REG - BlueRock DiamondsPLC - Placing to Raise £2.1 million & Operational Update

Bluerock DiamondsAnnouncement

31/03/2022 08:00

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RNS Number : 7353G  BlueRock Diamonds PLC  31 March 2022

BlueRock Diamonds PLC / AIM: BRD / Sector: Natural Resources

31 March 2022

BlueRock Diamonds PLC ('BlueRock' or the 'Company')

Placing to Raise £2.1 million &

Operational Update

 

 

BlueRock Diamonds PLC, the AIM listed diamond producer, which owns and
operates the Kareevlei Diamond Mine ('Kareevlei') in the Kimberley region of
South Africa, is pleased to announce the raising of gross proceeds totalling
£2.1 million via a placing of 6,000,000 new ordinary shares of 5 pence each
in the Company (the "Placing Shares") at a price of 35 pence per Placing Share
(the "Placing Price") (the "Placing").

 

The net proceeds of the Placing will be used to provide additional working
capital to the Company in order to:

a) Implement its upgraded mining plan to ensure consistent supply of quality
ore to the processing plant - optimising the throughput of the new 1 million
tonne plant, while maximising the economic life of the mine;

b) Pay its mining contractor, Teichmann SA Limited ("TSA"),  in order to
accommodate the impact of the two operation shutdowns experienced in Q4
2021. This balance to TSA stands at approximately £1 million.

 

In addition to the Placing, the CEO of the Company's principal operating
subsidiary, Meiring Burger, a Consultant acting as Project Manager on the
Company's expansion project, Phillip Mills and the Company's expansion project
contractor, BinVic (Pty) Limited ("BinVic"), have agreed to settle an
aggregate of £579,514 in funds due to them, by way of a subscription for
1,655,753 ordinary shares (the "Subscription Shares") at the Placing Price
(the "Subscription").

 

The Placing Price represents a discount of approximately 34.6% to the closing
mid-market price of BlueRock shares on 30 March 2022.

 

Upgraded mining plan

Following the significant increase in the Company's Diamond Resource announced
in February 2021 which, inter alia, increased the economic depth of KV1 and
KV2 (Main Opencast Pit) pipes materially and after a review of the mining
plan by Kareevlei's new CEO, Meiring Burger, the Board has decided to
concentrate its resources on providing consistent supply of quality ore in
terms of both the short term objectives and the life of mine plan.  This, in
turn, requires a large increase in the waste mining over the next 18 months in
the main pit and the opening up the largest pipe, KV3.  The Company expects
the bulk of this waste mining increase to be funded from cash flow, as it
expects to be operating on a consistently cashflow positive basis by Q3 2022,
with the throughput at its new plant increasing to the projected 85,000 tonnes
per month.  The funds raised will support the increased mining activity over
the months ahead.

 

Payment to TSA

Following the two unscheduled operational shutdowns towards the end of 2021,
the Board has been carefully managing its working capital position and has
been seeking to agree formal terms for extended credit provided by TSA and/or
the wider Teichmann Group.  With the Company unable to agree an extended
payment schedule with TSA (as it had previously), and while the Teichmann
Group had offered potential funding alternatives, ultimately, the Board
decided it would be in the best interests of all shareholders if the
opportunity to fund the Company's working capital needs was extended to a
wider investor base.

 

Current trading

 Diamond prices remain buoyant amid a fast-changing diamond market following
recent geopolitical events and Russian trade sanctions.  BlueRock's average
sale prices for the first two months of 2022 increased to around USD 600 per
carat, compared to the average of USD460 per carat in 2021 - marking a 30%
rise.  Following the implementation of sanctions on Russia and the
anticipated impact on the rough diamond supply chain, prices have increased
further and the Company achieved an impressive price of over USD1,000 per
carat in the March 2022 tender.  While it is difficult to know if, or how
long, the March pricing will persist, it is the Board's view that even prior
to the impact of the current geopolitical issues, there has been a step change
in diamond pricing.  The Board is not currently seeking to alter pricing
guidance for the year from the current $450 per carat but, will keep it under
review.

 

Production results in Q1 have been positive, notwithstanding challenging
operational conditions with significantly higher than normal rains, at a time
when management has been focussed on simultaneously ramping up production and
introducing improvements in a new processing plant. Production during Q1 has
been materially better than in Q1 2021. The Company expects to provide a
detailed update on the Q1 results in early April, as part of its usual
quarterly production reporting.

 

Mike Houston, Executive Chairman said, "The board is delighted to have
concluded the Placing, which will provide working capital for Bluerock's
diamond business as it moves into a transformative growth phase, aiming to
double carat production to 36,000-43,000 carats in 2022. It is particularly
pleasing to have the support of key contractors and management in the capital
raise.

 

"With the 1Mtpa processing plant upgrade completed and seasonal heavy rains
beginning to subside, the Company looks forward to maximising production
throughput and delivering the optimised mining plan.

 

"The diamond market is in a dynamic phase with significant short-term
opportunities for Kareevlei's quality diamonds but importantly it is an
anticipated that the supply of quality rough diamonds will remain tight in the
mid-term.

 

"The Company appreciates the support of existing and new investors for the
Placing, which was achieved despite share market uncertainty, and is a
vindication of our growth strategy and future potential."

 

"Our revenue forecasts of USD 16-19 million for the current year reflects the
possible growth this year and demonstrates the value that could be generated
amid a changing diamond market and rising price environment."

