on the industry overall. However, there was a large
amount of stressed sales of inventory, which created opportunities for companies
with a positive cash balance.

Retailers continued their resistance to purchasing additional
inventory and also reduced in-store inventory to acceptable levels while
improving their levels of debt. The result of these latter actions was a
worldwide cessation of trade in polished diamonds and, subsequently, rough
diamonds for the months November to January. Trade resumed in February albeit
very cautiously. A lower level of stressed sales continued through February and
ultimately placed pressure on the values offered for rough diamonds, creating
further opportunities for cash strong traders, and enabling them to purchase
rough diamonds at prices that reduced the average values of their inventories.
The pressure placed on rough diamond values and the high amount of opportunistic
buying resulted in producers receiving around 50% below the high prices received
in 2008.

Certain producers were forced to sell at these prices while
Rockwell managed its operations and cash flow, and deferred selling until the
latter part of February. Therefore, Rockwell diamonds were not sold at massive
discounts. Rockwell also moved away from selling its entire inventory on tenders
as we realized that traders were not prepared to offer good value but were
attempting to purchase at prices equivalent to those last seen in the year 2000.
Furthermore, the Company sold both directly to the industry and in part via
tender. The combination of the postponement of diamond sales as well as using
direct sales earned Rockwell better prices.

The largest producers, De Beers and Alrosa, also resisted
selling at the discounted prices and introduced a slow down and cessation at the
operational level. Most producers world-wide adopted a similar approach of
cessation and reduction in production. Rough diamond inventory immediately
reduced and, remarkably, shortages became evident in late February resulting in
the increase in rough diamond prices.

---

 Page 55 

The polished market was equally stressed but the diamond
engagement sector of the retail industry maintained itself and saw relatively
high volumes of polished 0.75 carat-2 carat stones sold, resulting in a price
and demand increase for rough diamonds up to 5 carats in size. There was little
demand for larger, over 5 carat rough diamonds because traders were unwilling to
invest in a product that was difficult to sell unless such diamonds were highly
discounted.

By the end of February 2009, rough diamond prices were 40%
below the highs of 2008 (84% below the averages achieved by Rockwell in 2008 due
to both price and mix). However based on the Companys own results and market
research, and information gleaned from the world wide web. Polished Prices, the
BMO Rough Diamond Index, and Royal Bank Canada Diamond Research publications
indications are that rough diamond prices have begun to increase since that time
as shown in tender prices in March and May. (The average price per carat
received increased from US$318.32 in February, to US$513.43 in March and to
US$584.69 in May).

Rockwell is relatively confident that rough diamond prices will
continue to increase during 2009 as is supported by market experts. However the
occurrence of possible further corrections in rough diamond prices through 2009
cannot be totally discounted.

The graph below provides a summary of Rockwells diamond
production and prices since start-up in 2006 is indicated below. This graph is
typical of alluvial diamond producers in that it shows strong fluctuations
consistent with the highly varied nature of alluvial diamond mine production as
compared to a primary kimberlite production prices. Because of this, predicting
average prices is challenging. In respect of 2009 sales, data suggest that the
overall market prices appear to be trending upwards in line with the views of
market observers and experts.



---

 Page 56 

E. Off-Balance Sheet Arrangements

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.

F. Tabular Disclosure of Contractual Obligations

The Company has the following payment commitments: (a) minimum
lease payments of $8.7 million, with $5.4 million payable in the next 12 months,
with installments up to the year 2011 to various financial institutions for
plant and equipment; (b) Remaining acquisition payment of $3.8 million to Trans
Hex for the Remhoogte property following the successful acquisition of
Saxendrift Mine (Pty) Ltd, though this transaction is at the election of the
Company.

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

|                                                                                                                                    | Payments due by period
|----------------------------------------------------------------------------------------------------------------------------------- | ----------------------
|                                                                                                                                    | Total                 
|Contractual obligation                                                                                                              | Nil                   
|Long term debt obligations                                                                                                          | 8.7m                  
|Operating lease obligations                                                                                                         | Nil                   
|Purchase obligations                                                                                                                | Nil                   
|Reclamation Obligations                                                                                                             | 3.8m                  
|Other Long-Term Liabilities
      Reflected on the Company's Balance Sheet under the GAAP of the primary
      financial statements | Nil                   
|Total                                                                                                                               | 12.5m                 

Other than described above and in the notes of the audited
financial statements for the year ended February 28, 2009, 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.

G. Safe Harbor

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.

---

 Page 57 

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

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 21, 2009.

The information as to the number of Common Shares beneficially
owned, controlled or directed is not within the knowledge of the management of
the Company and has been furnished by the respective nominees as reported in
their filings at www.sedi.ca. The term of office of Mr. Greg Radke and Mr.
Terrance Janes expired in June 2009 when they resigned from the Board of
Directors.

|Name, Position and Country of Residence                                                                            | Period a Director of Rockwell | Securities Beneficially Owned or
      Controlled(1)          
|------------------------------------------------------------------------------------------------------------------ | ----------------------------- | --------------------------------------------------------------
|D. Mark Bristow 5Director Johannesburg,
      South Africa                                                         | Since March 2007              | 2,433,286 Common Shares 600,000 Warrants
      449,500 Options
|John Bristow President, Chief Executive Officer, Chief
      Operating Officer and Director Pretoria, South Africa | Since August 2006             | 1,283,386 Common Shares 899,500 Options                       
|David Copeland 3,5 Chairman and Director
      Vancouver, British Columbia, Canada                                 | Since September 2006          | 1,224,373 Common Shares 500,000 Options
      192,000 Warrants
|William J. Fisher 2,3, 5 Director
      Toronto, Ontario, Canada                                                   | Since November 2008           | Nil                                                           
|Sandile Zungu 3,4 Director Bryanston,
      South Africa                                                           | Since November 2008           | Nil                                                           
|Desmond Morgan Chief Financial Officer
      Johannesburg, South Africa                                            | Since October 2008            | Nil                                                           
|Trevor Thomas Secretary Vancouver, British
      Columbia, Canada                                                  | Since February 2008           | 15,000 Options                                                

Notes:

|1. | The information as to securities beneficially owned or
      controlled is not within the knowledge of the management of the Company
      and has been furnished by the respective nominees and is based on insider
      reports filed on www.sedi.caas at June
      24, 2009.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Member of the Audit Committee                                                                                                                                                                                                                                                    
|3. | Member of the Nominating and Corporate Governance
      Committee                                                                                                                                                                                                                
|4. | Member of the Compensation Committee                                                                                                                                                                                                                                             
|5. | Member of the Technical
Committee                                                                                                                                                                                                                                                

---

 Page 58 

|6. | Mr. John Bristow, Mr. Mark Bristow and Mr. Copeland each
      hold options to purchase common shares at $0.62 per share expiring on
      September 24, 2012. Mr. John Bristow also holds options to purchase common
      shares at $0.45 per share expiring on June 20, 2011.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|7. | On June 18, 2009, Greg Radke (appointed 28 November 2008)
      resigned from the Board of Directors.                                                                                                                                                                           
|8. | On June 23, 2009, Terry Janes (appointed 28 November
      2008) resigned from the Board of Directors.                                                                                                                                                                          

Effective November 21, 2008, several
changes were implemented to the board of directors as a result of a recent board
review of the Company's operations in light of volatile capital market
conditions and investor perceptions of listed diamond entities. The changes also
reflected alignment with Rockwell's black economic empowerment partner, and were
made as part of an agreement with the Companys largest shareholder, Pala
Investment Holdings Limited. The changes included the following:

- After playing key roles in the advancement of Rockwell, Mr. Pat Bartlett,
  Mr. Rene G. Carrier, Mr. Scott Cousens and Mr. Douglas Silver resigned from
  the Board;
- Mr. Sandile Zungu, a mechanical engineer with an MBA and a founding member
  of Zungu Investments Company (Proprietary) Limited, a diversified investment
  company which is the majority shareholder of Rockwell's empowerment partner
  Africa Vanguard Resources, joined the Board as an independent director; and
- Mr. Bill Fisher, a geologist with alluvial diamond mining experience in
  Africa and Brazil, and broad experience in the management of Canadian publicly
  listed companies joined the board as an independent director;

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

DAVID COPELAND, P.Eng.  Chairman and Director

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:

|Company                          | Positions Held | From           | To            
|-------------------------------- | -------------- | -------------- | --------------
|Amarc Resources Ltd.             | Director       | September 1995 | Present       
|Anooraq Resources Corporation    | Director       | September 1996 | September 2004
|Continental Minerals Corporation | Director       | November 1995  | Present       
|President & CEO                  | January 2008   | Present       
|Farallon Resources Ltd.          | Director       | December 1995  | April 2009    

---

 Page 59 

|Company                        | Positions Held | From           | To        
|------------------------------ | -------------- | -------------- | ----------
|Great Basin Gold Ltd.          | Director       | February 1994  | March 2008
|Northern Dynasty Minerals Ltd. | Director       | June 1996      | Present   
|Rockwell Diamonds Inc.         | Director       | September 2006 | Present   
|Chief Executive Officer        | September 2006 | September 2007
|Chairman                       | September 2007 | Present       
|Taseko Mines Limited           | Director       | March 1994     | Present   

DR. JOHN BRISTOW  President, Chief Executive Officer, Chief
Operating Officer and Director

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 Americanand De Beers
Groupof companies for 12 years from 1983 1994. He served as Head of
International Research with De Beersin Kimberley (South Africa), and was
subsequently Head of the Geology Laboratory at the Anglo American Research
Laboratoriesin 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 Corporationon
the Johannesburg Stock Exchange, in which Tokyo Sexwales Mvelaphanda
Diamondssubsequently acquired an interest. Gem DiamondsSaxendrift
mining operation consistently produced amongst the worlds highest value alluvial
diamonds, and was merged with the Trans Hex Groupin 2000.

