Aim-listed BlueRock Diamonds’ major shareholder Teichmann Company has increased its shareholding in the company from 16.72% to 35.46% in the week ended September 16.
Including Teichmann’s subsidiaries and employees’ shareholding in BlueRock, which also increased, this amounts to an effective 52.45% shareholding.
BlueRock owns and operates the Kareevlei diamond mine, in Kimberley, South Africa.
This follows on BlueRock signing a loan note subscription agreement with Teichmann, its subsidiary T-Three-Drilling and three Teichmann employees, for £1.6-million, in July.
BlueRock issued a £1-million simple loan note to Teichmann alongside the provision of a debt funding facility of up to R30-million to the Kareevlei mine.
The loan note would be redeemed for equity in the company and would be followed by the issue of a new convertible loan note of £600 000 and an amendment to the existing convertible loan note.
BlueRock chairperson Mike Houston in July explained that the company’s need for financing arose after experiencing an excessive and extended rainy season this year, which had delayed the mine’s ramp-up in production and development of the main pit.
This led to significantly lower production levels and lower grades than expected, and BlueRock had since been exploring how to finance the hole left by the lower-than-expected revenue, at a time when BlueRock was investing heavily in developing the mine.
Having explored these options, the only source of funds available to BlueRock in the form and magnitude required was that offered by Teichmann, albeit on terms that dilute existing shareholders significantly.
“Teichmann has demonstrated a strong ongoing commitment to the company and their closer involvement in the management of Kareevlei is expected to assist the company during this critical phase of development,” Houston says.
Teichmann nonexecutive director Gary Teichmann says the company is fully committed to the success of BlueRock and Kareevlei for all shareholders and the fair treatment of all shareholders.
“Our further investment in BlueRock and Kareevlei demonstrates this.
“Going forward, we will be taking a more active role in the management of BlueRock and Kareevlei and I look forward to updating the market on progress,” he affirms.
The Teichmann financing will provide funding to invest in continued mine development, to repay trade creditors, to repay an existing loan note maturing in October and to provide general working capital to the company.