BlueRock lowers guidance as above-average rainfall hits Kareevlei production

1st June 2022

By: Donna Slater

Creamer Media Chief Photographer and Senior Contributing Editor


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Aim-listed BlueRock Diamonds reports that above-average rainfall in the first five months of the year at its Kareevlei diamond mine, near Kimberley, in the Northern Cape, significantly impeded mining development and processing.

During the period, Kareevlei experienced nearly double its normal yearly rainfall with a total of 561 mm, while May's rainfall, in particular, was three times above the long-term average.

As such, mining development fell 36% to 400 000 t, as compared to what was budgeted for April and May. This limited the mine's access to quality kimberlite and necessitated the use of lower-grade and more difficult-to-handle material in Kareevlei's processing operations.

In addition, where BlueRock had hoped to ramp up production at its new one-million-tonne-a-month processing plant, the unforeseen lost days to rain and the lower-grade feed resulted in operations declining against what was budgeted over the period for March to May.

This means tonnes processed declined by 48%, while grade slipped by 51% and carats produced by 74%.

Going forward, BlueRock reports that, despite drier winter weather setting in, the adverse conditions in the first and second quarters have impacted on the total outlook for the remainder of the year.

In addition, as a result of global economic conditions, the miner says it is facing higher costs of production owing to higher diesel prices and increases in costs of other inputs.

Further, as a result of fewer diamonds being produced and sold, as well as increasing costs, BlueRock's cash resources have been depleted during what continues to be a period of heavy investment in mining development.

In this regard, BlueRock has entered into discussions with a major shareholder and providers of debt finance to support it through this period.

Executive chairperson Mike Houston says, “as we finally move into drier weather, I am pleased to report operations are improving rapidly, which will enable us to take advantage of the buoyant market, with prices achieved for BlueRock's unique stones averaging over $600/ct during 2022”.

This, he says, marks an improvement of 29% against 2021 prices.

While BlueRock’s 2023 guidance remains unchanged, its production guidance for this year has been revised 30% downwards from between 36 000 ct and 43 000 ct, to between 28 000 ct and 33 000 ct.

Processing tonnages have also been revised 15% down, to between 780 000 t and 830 000 t, while the miner forecasts revenue to be 9% down to between $14-million and $18-million.

However, despite this decline in carats produced and processed, BlueRock forecasts the value per carat to increase in 2022 by 14%, from a previous estimation of $450/ct to a revised range of between $500/ct and $550/ct.

". . . management is confident that fundamentals remain sound for Kareevlei building up output to one-million tonnes a year and about 43 000 ct in 2023.

“This year, we are still on track to increase output by at least 50% and the plant has performed well in the intermittent periods of dry weather.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online


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