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BlueRock raises £1.2m for Kareevlei expansion

16th July 2020

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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Aim-listed BlueRock Diamonds, which owns and operates the Kareevlei diamond mine in Kimberley, South Africa, has conditionally raised gross proceeds of about £1.2-million in an oversubscribed placing and subscription of more than 3.5-million new ordinary shares.

Three of the company’s directors have also participated in the placing, the net proceeds of which will be used to fast-track growth plans at the mine and strengthen the company’s balance sheet.

The use of proceeds is in line with the implementation of BlueRock’s expansion plans, as announced in February, to increase production to about 700 000 t/y, which was well under way when Covid-19 began to spread in South Africa.

The consequent lockdown in South Africa at the end of March led to expansion plans being halted and the Kareevlei operation being put into temporary care and maintenance.

The plant remained closed for six weeks and no diamond sales took place for three months. According to BlueRock, the estimated direct cash cost of the pandemic has been about £550 000, excluding the longer-term opportunity cost of weakening diamond prices.

Although this is significant, the company currently has cash and near cash of about £1.2-million available, and the proceeds of the fund raising will increase the group’s cash balance to about £2.4-million.

The combined funds will be used to complete the enhanced expansion plan to increase production, to implement significant cost saving measures and to increase recovery rates, while providing sufficient cash resources to operate in what is likely to remain a challenging environment.

ENHANCED EXPANSION PLANS

BlueRock’s expansion plan is expected to be completed in two phases, with the first to be completed by the end of this year.

Phase 1 will be focused on resource optimisation to increase the volume to a run rate of about one-million tonnes a year and to steady state of about 45 000 ct/y.

This, the company says, will be achieved by operating the existing plant alongside the Numovista plant, which was acquired earlier this year. There will also be an addition of a larger front-end crusher to handle the increased volumes.

Phase 2, which is expected to be completed by the second half of 2021, will be focused on profitability optimisation, which will see the mine connected to the national grid, which will substantially reduce the use of diesel generators.

The introduction of a re-crushing circuit will result in an expected increase in recovery from 70% to about 90%, and the process will also enhance the carat production at nominal cost.

The introduction of a re-crushing circuit will result in an expected increase in recovery from 70% to about 90%.  This process enhances the carat production at a nominal cost.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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