Aim-listed BlueRock Diamonds will, subject to funding, invest in further improvements at its mining operation, plant and necessary personnel at the Kareevlei diamond mine, in the Northern Cape, to increase the capacity and efficiency of the operation.
The proposed investment is expected to “materially” increase the mine ‘s profitability.
The decision to invest in further upgrades to the mine follows a technical review, which found that existing production targets and further growth are being “inhibited by limited flexibility in the mining operation, plant capacity constraints and the consistency of production”.
BlueRock on Monday reported that the mine had achieved a record quarterly production volume of 63 621 t during the quarter ended September 30, taking production for the nine months ended September 30 to 133 050 t – a 28% year-on-year improvement.
The company has, however, decreased its full-year production guidance lower to 200 000 t, from 220 000 t previously, as a result of continuing issues with the reliability of the plant.
“Our increased production in the quarter and in [the year-to-date] is encouraging; however, we are not yet where we would like to be. Operations are moving into an exciting phase and the knowledge built up at Kareevlei will be important in making the correct decisions for the future,” commented CEO Adam Waugh.
BlueRock has, therefore, enlisted the help of mining veteran Michael Houston, to help it develop its new operational plans at Kareevlei.
He is advising the BlueRock board on its strategy and is expected to join the board once the company's development plans have been finalised and financed.
“Mike Houston and his team who come with experience of mining operations on a much larger scale than Kareevlei have been able to bring in some fresh thinking and in their initial assessment, are encouraged by the potential of the business,” said Waugh.
Meanwhile, BlueRock has also proposed a capital reorganisation that will involve a reduction in the nominal value of the ordinary shares in issue from 1p to 0.01p, while retaining the same number of shares.
“Acknowledging that currently the company's shares are trading below the current nominal value, the board considers the capital reorganisation to be in the best interest of the company and its shareholders, as the capital reorganisation will allow the company, if appropriate, to raise money in the future by the issue of new ordinary shares and, therefore, facilitate its expansion plans,” the company stated.
Shareholders will be given an opportunity to vote on the proposal during a general meeting on October 25.