BlueRock Diamonds PLC (LON:BRD) said the expansion project at Kareevlei remains on track to be commissioned in July, with around 80% of the work completed.
The expansion project at the mine, in the Kimberley region of South Africa, is expected to more than double the diamond producer’s annual revenue to around US$16mln while the company’s total unit cost is set to reduce significantly to around US$220 per carat compared with BlueRock’s average sale price for the first three months of 2021 of US$446 per carat.
BlueRock revealed its new project management team has undertaken a full review of the project and its costings as a result of which the upfront capital and development costs have increased.
Meanwhile, the company has agreed in principle to issue a £1.61mln loan note to the Teichmann Group; the intention is to replace this loan note with a convertible loan note that will, if fully converted, increase the Teichmann Group’s stake in BlueRock to 49%.
“I am pleased that Teichmann is demonstrating its commitment by investing a further £1.61mln into the company, which will provide us with the capital to deliver the expansion project while providing the working capital to further develop mining operations. In addition, we will benefit from a further strengthening of our already close working relationship with Teichmann, which will provide a greater depth of expertise at the operational and management level in South Africa,” said Mike Houston, the executive chairman of BlueRock.
Gary Teichmann, the executive director of Teichmann Group, said the group was looking forward to cementing its relationship with BlueRock over the coming year.
“We firmly believe that Kareevlei is an exciting asset and will endeavour to assist BlueRock in completing its project as planned and achieving its production targets,” Teichmann said.
BlueRock also told investors that it has beefed up its management team and board, with the appointment of Rob Croll as a non-executive director, while it has appointed Minexec to work alongside its Kareevlei boss, Gus Simbanegavi, to provide additional management support and to ensure that the delivery of the increased tonnages is achieved with the maximum efficiency.
Croll, a veteran of the South African mining industry, will head a technical committee of the board.
“We will keep shareholders updated regularly during what is a challenging but exciting phase in the development of BlueRock into a mid-sized mining company,” Houston said.