From 2002 he was a Director and CEO of Kalahari Diamonds
Limitedand its subsidiary Sekaka Diamonds (Pty) Limitedin Botswana
until Kalahari was merged with Petra Diamondsin 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.

---

 Page 60 

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:

|Company                 | Positions Held | From        | To     
|----------------------- | -------------- | ----------- | -------
|Rockwell Diamonds Inc.  | Director       | August 2006 | Present
|President               | August 2006    | Present    
|Chief Operating Officer | August 2006    | Present    
|Chief Executive Officer | September 2007 | Present    

DR. MARK BRISTOW  Director

Dr. Mark Bristow was appointed to the Rockwell Diamonds Inc.
(Rockwell) 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:

|Company                    | Positions Held   | From          | To     
|-------------------------- | ---------------- | ------------- | -------
|Midway Resources Intl.    | Director         | November 2005 | Present
|Randgold Resources Limited | CEO and Director | August 1995   | Present
|Rockwell Diamonds Inc.     | Director         | December 2006 | Present

WILLIAM J. FISHER  DIRECTOR

Mr. Bill Fisher, a geologist with alluvial diamond mining
experience in Africa and Brazil, and broad experience in the management of
Canadian publicly listed companies has joined the board as an independent
director.

---

 Page 61 

William (Bill) Fisher, a British geologist, spent much of his
early career in diamond exploration and mining in Africa. He was a mine
production geologist in Angola for de Beers, and also in Guinea, West Africa for
AREDOR where he was responsible for mine control of alluvial, colluvial and open
pit kimberlite operations. He was also Mine Manager of a small alluvial gold
mine in northern Queensland, Australia and as CEO of Ambrex Mining, he
established a diamond pilot plant in Minas Gerais, Brazil. Mr. Fisher moved to
Canada in 1993 as a diamond expert. He subsequently became Vice President of
Exploration for Boliden, and then CEO of GlobeStar Mining Corporation. He has
been Chairman and Director of a number of publically listed Canadian companies,
including Treasury Metals, and currently serves as director of PC Gold as well
as CEO of Karmin Exploration. Mr. Fisher holds a Bachelor of Science degree in
Geology from Kingston University, London UK and is a practicing Professional
Geologist.

SANDILE ZUNGU  Director

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 R400 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.

TREVOR THOMAS, LLB  Secretary

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.

|Company                          | Positions Held | From          | To     
|-------------------------------- | -------------- | ------------- | -------
|Northern Dynasty Minerals Ltd.   | Secretary      | February 2008 | Present
|Amarc Resources Ltd.             | Secretary      | February 2008 | Present
|Anooraq Resources Corporation    | Asst Secretary | November 2007 | Present
|Continental Minerals Corporation | Secretary      | February 2008 | Present

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 Page 62 

|Farallon Resources Ltd. | Secretary | December 2007  | Present
|----------------------- | --------- | -------------- | -------
|Rockwell Diamonds Inc.  | Secretary | February 2008  | Present
|Taseko Mines Limited    | Secretary | August 1, 2008 | Present

DESMOND MORGAN  Chief Financial Officer

Mr Desmond Morgan is a Chartered Accountant with an Honours
Degree in Accounting Sciences from the University of South Africa (UNISA). He
has extensive high level and operational financial management and accounting
experience in mining, manufacturing, communications, finance, mergers and
acquisitions, and corporate environments.

POTENTIAL CONFLICTS OF INTEREST

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.

B. Compensation

GENERAL PROVISIONS

Named Executive Officer (NEO) means each of the following
individuals:

(a) the Chief Executive Officer
(CEO);

(b) the Chief Financial Officer
(CFO);

(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, 2009.

On December 12, 2007 the Board authorized the Company to change
its year end from May 31 to February 28.

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, 2009.

---

 Page 63 

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Committee

The Board had established a Compensation Committee consisting
of Mr. Terence Janes, Mr. Greg Radke and Mr. Sandile Zungu. Mr. Janes, Mr. Radke
and Mr. Zungu became Committee members on December 16, 2008. In June 2009 Mr.
Terence Janes and Mr. Greg Radke resigned as directors of the Company and as
members of the Compensation Committee. Mr. Mark Bristow, Mr. Rene Carrier, Mr.
David Copeland and Mr. Cousens were former members of the Compensation
Committee. The Compensation Committee recommends compensation for the directors
and executive officers of the Company. See further disclosure under heading
Report of Executive Compensation. 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.

---

 Page 64 

(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.

Report on Executive Compensation

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. Mr. John Bristow, Mr.
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.

Philosophy and Objectives

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.

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 Page 65 

Base Salary

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.

Bonus Incentive Compensation

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.

Equity Participation

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.

---

 Page 66 

Performance Graph

The Company commenced trading on The Toronto Exchange (TSX)
  on February 22, 2008. The Company was previously listed on the TSX Venture
  Exchange (TSXV). The following graph compares the cumulative shareholder
  return on the Companys Common Shares for the last five fiscal years against the return of the TSXV and the S&P/TSX
  Composite Total Return Index based on a $100 investment on May 31, 2004. The
  year end of the Company was changed to February 28 in 2007.



Notes: The Company has not declared or paid a dividend on its
Common Shares.

Option Based Awards

The Companys long term incentives are designed to foster and
promote the long-term financial success of the Company by strengthening the
ability of the Corporation to attract and retain highly competent employees,
motivate performance through incentive compensation, promote greater alignment
of interests between employees and shareholders in creating long-term
shareholder value, and enable employees to participate in the long-term growth
and financial success of the Company. Long term incentives are comprised of
stock options, with approximately the same value of each being provided. The
Black-Scholes method is used to value stock options. The share price on the date
of grant is used to value share units. Stock options provide employees with the
opportunity to participate in the growth of the Companys share price as well as
benefit from the favourable tax treatment applicable to this form of
compensation.

The Compensation Committee approves stock options to facilitate
consideration of targeted direct compensation to senior executive officers.
Options are generally granted in the last quarter of each year as part of the
annual compensation review. Options are granted at other times of the year to
individuals commencing employment with the Company. The exercise price for the
options set in accordance with the rules of the TSX and is based on the five-day
volume weighted average closing price prior to the date of grant.

---

 Page 67 

Given the evolving nature of the Companys business, the Board
continues to review and redesign the overall compensation plan for senior
management so as to continue to address the objectives identified above.

Stock Option Plan

The Company currently has a share purchase option compensation
plan dated for reference August 14, 2008, the Stock Option Plan (for the
purposes of this section, the Plan) approved by the shareholders
in September 15, 2008 that allows the Company to grant options up to 10% of the
issued and outstanding the Shares at any one time, typically vesting over two
years, to its directors, employees, officers, and consultants. The exercise
price of each option can be set equal to or greater than the closing market
price of the Shares on the TSX on the day prior to the date of the grant of the
option, less any allowable discounts. Options have a maximum term of five years
and typically terminate 30 days following the termination of the optionees
employment, except in the case of retirement or death.

