BlueRock Diamonds is in talks to receive financial help after operations at its Kareevlei mine in South Africa paused due to a possible safety breach.
“The suspension has impacted near-term cash-flow expectations, exacerbated by the fact that there is no planned diamond tender in Kimberley [in South Africa] in December,” BlueRock said last week. “The company is assessing how best to meet its working capital needs over this period.”
The miner is considering funding its December production through its existing relationship with Delgatto Diamond Finance, it explained.
While mining is on hold, meaning BlueRock cannot source any new production, it is currently processing ore stocks that built up before the rainy season began, management noted. The company still expects to meet its outlook of 22,000 to 26,000 carats for the full year, but believes output will be toward the lower end of that.
Last week, the Department of Mineral Resources and Energy (DMRE) visited the site and issued a notice under Section 54 of the Mine Health and Safety Act, which enables inspectors to call for the suspension of mine operations if they identify possible danger.
“The company remains in discussion with the DMRE in relation to the issues raised regarding BlueRock’s mining activities that remain suspended, and hopes to resolve these in the near future,” BlueRock added.
BlueRock Diamonds has announced that it operated profitably for the first time in the second half of 2019. The miner started operations in 2012.
The AIM-listed diamond producer, which owns and operates the Kareevlei Diamond
Mine in the Kimberley region of South Africa said its revenue was up 190 percent to Â£4.1 million ($5.4 million) for full year 2019.
The miner sold 12,675 for the year, an increase of 118 percent over the 5,805 carats in 2018. On a quarterly basis, Q4 2019 saw an increase of 172 percent to 4,170 carats compared to 1,533 carats in Q4 2018.
BlueRock also saw an increase in its average price per carat during Q4 and FY2019. For 2019, the per-carat price increased 24 percent to $415 (2018: $334) and for the quarter it rose 30 percent to $410 (2018: $316).
“I am very pleased with the continued success at Kareevlei,” said Mike Houston, BlueRock executive chairman. “Having achieved the aggressive guidance for 2019 and operated profitably for the first time in the second half of 2019. We are proud of this key milestone, which is a testament to the implementation of the revised production strategy brought in by the company’s new management team in Q2 2019.”
BlueRock said it expects to report positive EBITDA and positive comprehensive income for
the second half of 2019 (excluding non-cash adjustments for IFRS 9 charges and movement in foreign exchange).
The company said the first quarter of 2020 has started “satisfactorily” with expectations that, despite the impact of seasonal rains, it will meet its targeted production volumes for the quarter, which are significantly ahead of those achieved in Q1 2019.
BlueRock Diamonds shares were up 15% on the London Stock Exchange Friday after the miner announced it had recovered its largest diamond to date, a 24.9 carat gem quality stone.
BlueRock owns and operates the Kareevlei Diamond Mine in the Kimberley region of South Africa. The miner’s largest diamond prior was 16.28 carats, which sold for $78,947.
“This record recovery of such a high-quality diamond is an exciting milestone and underpins why we are so confident about the potential of the Kareevlei mine. We have a comprehensive development plan to increase production and look forward to providing further updates as we progress,” executive chairman Mike Houston said in a media statement.
The diamond will be put to tender, the results of which will be announced June 17, the company said.
BlueRock’s shares were priced at 11 pence on the LSE late Friday, on a day that saw trading volume at 61.9 million, mover six times the average daily trading volume is 9.5 million. The company has a £1.8 million market capitalization.