 

BinVic

BinVic has agreed that its costs, totalling £510,704, will be settled through
the issue of Shares at the Placing Price. The Company appreciates Binvic's
continued support.

 

Following Admission BinVic will hold 2,682,487 shares in the Company
representing approximately 12.3%.

 

Meiring Burger

Meiring Burger, as a Director of the Company's principal operating subsidiary,
Kareevlei Mining, is considered to be a "related party" as defined under the
AIM Rules and, accordingly, his participation in the Subscription representing
72,637 shares constitutes a related party transaction for the purposes of Rule
13 of the AIM Rules.

The Directors independent of the Subscription, being the full board, consider,
having consulted with the Company's Nominated Adviser, SP Angel Corporate
Finance LLP, that the terms of Meiring Burger's participation in the
Subscription, is fair and reasonable insofar as the shareholders of the
Company are concerned.

Phillip Mills

Phillip Mills,  a Consultant acting as Project Manager on the Company's
expansion project, has agreed that the costs of £43,386 will be settled
through the issue of Shares at the Placing Price.

 

Production Guidance

The Company has refined its guidance to 2022 as follows:

 

                             Actual: 2021   Outlook: 2022      Outlook: 2023
  Tonnes processed ('000)   516             900-950            1,000
  Carats produced           23,497          36,000-43,000      43,000
  Grade                     4.55            4.0 to 4.5         4.3
  Value Per Carat (USD)     470             450                 450
 Revenue (USDm)             10.8            16 to 19           19

 

Impact on CLN conversion price

Following the Placing and Subscription, the conversion price of the Company's
existing Convertible Loan Note with Company Non-Executive Director, Tim
Leslie, and, Mark Poole, will be adjusted to 72 pence, in accordance with its
terms.

Admission to Trading on AIM and Total Voting Rights

Application will be made for the Placing Shares and the Subscription Shares,
which will rank pari passu, with the existing Ordinary Shares, to be
admitted to trading on AIM ("Admission"). It is expected that Admission will
become effective, and dealings will commence on or around 5 April 2022.

Following the issue of the Placing Shares and the Subscription Shares, the
issued share capital of the Company will consist of 21,776,755 Ordinary
Shares. No shares were held in treasury at the date of this announcement. The
total current voting rights in the Company are therefore 21,776,755.

 The above total current voting rights number is the figure, which may be
used by shareholders as the denominator for the calculation, by which they
will determine if they are required to notify their interest in, or a change
to their interest in the Company.

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.

**ENDS**

 

For further information, please visit BRD's website www.bluerockdiamonds.co.uk
(http://www.bluerockdiamonds.co.uk) or contact:

 

 BlueRock Diamonds PLC

 Mike Houston, Executive Chairman       mhouston@bluerockdiamonds.co.uk

 David Facey, Finance Director          dfacey@bluerockdiamonds.co.uk
 SP Angel (NOMAD and Broker)

 Stuart Gledhill / Caroline Rowe        Tel: +44 (0)20 3470 0470
 St Brides Partners Ltd (Financial PR)

 Isabel de Salis / Oonagh Reidy         info@stbridespartners.co.uk

 

Notes to editors:

BlueRock Diamonds is an AIM-listed diamond producer which operates the
Kareevlei Diamond Mine near Kimberley in South Africa which produces diamonds
of exceptional quality and ranks in the top ten in the world in terms of
average value per carat. The Kareevlei licence area covers 3,000 hectares and
hosts five known diamondiferous kimberlite pipes with a combined Inferred
Diamond Resource of 10.4 million tonnes / 516,200 carats (February 2021);
based on its planned production of 1 million tonnes per annum, this provides a
minimum 10-year life of mine.

 

RESPONSIBILITIES AND PERSONS CLOSELY ASSOCIATED WITH THEM

 

 1.    Details of the person discharging managerial responsibilities/person closely
       associated
 a)    Name:                                                         Meiring Burger

 2.    Reason for the notification
 a)    Position/status:                                              CEO, Kareevlei Mining
 b)    Initial notification/Amendment:                               Initial notification
 3.    Details of the issuer, emission allowance market participant, auction
       platform, auctioneer or auction monitor
 a)    Name:                                                         BlueRock Diamonds plc
 b)    LEI:                                                          213800LVSJ2RNI3SSN92
 4.    Details of the transaction(s): section to be repeated for (i) each type of
       instrument; (ii) each type of transaction; (iii) each date; and (iv) each
       place where transactions have been conducted
 a)    Description of the financial instrument, type of instrument:  Ordinary shares of 5 pence each

       Identification code:                                           GB00BKKJK954
 b)    Nature of the transaction:                                    Subscription for Shares
 c)    Price(s) and volume(s):                                        :

Price(s)  Volume(s)
                                                                     35p       72,637

 
 d)    Aggregated information:

Price(s)  Volume(s)
       Aggregated volume:                                            35p       72,637

       Price:
 

 e)    Date of the transaction:                                      31 March 2022
 f)    Place of the transaction:                                     Outside a trading venue

 

d)

Aggregated information:

Aggregated volume:

Price:

 

 Price(s)  Volume(s)
 35p       72,637

 

 

e)

Date of the transaction:

31 March 2022

f)

Place of the transaction:

Outside a trading venue

 

 

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