Material Terms of the Plan

The following is a summary of the material terms of the
Plan:

| | (a) | Currently all options granted under the Plan are
      non-assignable and non-transferable and are issueable for a period of up
      to five years;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (b) | for stock options granted to employees or service
      providers (inclusive of management company employees), the Company must
      ensure that the proposed optionee is a bona fide employee or service
      provider (inclusive of management company employees), as the case may be,
      of the Company or any subsidiary;                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (c) | if an optionee ceases to be employed by the Company
      (other than as a result of termination with cause) or ceases to act as a
      director or officer of the Company or a subsidiary of the Company, any
      option held by such optionee may be exercised within 90 days after the
      date of such optionee ceases to be employed as an officer or director or,
      as the case may be;                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (d) | if an optionee dies, any vested option held by him at the
      date of death will become exercisable by the optionees lawful personal
      representatives, heirs or executors until the earlier of one year after
      the date of death of such optionee and the date of expiration of the term
      otherwise applicable to such option;                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (e) | in the case of an optionee being dismissed from
      employment or service for cause, such optionees options, whether or not
      vested at the date of dismissal, will immediately terminate without right
      to exercise same;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (f) | the minimum exercise price of an option granted under the
      Plan must not be less than the Market Price calculated the day before the
      grant (as defined in the Plan);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (g) | Vesting of options shall be in accordance with the option
      commitment in the Plan or otherwise, at the discretion of the Board, and
      will generally be subject to: (i) the service provider remaining employed
      by or continuing to provide services to the Company or any of its
      affiliates as well as, at the discretion of the Board, achieving certain
      milestones which may be defined by the Board from time to time or
      receiving a satisfactory performance review by the Company or any of its
      affiliates during the vesting period; or (ii) the service provider
      remaining as a Director of the Company or any of its affiliates during the
      vesting period;

---

 Page 68 

| | (h) | The maximum aggregate number of shares issuable upon
      exercise of options to non- employee directors must not exceed 1% of the
      total common shares of the Company outstanding at any time and no more
      than $100,000 in total award value per non- employee director on an annual
      calendar basis; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                            
| | (i) | The Board reserves the right in its absolute discretion
      to terminate the Plan with respect to all Plan shares in respect of
      Options which have not yet been granted hereunder.                                                                                                                                 

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 Plan also provides that:

| | (a) | All outstanding but unvested options will vest
      immediately prior to completion of a Change in Control (as defined in the
      Plan);                                                                                                                                                                                                                                                                               
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | If an option which has been previously granted is set to
      expire during a period in which trading in securities of the Company by
      any participant is restricted by a black-out, or any such blackout extends
      to a date which is within five business days of the expiry of the option,
      the exercise date will be extended to ten business days after the trading
      restrictions are lifted; and
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (c) | The Plan and outstanding options may be amended by the
      Board without shareholder approval in the following
  circumstances:                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (v)                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (vi)                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (vii)                                                                                                                                                                                                                                                                                                                                                                                                                     

The full text of the Plan is available for download at
www.sedar.com.

---

 Page 69 

SUMMARY COMPENSATION TABLE

The compensation paid to the NEOs during the Companys most
recently completed financial year of February 28, 2009 is as set out below and
expressed in Canadian dollars unless otherwise noted:

|Name
      and principal position                           | Salary ($)                       | Share- based awards
      ($) | Option- based
      awards ($)(5) | Non-equity
      incentive plan compensation**($)** | Pension value
      ($) | All other compensation ($) | Total compensation
      ($)
|----------------------------------------------------------- | -------------------------------- | ----------------------------- | --------------------------------- | --------------------------------------------------- | ----------------------- | -------------------------- | ----------------------------
|Annual
      incentive plans                                | Long-
      term incentive plans
|John Bristow(3) President,
      CEO and COO                | 333,455                          | Nil                           | 121,900                           | Nil                                                 | Nil                     | Nil                        | Nil                         
|Desmond Morgan CFO(1)(3)                                    | 44,043                           | Nil                           | Nil                               | Nil                                                 | Nil                     | Nil                        | Nil                         
|Dominque De La Roche Former CFO(2)(3)                       | 136,922                          | Nil                           | 81,266                            | Nil                                                 | Nil                     | Nil                        | Nil                         
|Jeffrey Brenner Manager  Diamond
      Marketing and Sales | 206,470                          | Nil                           | 81,266                            | Nil                                                 | Nil                     | Nil                        | Nil                         
|Hennie van Wyk Former Director 
      Operations(3)(4)     | 226,436                          | Nil                           | 81,266                            | Nil                                                 | Nil                     | Nil                        | Nil                         

Notes:

| | (1) | Mr. Morgan commenced employment with the Company on
      October 13, 2008 and was appointed Chief Financial Officer on October 20,
      2008. The salary in the table above reflects the pro-rata portion of his
      annual base salary of $116,491 (ZAR 900,000).                                                                                                                                                                                                                                                                                                                                         
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Mr. De La Roche resigned as Chief Financial Officer on
      October 17, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (3) | Compensation of the Companys South African executives
      (Mr. Bristow, Mr. Morgan, Mr. De La Roche and Mr. van Wyk) is paid to each
      executive in South African Rand (ZAR) at an exchange rate of 1 Canadian
      dollar = ZAR 7.872, being the average monthly rate for the year ended
      February 28, 2009.                                                                                                                                                                                                                                                                                   
| | (4) | Mr. van Wyk was paid an annual salary of $323,150 (ZAR
      2,544,000) until August 2008. Commencing August 28, 2008, he became a
      consultant for the Company at a retainer of ZAR 100,000 per month. The
      salary in the table above reflects the pro-rata compensation made to Mr.
      van Wyk as an employee and consultant for the full financial
  year.                                                                                                                                                                                                                                      
| | (5) | The options granted in the 2008 financial year were
      granted pursuant to the Stock Option Plan. For compensation purposes, the
      Black-Scholes option valuation model has been used to determine the fair
      value on the date of grant. The Black-Scholes option valuation is
      determined using the expected life of the stock option, expected
      volatility of the Companys common share price, expected dividend yield,
      and risk-free interest rate. The Black-Scholes grant date fair value for
      awards granted on June 20, 2008 was 90% of the option exercise
    price.

INCENTIVE PLAN AWARDS

Outstanding Option-based Awards

The Company only currently has an option-based awards plan and
does not have any share based awards plan. The following table sets out all
share-based awards and option-based awards outstanding as at February 28, 2009,
for each NEO:

---

 Page 70 

|Name                                                        | Option-based Awards            
|----------------------------------------------------------- | -------------------------------
|Number of securities underlying unexercised options (#)     | Option exercise
      price ($)
|John Bristow President, CEO and
      COO                   | 600,000
      300,000          
|Desmond Morgan CFO                                          | Nil                            
|Jeffrey Brenner Manager 
      Diamond Marketing and Sales | 350,000
      200,000          
|Hennie van Wyk Former Director
       Operations           | 300,000
      200,000          

Notes:

| | (1) | The value at February 28, 2009 is calculated by
      determining the difference between the closing price of the Companys
      common shares at February 28, 2009 ($0.04/share) underlying the option on
      the TSX and the exercise price of the options.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Incentive Plan Awards  Value Vested or Earned During the
Year

The following table sets out all incentive plan (value vested
or earned) during the year ended February 28, 2009:

|Name                                                        | Option-based awards  Value
      vested during the year(1) ($) | Non-equity incentive plan
      compensation  Value earned during the year
      ($)
|----------------------------------------------------------- | --------------------------------------------------------------- | -------------------------------------------------------------------------------------
|John Bristow President, CEO and COO                         | Nil                                                             | Nil                                                                                  
|Desmond Morgan CFO                                          | Nil                                                             | Nil                                                                                  
|Dominque De La Roche Former CFO                             | Nil                                                             | Nil                                                                                  
|Jeffrey Brenner Manager  Diamond
      Marketing and Sales | Nil                                                             | Nil                                                                                  
|Hennie van Wyk Former Director 
      Operations           | Nil                                                             | Nil                                                                                  

Notes:

| | (1) | These amounts represent the aggregate dollar value that
      would have been realized if the options under the option-based award had
      been exercised on the vesting date. The value of each amount has been
      determined by taking the difference between the market price of the option
      at date of exercise and the exercise or base price of the option under the
      option- based award on the vest date.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

 Page 71 

PENSION PLAN BENEFITS

The Company has no pension plans for its directors, officers or
employees.

TERMINATION AND CHANGE OF CONTROL BENEFITS

The only written employment contracts between the Company and
the NEOs, in place are with John Bristow, Desmond Morgan and Jeffrey Brenner.
Hennie van Wyk has a consulting contract with the Company which contains a
change in control provision. Under these agreements, Messrs. Bristow, Morgan,
Brenner and van Wyk 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. In addition, under these agreements an
amount equal to a minimum of 12 months salary, in the case of Mr. Bristow, and 3
months in the case of Mr. Brenner, 4 months in the case of Mr. Morgan and 3
months in the case of Mr. van Wyk is payable in the event of a termination
without cause. In the event of a termination without cause or a resignation with
cause within 12 months following a change of control, Mr. Bristow, Mr. Morgan,
Mr. Brenner and Mr. van Wyk is entitled to receive, among other things, an
amount equal to 12 months salary and accrued bonus, and all stock options held
by these individuals will fully vest. Please see Summary Compensation Table.

