Aim-listed diamond producer BlueRock Diamonds processed 402 000 t during its 2020 financial year, which resulted in the recovery of 15 371 ct, an increase of 25% year-on-year, despite the Kareevlei diamond mine, in South Africa, having been closed for 50 days during a strict Covid-19-related countrywide lockdown in April and May.
Assuming a constant run rate during the period of closure, the increase over the year would have been about 45%, the company said. Further, these production increases have been obtained using the old plant and, therefore, are considered a “remarkable achievement in a very difficult year”.
Once the new plant is commissioned, it is expected that BlueRock’s production profile will be significantly less impacted by the rainy season, as was experienced in the fourth quarter when abnormally high and early rains translated into the quarter’s increase being 34% lower than anticipated.
Carat production, meanwhile, has increased by 10%, and the lower percentage increase in the number of carats is a reflection of the reduced grade. The grade for the first half of the year was significantly lower than expected as the company was concentrating on developing the Main Pit out of KV1 and KV2.
The average grade for the second half of the year was a much improved 4.4 carats per hundred tonnes, a slight increase over the average for the 2019 financial year.
Carat sales were also up significantly over the year reflecting the increased production and the fact that in 2020 a December sale was made whereas in 2019 there was no December sale.
Value per carat of $295/ct was around the bottom end of the company’s guidance for 2020 and 26% down on the 2019 financial year, owing largely to the impact of Covid-19 on the marketing chain and the reduced incidence of higher value diamonds in 2020 compared with 2019.
The latter is partly owing to the development of the Main pit, which BlueRock said required a large tonnage of higher level and near edge ore to be mined as the company prepared for the expansion of operations in 2021.
BlueRock executive chairperson Mike Houston said the fall in the value per carat is “unfortunate” as it has reduced the impact of the improved production output. The company is, however, seeing signs of recovery in general pricing as well as early signs of an increasing incidence of the high value stones.
The company estimates that the like-for-like reduction in pricing is between 10% and 15%, a decent result in what was a very difficult market environment. BlueRock had to rely upon private sales to a limited number of buyers as the tender system was not in operation for much of the year.
Further, the plan to transition to the new operation by running both plants during the first quarter is expected to minimise the disruption on production in early 2021. Despite having to deal with the ongoing exceptionally poor weather conditions and, weather permitting, the project is still expected to be fully commissioned by the end of the quarter, but may push into early quarter two.
BlueRock’s guidance for 2021 remains at between 850 000 t and one-million tonnes and between 34 000 ct and 46 000 ct.