Both these agreements define the events that could cause a
resignation with cause within 12 months of a change of control. Good Cause
means the occurrence of one of the following events without the Employees
express written consent:

| | (a) | the assignment by the Company of any substantial new
      duties inconsistent with the Employees positions, duties,
      responsibilities and status with the Company immediately prior to such
      change in assigned duties;                                                                                                                                                                                                                                                              
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (b) | a change in or reduction to the Employees position,
      duties, responsibilities or status with the Company compared to those that
      existed immediately prior to such change or reduction;                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (c) | a reduction by the Company in the Employees Annual
      Salary;                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (d) | a change in the principal place of work of the Employee
      to a location more than 50 kilometers from the then-current place of
      work;                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (e) | the failure by the Company to continue in effect, or a
      material change in the terms of Employees participation in benefits under
      any Incentive Plan or Benefits plan, (collectively, the Existing Plans),
      the effect of which would be to materially reduce the total value, in the
      aggregate, of the Employees benefits under the Existing Plans, or any
      reduction by the Company of the number of paid vacation days to which the
      Employee is entitled;
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (f) | any other circumstances which would constitute a
      constructive dismissal at common law;                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (g) | any breach by the Company of any provision of the
      employment agreement;                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (h) | the good faith determination by the Employee that, as a
      result of a Change of Control or any action or event thereafter, the
      Employees status or responsibilities within the Company have been
      diminished or the Employee is being prevented from carrying out his duties
      or responsibilities as they existed immediately prior to the Change of
      Control; or                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (i) | the good faith determination by the Employee, based on
      the standing or business practices of a person or group of persons who
      acquire control of Rockwell or the assets of Rockwell under a Change of
      Control, that it is not in the Employees best interest to continue to be
      employed by Rockwell in his position at the time of the Change of
      Control.                                                                                                         

---

 Page 72 

The estimated incremental payments from the Company to each of
Messrs. Bristow, Morgan and Brenner on (i) termination without cause or (ii)
termination without cause or resignation with cause within 12 months following a
change of control, assuming the triggering event occurred on February 28, 2009,
are as follows:

|NEO             | Termination Without Cause | Change of Control
|--------------- | ------------------------- | -----------------
|John Bristow    | Salary                    | $271,128         
|Bonus           | Nil                       | Nil              
|Options         | Nil                       | Nil              
|Desmond Morgan  | Salary                    | $38,732          
|Bonus           | Nil                       | Nil              
|Options         | Nil                       | Nil              
|Jeffrey Brenner | Salary                    | $51,617          
|Bonus           | Nil                       | Nil              
|Options         | Nil                       | Nil              
|Hennie van Wyk  | Salary                    | $38,732          
|Bonus           | Nil                       | Nil              
|Options         | Nil                       | Nil              

Notes:

|(1) | Compensation of the Companys South African executives
      (Mr. Bristow, Mr. Morgan and Mr. van Wyk) is paid to each executive in
      South African Rand (ZAR). For the purposes of the table above, an
      exchange rate of 1 Canadian dollar = ZAR 7.7454 was
used.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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, 2009 is:

---

 Page 73 

|Name                   | Fees earned
      ($) | Share- based
      Awards ($) | Option- based
      awards ($) | Non-equity incentive
      plan compensation ($) | Pension value
      ($) | All other
      compensation ($) | Total ($)
|---------------------- | --------------------- | ----------------------------- | ------------------------------ | ------------------------------------------------ | ----------------------- | -------------------------------- | ---------
|David Copeland(3)      | 25,623                | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | 25,623   
|Mark Bristow(5)        | 36,000                | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | 36,000   
|Terrence Janes(1)      | Nil                   | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | Nil      
|Bill Fisher(1)         | Nil                   | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | Nil      
|Greg Radke(1)          | Nil                   | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | Nil      
|Sandile Zungu(1)       | Nil                   | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | Nil      
|Patrick Bartlett(2)(5) | 26,250                | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | 26,250   
|Rene Carrier(2)(5)     | 22,372                | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | 22,372   
|Scott Cousens(2)(4)    | 24,762                | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | 24,762   
|Douglas Silver(2)(5)   | 20,250                | Nil                           | Nil                            | Nil                                              | Nil                     | Nil                              | 20,250   

Notes:

|(1) | Joined as Director of the Board on November 21,
    2008.                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Retired as Director of the Board on November 21,
    2008.                                                                                                                        
|(3) | Fees paid to Mr. Copeland via CEC Engineering are based
      on time spent working on the Companys matters.                                                                     
|(4) | Fees paid to Mr. Cousens via Hunter Dickinson Services
      Inc. are based on time spent working on the Companys matters.                                                       
|(5) | A one-time fee of $3,000 was paid to Mr. Bartlett,
      Carrier, Silver and $7,666 to Mr. Bristow for serving on a Special
      Committee established during the financial
year.

---

 Page 74 

The following table sets out all share-based awards and
option-based awards outstanding as at February 28, 2009, for each director,
excluding a director who is already set out in disclosure for a NEO for the
Company:

|Name                                                                    | Option-based
      Awards       | Share-based Awards         
|----------------------------------------------------------------------- | ------------------------------- | ---------------------------
|**Number of** securities
      underlying unexercised options
      (#) | Option
      exercise price ($) | Option
      expirationdate
|David Copeland                                                          | 500,000                         | 0.62                       
|Mark Bristow                                                            | 450,000                         | 0.62                       
|Terrence Janes                                                          | Nil                             | Nil                        
|Bill Fisher                                                             | Nil                             | Nil                        
|Greg Radke                                                              | Nil                             | Nil                        
|Sandile Zungu                                                           | Nil                             | Nil                        
|Patrick Bartlett                                                        | Nil                             | Nil                        
|Rene Carrier                                                            | 300,000                         | 0.62                       
|Scott Cousens                                                           | 450,000                         | 0.62                       
|Douglas Silver                                                          | 300,000                         | 0.62                       

Notes:

| | (1) | The value at February 28, 2009 is calculated by
      determining the difference between the closing price of the Companys
      common shares at February 28, 2009 ($0.04/share) underlying the option on
      the TSX and the exercise price of the options.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table sets out all incentive plan (value vested
or earned) during the year ended February 28, 2009, for each director, excluding
a director who is already set out in disclosure for a NEO for the Company:

---

 Page 75 

|Name             | Option-based awards  Value
      vested during the year(1) ($) | Share-based awards  Value
      vested during the year ($) | Non-equity incentive plan
      compensation  Value earned during the year
      ($)
|---------------- | --------------------------------------------------------------- | ----------------------------------------------------------- | -------------------------------------------------------------------------------------
|David Copeland   | Nil                                                             | Nil                                                         | Nil                                                                                  
|Mark Bristow     | Nil                                                             | Nil                                                         | Nil                                                                                  
|Terrence Janes   | Nil                                                             | Nil                                                         | Nil                                                                                  
|Bill Fisher      | Nil                                                             | Nil                                                         | Nil                                                                                  
|Greg Radke       | Nil                                                             | Nil                                                         | Nil                                                                                  
|Sandile Zungu    | Nil                                                             | Nil                                                         | Nil                                                                                  
|Patrick Bartlett | Nil                                                             | Nil                                                         | Nil                                                                                  
|Rene Carrier     | Nil                                                             | Nil                                                         | Nil                                                                                  
|Scott Cousens    | Nil                                                             | Nil                                                         | Nil                                                                                  
|Douglas Silver   | Nil                                                             | Nil                                                         | Nil                                                                                  

Notes:

| | (1) | These amounts represent the aggregate dollar value that
      would have been realized if the options under the option-based award had
      been exercised on the vesting date. The value of each amount has been
      determined by taking the difference between the market price of the option
      at date of exercise and the exercise or base price of the option under the
      option- based award on the vest date.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

C. Board Practices

All directors were elected at the annual general meeting held
in November 2007, and have a term of office expiring at the next annual general
meeting of Rockwell expected to be held in November 2009. .There are no
contracts or arrangements under which directors are compensated or provided
benefits upon termination of employment.

1. Board of Directors

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 Mr. Fisher and Mr. Zungu,
are not 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.

---

 Page 76 

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):

|Committee                           | Membership                                       
|----------------------------------- | -------------------------------------------------
|Audit Committee                     | William Fisher                                   
|Nominating and Governance Committee | David Copeland William Fisher Sandile
      Zungu
|Compensation Committee              | Sandile Zungu                                    
|Technical Committee                 | Mark Bristow David Copeland
William Fisher       

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.

2. Other Directorships

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

3. Orientation and Continuing Education

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.

4. Ethical Business Conduct

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.

---

 Page 77 

5. Nomination of Directors

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.

6. Compensation

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

7. Other Board Committees

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

8. Assessments

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.

AUDIT COMMITTEE

The Audit Committees Charter

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.comand the Companys website,
www.rockwelldiamonds.com.

Composition of the Audit Committee

The current member of the audit committee is Messrs. William
Fisher., Messrs. Terry Janes and Gregory Radke resigned from the Board of
Directors on June 23, 2009 and June 18, 2009. 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 new audit
committee members to replace Messrs. Janes and Radke.

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.

---

 Page 78 

Relevant Education and Experience

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

- the accounting principles used by the Company to prepare its financial
  statements, and the ability to assess the general application of those
  principles in connection with estimates, accruals and reserves;
- reviewing or evaluating financial statements that present a breadth and
  level of complexity of accounting issues that are generally comparable to the
  breadth and complexity of issues that can reasonably be expected to be raised
  by the Company's financial statements, and
- an understanding of internal controls and procedures for financial
  reporting.

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.

Audit Committee Oversight

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.

Pre-Approval Policies and Procedures

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.

D. Employees

At February, 2009, Rockwell has 467 direct employees. The
Company's administrative and operational functions are primarily administered in
South Africa (see Item 7B).

E. Share Ownership

Security holdings of the Company's directors and senior
management (as at February 28, 2009), as disclosed on www.sedi.ca.

---

 Page 79 

|Name of Insider(1) | Shares Beneficially Owned or Controlled(2) | As a percentage of outstanding
          shares
|------------------ | ------------------------------------------ | -----------------------------------------------
|D. Mark Bristow    | 2,433,286 shares                           | 1.02%                                          
|John W. Bristow    | 1,283,386 shares                           | 0.54%                                          
|David Copeland     | 1,224,373 shares                           | 0.51%                                          

Notes:

|(1) | The information as to principal occupation, business or
      employment and Shares beneficially owned or controlled is not within the
      knowledge of the management of the Company and has been furnished by the
      respective nominees. Each nominee has held the same or a similar principal
      occupation with the organization indicated or a predecessor thereof for
      the last five years.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                
|(2) | The number of Shares beneficially owned by the above
      nominees for directors, directly or indirectly, is based on information
      furnished by the Company and by the nominees
themselves.                                                                                                                                                                                                              

Share Option Plan

At the Company's Annual and Extraordinary General Meeting held
in August 2008, shareholders of the Company approved a Share Incentive Plan
("2007 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.

The Option Plan is subject to restrictions that:

| | (j)   | the number of shares issuable to insiders as a group
      under the Option Plan, when combined with shares issuable to insiders
      under all the Companys other security based compensation plans may not
      exceed 10% of the issued shares within any 12 month period;
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                 
| | (ii)  | the number of shares issuable to insiders as a group
      under the New Option Plan, when combined with shares issuable to insiders
      under all the Companys other security based compensation plans, may not
      exceed 10% of the Companys issued shares; and        
| |       |                                                                                                                                                                                                                                                                                 
| | (iii) | no exercise price of an option granted to an insider may
      be reduced nor an extension to the term of an option granted to an insider
      extended without further approval of the disinterested shareholders of the
      Company.                                       

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.

The continuity of share purchase options as at May 31, 2009 is
as follows:

---

 Page 80 

|                                                                 |   | Exercise |  |   | Feb 28    |  |   |         |      |   |           |  |   | Expired/  |  |   | May 31    | 
|---------------------------------------------------------------- | - | -------- |  | - | --------- |  | - | ------- | ---- | - | --------- |  | - | --------- |  | - | --------- | 
|Expiry date                                                      |   | price    |  |   | 2009      |  |   | Granted |      |   | Exercised |  |   | cancelled |  |   | 2009      | 
|September 24, 2012                                               | $ | 0.62     |  |   | 5,901,334 |  |   |        |      |   | 1,500     |  |   |          |  |   | 5,899,834 | 
|November 14, 2012                                                | $ | 0.63     |  |   | 1,104,834 |  |   |        |      |   |          |  |   | 3,334     |  |   | 1,101,500 | 
|June 20, 2011                                                    | $ | 0.45     |  |   | 950,000   |  |   |        |      |   |          |  |   |          |  |   | 950,000   | 
|                                                                 |   |          |  |   | 7,956,168 |  |   |        |      |   | 1,500     |  |   | 3,334     |  |   | 7,951,334 | 
|                                                                 |   |          |  |   |           |  |   |         |      |   |           |  |   |           |  |   |           | 
|Weighted average exercise price                                  |   |          |  | $ | 0.60      |  | $ | 0.00    |      | $ | 0.62      |  | $ | 0.63      |  | $ | 0.60      | 
|Weighted average fair value of options granted during the period |   |          |  |   |           |  |   | $       | 0.00 |  

As at May 31, 2009, 7,318,000 of the options outstanding with a
weighted average exercise price of $0.60 per share have vested with
grantees.

---

 Page 81 

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS

A. Major Shareholders

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, 2009, Rockwell had
authorized an unlimited number of common shares without par value of which
238,041,569 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 Actinsiders
(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 August 21,2009 there were no current
registered filed shareholding position of greater than 5%.

As of August 21, 2009, directors and officers of Rockwell in
total (6 persons) own or control an aggregate of 4,912,945 common shares of the
Company (2.06%) . 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

---

 Page 82 

As at August 21, 2009, 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.

|                         |  | Percentage | 
|------------------------ |  | ---------- | 
|                         |  | of total   | 
|Location                 |  | shares     | 
|Canada                   |  | 96.92%     | 
|United States            |  | 2.45%      | 
|Republic of South Africa |  | 0.52%      | 
|Other countries          |  | 0.11%      | 
|Total                    |  | 100%       | 

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

B. Related Party Transactions

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 during the fiscal year ended
February 28, 2009 except as follows:

|Balances payable                          |   | As at February 28, 2009 |  |   | As at February 29,2008 | 
|----------------------------------------- | - | ----------------------- |  | - | ---------------------- | 
|Banzi Trading (h)                         | $ |                        |  | $ |                       | 
|Jeffrey Brenner (d)                       |   | 7,890                   |  |   |                       | 
|Jakes Tyres (i)                           |   | 5,498                   |  |   | 49,604                 | 
|Hunter Dickinson Services Inc. (a)        |   | 180,267                 |  |   |                       | 
|Current balances payable                  | $ | 193,655                 |  | $ | 49,604                 | 
|                                          |   |                         |  |   |                        | 
|Liberty Lane (l)                          |   | 383,330                 |  |   |                       | 
|Long-term balances payable                | $ | 383,330                 |  | $ |                       | 
|                                          |   |                         |  |   |                        | 
|Balances receivable                       |   |                         |  |   |                        | 
|Hunter Dickinson Services Inc. (a)        | $ |                        |  | $ | 78,504                 | 
|Flawless Diamonds Trading
      House (g) |   | 3,441,510               |  |   | 477,298                | 
|Banzi Trade 26 (Pty) Ltd (h)              |   | 19,547                  |  |   | 33,744                 | 
|Diacor CC (k)                             |   | 29,668                  |  |   | 3,888                  | 
|                                          | $ | 3,490,725               |  | $ | 593,434                | 

---

 Page 83 

|Transactions                               |   | Year ended        |  |   | Nine Months Ended |  |   | Year ended   | 
|------------------------------------------ | - | ----------------- |  | - | ----------------- |  | - | ------------ | 
|                                           |   | February 28, 2009 |  |   | February 29, 2008 |  |   | May 31, 2007 | 
|Services rendered and expenses reimbursed: |   |                   |  |   |                   |  |   |              | 
|Hunter Dickinson
      Services Inc. (a)   | $ | 1,280,316         |  | $ | 863,861           |  | $ | 1,988,027    | 
|Euro-American Capital Corporation (b)      |   |                  |  |   | 14,393            |  |   | 18,765       | 
|CEC Engineering (c)                        |   | 26,904            |  |   | 39,766            |  |   | 187,225      | 
|John Bristow                               |   |                  |  |   |                  |  |   | 115,320      | 
|Jeffrey B Traders CC
      (d)             |   |                  |  |   | 52,740            |  |   | 141,318      | 
|Seven Bridges Trading (e)                  |   |                  |  |   | 57,952            |  |   | 55,534       | 
|Cashmere Trading (f)                       |   | 18,808            |  |   | 353,736           |  |   | 43,357       | 
|Banzi Trade 26 (Pty) Ltd (h)               |   | 29,768            |  |   | 47,575            |  |   | 251,942      | 
|Jakes Tyres (i)                            |   | 440,283           |  |   | 1,141,454         |  |   | 267,361      | 
|AA Van Wyk (j)                             |   |                  |  |   | 148,658           |  |   | 173,977      | 
|Diacor CC (k)                              |   | 39,510            |  |   | 3,888             |  |   |             | 
|                                           |   |                   |  |   |                   |  |   |              | 
|Sales rendered to:                         |   |                   |  |   |                   |  |   |              | 
|Flawless Diamonds Trading House (g)        | $ | 34,330,078        |  | $ | 36,038,106        |  | $ | 10,085,536   | 
|Banzi Trade 26 (Pty) Ltd (h)               |   | 884               |  |   |                  |  |   |             | 

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.

| | a) | Hunter Dickinson Services Inc. (HDSI) is a private
      company with a director in common with the Company. HDSI provides
      geological, technical, corporate development, administrative and
      management services to, and incurs third party costs on behalf of, the
      Company on a full cost recovery market related basis pursuant to an
      agreement dated November 21, 2008.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                    
| | b) | Euro-American Capital Corporation is a private company
      controlled by Rene Carrier, a director of the Company, which provided
      management services to the Company at market rates for those services.
      Rene Carrier resigned as a Director in November 2008                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                    
| | c) | CEC Engineering Ltd. is a private company owned by David
      Copeland, Chairman and a director of the Company, which provides
      engineering and project management services at market rates.                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                    
| | d) | Jeffrey B Traders CC is a private company controlled by
      Jeffrey Brenner, a former director and employee of the Company, which
      provided management and specialized diamond marketing services to the
      Company at market rates.                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                    
| | e) | Seven Bridges Trading is a wholly owned subsidiary of
      Randgold Resources, a public company where Mark Bristow, a director of the
      Company, serves in an executive capacity. Seven Bridges Trading provides
      office, conferencing, information technology, and other administrative and
      management services at market rates to the Companys South African
      subsidiaries.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                    
| | f) | Cashmere Trading is a private company owned by Hennie Van
      Wyk, an officer of the Company, which provides helicopter services for the
      movement of product on an ad-hoc basis at competitive market rates thereby
      providing benefits to the company and its employees in respect of secure
      transport of high value product and reduced insurance
  premiums.                 

---

 Page 84 

| | g) | Flawless Diamonds Trading House (Flawless) is a private
      company where certain directors, former directors and officers of the
      Company, namely, Messr. Brenner, J W and D M Bristow and Van Wyk, are
      shareholders of. Flawless is a registered diamond broker which provides
      specialist diamond valuation, marketing and tender sales services to the
      Company for a fixed fee of 1% of turnover which is below the market rate
      charged by similar tender houses.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | h) | Banzi Trade 26 (Pty) Ltd (Banzi) is 49% owned by HC van
      Wyk Diamonds Ltd and 51% by Bokomoso Trust. Banzi is an empowered private
      company established to provide self sustaining job creation programs to
      local communities as part of the companys Social and Labour Plan which is
      required in terms of the Minerals and Petroleum Resources Development Act
      (MPRDA) Banzi provides the Company with buildings materials at market
      rates.                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | i) | Jakes Tyres is a private company with certain directors
      and officers (H C van Wyk) in common with the Company that provides tyres,
      tyre repair services and consumables at market rates to Rockwells remote
      Middle Orange River operations.                                                                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | j) | AA Van Wyk is a private company owned by a party related
      to the directors and officers of the Company, which provided contract
      mining services at market rates.                                                                                                                                                                                                                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | k) | Diacor CC is a private company of which H C van Wyk is a
      directors from which Company has purchased consumable materials at market
      rates.                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | l) | Liberty Lane is the BEE partner of the Saxendrift
      property and has certain directors in common with the
  Company.                                                                                                                                                                                                                                                                                                                                                                             

C. Interest of Experts and Council

Not Applicable.

---

 Page 85 

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial
Information

See Item 17 Financial Statements.

Legal Proceedings

As of February 28, 2009, there is no material legal or
arbitration proceedings against Rockwell or any of its subsidiaries, nor, to the
knowledge of Rockwell, are such proceedings pending or threatened that may have
or have had in the previous 12 months a material effect on Rockwell's financial
position, other than as disclosed herein.

Dividend Policy

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.

B. Significant Changes

There have been no significant changes to the accompanying
financial statements since February 28, 2009, except as disclosed in this Annual
Report on Form 20-F.

On April 11, 2008 the Company completed the acquisition of two
open pit alluvial diamond mines (Saxendrift and Niewejaarskraal) then on care
and maintenance, and three alluvial diamond exploration projects (Kwartelspan,
Zwemkuil-Mooidraai, and Remhooget-Holsloot) referred to collectively as the
Middle Orange River Operations (MORO) from Trans Hex Operations (Pty) Ltd.
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 were obtained. In
March 2009, the Niewejaarskraal mining rights occurred on March 4, 2009,
subsequent to year end. Rockwell has chosen not to exercise the option on the
Remhoogte prospecting right due to current harsh financial constraints and
depressed diamond prices.

---

 Page 86 

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

Trading Markets

|                                      |   | TSX Exchange |  |   | OTC Bulletin Board |  |   | JSE  | 
|------------------------------------- | - | ------------ |  | - | ------------------ |  | - | ---- | 
|                                      |   | RDI          |  |   | RDIAF              |  |   | RDI  | 
|                                      |   | High         |  |   | Low                |  |   | High | 
|                                      |   | CAD          |  |   | CAD                |  |   | USD  | 
|                                      |   |              |  |   |                    |  |   |      | 
|Annual                                |   |              |  |   |                    |  |   |      | 
|Fiscal 2005                           | $ | 0.66         |  | $ | 0.26               |  | $ | 0.52 | 
|Fiscal 2006                           | $ | 0.70         |  | $ | 0.28               |  | $ | 0.64 | 
|Fiscal 2007                           | $ | 0.85         |  | $ | 0.38               |  | $ | 1.98 | 
|Fiscal 2008                           | $ | 0.80         |  | $ | 0.50               |  | $ | 0.75 | 
|Fiscal 2009                           | $ | 0.64         |  | $ | 0.03               |  | $ | 0.70 | 
|                                      |   |              |  |   |                    |  |   |      | 
|By Quarter                            |   |              |  |   |                    |  |   |      | 
|Quarter ended May 31, 2007            | $ | 0.78         |  | $ | 0.50               |  | $ | 0.70 | 
|Fiscal 2008                           |   |              |  |   |                    |  |   |      | 
|Quarter ended August 31, 2007         | $ | 0.80         |  | $ | 0.62               |  | $ | 0.75 | 
|Quarter ended November 30,
      2007 | $ | 0.71         |  | $ | 0.55               |  | $ | 0.74 | 
|Quarter ended February 28, 2008       | $ | 0.67         |  | $ | 0.50               |  | $ | 0.71 | 
|                                      |   |              |  |   |                    |  |   |      | 
|Fiscal 2009                           |   |              |  |   |                    |  |   |      | 
|Quarter ended May 31, 2008            | $ | 0.64         |  | $ | 0.42               |  | $ | 0.70 | 
|Quarter ended August 31, 2008         | $ | 0.54         |  | $ | 0.16               |  | $ | 0.53 | 
|Quarter ended November 30,
      2008 | $ | 0.34         |  | $ | 0.03               |  | $ | 0.32 | 
|Quarter ended February 28, 2009       | $ | 0.08         |  | $ | 0.03               |  | $ | 0.09 | 
|                                      |   |              |  |   |                    |  |   |      | 
|Monthly                               |   |              |  |   |                    |  |   |      | 
|March 2009                            | $ | 0.05         |  | $ | 0.03               |  | $ | 0.05 | 
|April 2009                            | $ | 0.08         |  | $ | 0.04               |  | $ | 0.06 | 
|May 2009                              | $ | 0.08         |  | $ | 0.05               |  | $ | 0.07 | 
|June 2009                             | $ | 0.12         |  | $ | 0.05               |  | $ | 0.10 | 
|July 2009                             | $ | 0.06         |  | $ | 0.03               |  | $ | 0.05 | 
|August 2009                           | $ | 0.06         |  | $ | 0.05               |  | $ | 0.07 | 

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

B. Plan of Distribution

Not applicable.

---

 Page 87 

C. Markets

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").

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

---

 Page 88 

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Notice of Articles and Articles

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.

A discussion of the notice of articles and articles of Rockwell
follows:

Objects and Purposes

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.

Directors  Powers and Limitations

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, no fraud related convictions in the previous five years and a majority
of directors must be ordinarily resident in Canada. There is no
mandatory retirement age either under Rockwell's articles or under the BCA.

---

 Page 89 

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.

Rights and Restrictions attached to Shares

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.

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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 Rights of Common Shareholders

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

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.

Redemption

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.

Rockwell has no redeemable securities authorized or issued.

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Pre-emptive Rights

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

Liquidation

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

No Limitation on Foreign Ownership

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

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.

Voting Rights

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.

Change in Control

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.

Share Ownership Reporting

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.

C. Material Contracts

Rockwell's material contracts are included in the exhibits list
in item 19.

D. Exchange Controls

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.

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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 Actfor 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 Actwill 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 Actgenerally 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 Actis 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 Actand 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 Actif 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 Actif 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 Actif 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.

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E. Taxation

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

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.

Disposition

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.

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 Page 94 

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.

United States Tax Consequences

United States Federal Income Tax Consequences

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.

U.S. Holders

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.

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 Page 95 

Distribution on Common Shares of Rockwell

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.

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 Page 96 

Foreign Tax Credit

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.

Disposition of Common Shares of Rockwell

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.

Other Considerations

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:

Passive Foreign Investment Company

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.

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 Page 97 

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.

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 Page 98 

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.

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 Page 99 

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.

---

 Page 100 

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.

Controlled Foreign Corporation

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.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

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 Actare
available for viewing on the internet at www.sedar.com.

---

 Page 101 

I. Subsidiary Information

The corporate structure is presented in Item 4.C of this Form
20-F.

---

 Page 102 

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

(a) Transaction Risk and Currency Risk Management

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

(b) Exchange Rate Sensitivity

In the normal course of business for its diamond operations,
the Company enters into transactions for the purchase of supplies and services
denominated in South African rand. As a result, the Company is subject to
foreign exchange 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.

(c) Interest Rate Risk and Equity Price Risk

The Company is equity financed and does not have any debt which
would be subject to interest rate change risks.

(d) Commodity Price Risk

While the value of the Company's mineral properties can always
be said to relate to the price of the commodity and the outlook for same, the
Company does not have any hedging or other commodity based risks respecting its
operations.

(e) Exchange Controls

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.

---

 Page 103 

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

Not applicable.

---

 Page 104 

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND
DELINQUENCIES

Not applicable.

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

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

A. Disclosure Controls and Procedures

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 not effective to ensure that
the 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.

These disclosure controls and procedures include 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. The conclusion that our disclosure controls and
procedures were not effective was due to the presence of material weaknesses in
internal control over financial reporting as identified below under the heading
Managements Report on Internal Control Over Financial Reporting.

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.

B. Managements Report on Internal Control Over Financial
Reporting

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, not absolute 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.

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 Page 105 

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, 2009 based on the
criteria set forth in Internal Control  Integrated Frameworkissued 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. Based on this evaluation, our
management concluded our internal control over financial reporting was not
effective as at February 28, 2009 due to resulting material weaknesses from the
aggregation of the following significant deficiencies: (i) insufficient
supervision and review by key accounting personnel over routine, non-routine and
complex accounting transactions; (ii) inconsistent application of documented
financial reporting procedures by accounting personnel; and (iii) ineffective
review of certain accounting transactions by accounting personnel.

In order to remediate the material weaknesses, the Companys
management continues to enhance the effectiveness of internal controls related
to its financial reporting process, including improvements to remediate the
internal control deficiencies that existed as at February 28, 2009. Management
has the following remediation plans in progress: (i) enhance controls around the
timing and level of review of accounting schedules and calculations that support
significant financial statement accounts; (ii) reinforce to accounting personnel
the importance of consistent application of accounting procedures; and (iii)
provide appropriate training to accounting personnel regarding the Companys
period end financial reporting process and procedures.

These programs, as enhanced, are designed to reduce, although
they may not eliminate, the risk of a material misstatement to a reasonable
level. The remediation efforts set out above are largely dependent upon our
Company securing additional financing to cover the costs of implementing the
changes required. If we are unsuccessful in securing such funds, remediation
efforts may be adversely affected in a material manner.

Our internal control over financial reporting was not subject
to attestation by our independent registered public accounting firm pursuant to
the rules of the Securities and Exchange Commission that permit us to provide
only managements report in this annual report.

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. These inherent limitations
include the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of simple error or mistake.

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 Page 106 

C. Changes in Internal Control Over Financial
Reporting

There were changes in internal control over financial reporting
in the year ended February 28, 2009 that have materially affected or are
reasonably likely to materially affect internal control over financial
reporting. However, as a result of the evaluation of our internal control over
financial reporting as of February 28, 2009, conducted by our Chief Executive
Officer and Chief Financial Officer, we expect to continue making such changes
in response to the remediation plan.

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 Page 107 

ITEM 16. AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES
AND EXEMPTIONS

A. Audit Committee Financial Expert

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.

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.

B. Code of Ethics

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.

C. Principal Accountant Fees and Services

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.

|                      |   | Year ended        |  |   | Nine months ended |    
|--------------------- | - | ----------------- |  | - | ----------------- | ---
|Services:             |   | February 28, 2009 |  |   | February 29, 2008 | (2)
|Audit Fees            | $ | 322,000           |  | $ | 150,000           |    
|Audit-Related Fees(1) |   | -                 |  |   | 130,000           |    
|Tax Fees              |   | -                 |  |   | 7,500             |    
|All Other Fees        |   | -                 |  |   | -                 |    
|                      | $ | 322,000           |  | $ | 287,500           |    

|Note: | (1) "Audit-Related Fees" include services that
      are traditionally performed by the auditor. These audit-related services
      include employee benefit audits, due diligence assistance, accounting
      consultations on proposed transactions, internal control reviews and audit
      or attest services not required by legislation or regulation.
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                               
|      | (2) The audit for the nine-months
      ended February 29, 2008 was performed by Davidson and Company, Chartered
      Accountants.                                                                                                                                                                                                                           

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.

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 Page 108 

D. Exemptions from Listing Standards for Audit
Committees

Not applicable.

E. Purchases of Equity Securities by the Issuer and
Affiliated Purchasers

None.

F. Change in Registrant's Certifying Accountant

On December 16, 2008 the Board of Rockwell Diamonds Inc.
resolved:

|1. | The resignation Davidson and Company, Chartered
      Accountants, effective December 16, 2008, as auditor of the Company be
      accepted, and                                             
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                              
|2. | KPMG Inc., be appointed as auditor of the Company to be
      effective December 16, 2008, to hold office until the next annual meeting
      at a remuneration to be fixed by the directors.

In accordance with National Instrument 51 - 102 ("NI 51 -
102"):

| | (a) | Davidson and Company, Chartered Accountants, was asked to
      resign as auditor of the Company to facilitate the appointment of KPMG
      Inc, South Africa.                                                                                                                                                                                                                                                       
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (b) | Davidson and Company, Chartered Accountants, did not
      express any reservation in its reports for the two most recently completed
      fiscal years of the Company, nor for the period from the most recently
      completed period for which Davidson and Company issued an audit report in
      respect of the Company and the date of this Notice;                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (c) | the resignation of Davidson and Company and appointment
      of KPMG Inc., as auditor of the Company was considered and approved by the
      Audit Committee of the Company;                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (d) | in the opinion of the Audit Committee of the Company, no
      "reportable event" as defined in NI 51 - 102 has occurred in connection
      with the audits of the two most recently completed fiscal years of the
      Company, nor any period from the most recently completed period for which
      Davidson and Company issued an audit report in respect of the Company and
      the date of this Notice; and
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (e) | the Auditor's Letters have been reviewed by the Audit
      Committee of the Company.                                                                                                                                                                                                                                                                                                                                 

G. Corporate Governance

Not applicable.

H.  Exemptions from Listing Standards for Audit
Committees

Not applicable.

I.  Purchases of Equity Securities by the Issuer and
Affiliated Purchasers

None.

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 Page 109 

PART III

ITEM 17. FINANCIAL STATEMENTS

The following attached financial statements are incorporated
herein:

|(1) | Report of Independent Registered Public Accounting Firm
      on the consolidated balance sheets as at February 28 2009 and February 29,
      2008.; consolidated statements of operations and deficit, and cash flows
      for each of the year ended February 28 2009, Nine months ended February 29
      2008 and year ended May 31, 2007;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                 
|(2) | Consolidated balance sheets as at February 28, 2009 and
      February 29 2008;                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                 
|(3) | Consolidated statements of operations and deficit for
      each of the year ended February 28 2009, Nine months ended February 29
      2008 and year ended May 31, 2007;                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                 
|(4) | Consolidated statements of cash flows for the periods
      referred to in (3) above;                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                 
|(5) | Consolidated statements of shareholders equity for the
      periods referred to in (3) above;                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                 
|(6) | Notes to the consolidated financial statements referred
      to I (2) through (5) above;                                                                                                                                                                                                                                                       

ITEM 18. FINANCIAL STATEMENTS

Not applicable. See Item 17.

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 Page 110 

ITEM 19. EXHIBITS

The following Exhibits have been filed with the 40F in
2008:

|Exhibit |                                                                                                                                                                                                                                                                                                           
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Exhibit Description                                                                                                                                                                                                                                                                                       
|        |                                                                                                                                                                                                                                                                                                           
|99.1    | Certification of Chief
      Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                           
|99.2    | Certification of Chief
      Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                 
|        |                                                                                                                                                                                                                                                                                                           
|99.3    | Certification of Chief
      Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002                                                                                                
|        |                                                                                                                                                                                                                                                                                                           
|99.4    | Certification of Chief
      Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002                                                                                                
|        |                                                                                                                                                                                                                                                                                                           
|99.5    | Annual Information Form of the
      Company for the period ended February 29, 2008 (1)                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                           
|99.6    | Audited consolidated balance
      sheets as at February 29, 2008 and May 31, 2007 and consolidated
      statements of operations, equity, and cash flows for the periods then
      ended, including the notes thereto and report of our independent
      registered public accounting firm thereon (1)
|        |                                                                                                                                                                                                                                                                                                           
|99.7    | Managements Discussion and
      Analysis of financial condition and results of operations for the period
      ended February 29, 2008 (1)                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                           
|99.8    | HCVW and Rockwell share
      exchange agreement to acquire an additional 23% of the Van Wyk Diamond
      Group assets. (1)                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                           
|99.9    | Acquisition Agreement between
      Trans Hex Group Limited and the Company to acquire the Saxendrift Mine.
      (1)                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                                                                           
|99.9    | Consent of Davidson &
      Company LLP                                                                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                                                                           
|99.10   | Consent of Glenn Norton, Pr.
      Sci. Nat (1)                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                           
|99.11   | Consent of Tania R. Marshall,
      PhD., Pr. Sci. Nat (1)                                                                                                                                                                                                                                                

---

 Page 111 

|99.12 | Consent of Catherine Telfer B.Sc. Hons (Geol.), Dip. Bus.
      Man, MSAIMM, MAusIMM, Pr. Sci. Nat
(1)
|----- | ------------------------------------------------------------------------------------------------------

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 Page 112 

The following Exhibits are filed with the Companys Annual
Report on Form 20-F in the current year:

|Exhibit 
Number | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                     
|--------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |                                                                                                                                                                                                                                                                                                                                                                                                         
|12.1            | Certification of Chief Executive Officer pursuant to Rule
      13a-14(a) of the Exchange  Act, as adopted pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                              
|                |                                                                                                                                                                                                                                                                                                                                                                                                         
|12.2            | Certification of Chief Financial Officer pursuant to Rule
      13a-14(a) of the Exchange  Act, as adopted pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                              
|                |                                                                                                                                                                                                                                                                                                                                                                                                         
|13.1            | Certification of Chief Executive Officer pursuant to Rule
      13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes- Oxley Act of 2002                                                                                                                                                                                                   
|                |                                                                                                                                                                                                                                                                                                                                                                                                         
|13.2            | Certification of Chief Financial Officer pursuant to Rule
      13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes- Oxley Act of 2002                                                                                                                                                                                                   
|                |                                                                                                                                                                                                                                                                                                                                                                                                         
|99.1            | Audited consolidated balance sheets as at February 29,
      2009 and February 29, 2008 and consolidated statements of operations,
      equity, and cash flows for the periods then ended, including the notes
      thereto and report of our independent registered public accounting firm
      thereon (1)                                                                                         
|                |                                                                                                                                                                                                                                                                                                                                                                                                         
|99.2            | Managements Discussion and Analysis of financial
      condition and results of operations for the period ended February 28, 2009
      (1)                                                                                                                                                                                                                                                            
|                |                                                                                                                                                                                                                                                                                                                                                                                                         
|4.1             | Subscription agreement amongst Richtrau no 139
      (Proprietary) Limited The Trustees of the H C van Wyk Diamante Trust
      Durnpike Investments (Propietary) Limited Georgia Venue Investments 14
      (Proprietary) Limited Klipdam Diamond Mining Company Limited Rockwell
      Diamonds Inc H C van Wyk Diamonds Limited and Africa Vanguard Resources
      (Proprietary) Limited  JUNE 2008
|                |                                                                                                                                                                                                                                                                                                                                                                                                         
|4.2             | Exchange Agreement between Rockwell Diamonds Inc and
  Georgia Avenue Investments 14 (Proprietary) Limited  JUNE 2008                                                                                                                                                                                                                                                                                  

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 Page 113 

|Exhibit 
      Number | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                      
|--------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.3                   | Exchange Agreement between Rockwell Diamonds Inc and
      Richtrau no 139 (Proprietary) Limited  JUNE 2008                                                                                                                                                                                                                                                                                             
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.4                   | Subscription agreement amongst Richtrau no 139
      (Proprietary) Limited The Trustees of the H C van Wyk Diamante Trust
      Durnpike Investments (Proprietary) Limited Georgia Avenue Investments 14
      (Proprietary) Limited Klipdam Diamond Mining Company Limited Rockwell
      Diamonds Inc H C van Wyk Diamonds Limited and Africa Vanguard Resources
      (Proprietary) Limited JUNE 2008
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.5                   | Loan Agreement amongst Georgia Avenue Investments 14
      (Proprietary) Limited Africa Vanguard Resources (Proprietary) Limited and
      Rockwell Resources RSA (Proprietary) Limited  JUNE 2008                                                                                                                                                                                                      
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.6                   | Loan Agreement amongst Richtrau no 139 (Proprietary)
      Limited and Rockwell Resources RSA (Proprietary) Limited  JUNE 2008                                                                                                                                                                                                                                                                          
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.7                   | Sales of Shares and Claims Agreement between Rockwell
      Resources RSA (Proprietary) Limited Liberty Lane Trading 167 (Proprietary)
      Limited and Saxendrift Mine (Proprietary) Limited  OCTOBER 2008                                                                                                                                                                                            
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.8                   | Sale of shares agreement amongst Rockwell Resources RSA
      (Proprietary) Limited, Africa Vanguard Resources (Proprietary) Limited and
      Nieuwejaarskraal (Proprietary) Limited  OCTOBER 2008                                                                                                                                                                                                     
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.9                   | Sale of shares agreement amongst Rockwell Resources RSA
      (Proprietary) Limited, Africa Vanguard Resources (Proprietary) Limited and
      Zwemkuil (Proprietary) Limited  OCTOBER 2008                                                                                                                                                                                                             
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.10                  | Shareholders agreement amongst Rockwell Resources RSA
      (Proprietary) Limited, Africa Vanguard Resources (Proprietary) Limited and
      Nieuwejaarskraal (Proprietary) Limited OCTOBER 2008                                                                                                                                                                                                       
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.11                  | Shareholders agreement amongst Rockwell Resources RSA
      (Proprietary) Limited, Africa Vanguard Resources (Proprietary) Limited and
      Zwemkuil (Proprietary) Limited OCTOBER 2008                                                                                                                                                                                                               
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.12                  | Consent of Tania R. Marshall, PhD., Pr. Sci. Nat (1)                                                                                                                                                                                                                                                                                                                                                     
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.13                  | Consent of Glenn Norton, Pr. Sci. Nat (1)                                                                                                                                                                                                                                                                                                                                                                
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.14                  | Auditors report of Davidson & Company LLP for the year ending February 29, 2008                                                                                                                                                                                                                                                                                                                          
|                      |                                                                                                                                                                                                                                                                                                                                                                                                          
|4.15                  | Consent of previous Auditors, Davidson & Company LLP                                                                                                                                                                                                                                                                                                                                                     

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 Page 114 

SIGNATURES

The Registrant 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.

ROCKWELL DIAMONDS INC.

Per:

DR JOHN BRISTOW Chief Executive Officer

DATED: August 30, 2010

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