TIDMBRD
RNS Number : 0432Q
BlueRock Diamonds PLC
16 October 2019
BlueRock Diamonds PLC / AIM: BRD / Sector: Natural Resources
16 October 2019
BlueRock Diamonds PLC ('BlueRock' or the 'Company')
Q3 2019 Production Update
Record Results
BlueRock Diamonds PLC, the AIM listed diamond producer, which
owns and operates the Kareevlei Diamond Mine ('Kareevlei') in the
Kimberley region of South Africa, is pleased to announce its Q3
2019 production update.
Overview
-- Monthly target of 40,000 tonnes achieved ahead of schedule in September 2019
-- Record levels of production of 92,500 tonnes, up 45% (Q3
2018: 63,600 tonnes), notwithstanding suspension of operations for
19 days during crushing circuit works in July
-- Grade of 4.30 cpht (Q3 2018: 3.13 cpht)
-- Average price achieved of US$432/c on sales of 4,139 carats
(Q3 2018: 1,834 carats sold at US$341/c)
-- Second gem quality stone recovered in excess of 20 carats
-- Tender revenue US$1,786,000 (Q3 2018: US$614,000)
BlueRock Executive Chairman, Mike Houston, said, "I am extremely
pleased with the continued success at Kareevlei. We reached our
monthly production target of 40,000 tonnes earlier than planned and
achieved record levels of production for the quarter. The increased
production, coupled with the increase in grade to above the lower
end of expectations, as well as the continued quality of our
diamonds leading to consistently high values per carat, has led to
record levels of income and lowered unit costs of production. I
remain confident that we will meet our target of profitability in
the second half of 2019."
Overview
The Board is pleased with the continuing progress made at
Kareevlei. Q3 2019 saw record production volumes of 92,500 tonnes
despite the shutdown of the plant in July 2019 in order to install
the new crusher. In September, the Company processed over 40,000
tonnes, a month earlier than planned. The increased volumes
together with increased grade led to record levels of diamonds
being recovered in the quarter and, thus, record levels of
revenue.
Having achieved near-term targets, the Company is now looking at
ways of increasing production further and preparing for the rainy
season, which traditionally impacts the first quarter of each year.
This is discussed in further detail below.
Production
2019 Q3 2019 year to date
2019 2018 Increase 2019 2018 Increase
Tonnes Milled 92,500 63,600 45% 212,900 136,600 56%
Grade 4.30 3.13 37% 4.19 3.34 25%
Carats 3,973 1,834 117% 8,912 4,272 109%
Production reached 92,500 tonnes in Q3 2019. The plant was
closed for 19 days in July (14,000 tonnes) and early August (38,400
tonnes). Accordingly, September production (40,100 tonnes), which
was the first full month of production following the installation
of the new crusher, reached the Company's internal target of 40,000
tonnes per month for the first time. Production levels are
continuing at this rate in October and the Company is mitigating
the risk of breakdowns of key equipment by systematically upgrading
plant and ensuring that there are stocks of critical spares.
The grade continues to increase, and, in the quarter, recovery
grade exceeded the lower end of the Company's 2019 guidance of 4.25
carats. Production in Q3 was primarily from KV1. The Board expects
grades in the short to medium term to remain within current
guidance as the multi-pit mining strategy is developed, and the
operations will have kimberlite from various depths.
Mining
The Company's new mining contractor, Teichmann South Africa
(Pty) Limited ("Teichmann"), commenced operating in the quarter and
has made good progress, achieving the development waste and ore
targets.
In preparation for the rainy season, the Company has started
creating stockpiles of crushed ore so that production can continue
throughout the rainy season other than in extreme weather
conditions. At the end of September 2019 the crushed stockpile
stood at around 6,000 tonnes. It is planned to increase this to
approximately 50,000 tonnes by the end of December. To assist in
this process, the Company is currently negotiating an agreement
with a specialist crushing contractor, which will crush the
oversize boulders that have been produced over the life of the mine
and which are too large for the existing crushing plant (estimated
at between 15,000 to 20,000 tonnes) together with run of mine ore
mined in excess of the monthly requirement. Teichmann, the
Company's mining contractor, has the capacity to increase its
activities to meet the expected new production schedules.
Tender Results
Q3 2019 year to date
2019 2018 Increase 2019 2018 Increase
Carats 4,139 1,834 126% 8,504 4,248 100%
Price 432 336 28% 418 338 24%
Revenue US$ 1,786,200 614,400 191% 3,554,400 1,436,200 147%
There were 1,149 carats on hand at the end of September, which
will be placed in the October tender (1,326 carats on hand at the
beginning of the period). This stock includes the 20.7 carat
diamond that was announced on 27 September 2019.
The significant increase in the carat sales compared with last
year reflects the increased production volumes, increased grade and
a 28% increase in the value per carat. The average value per carat
for the quarter of US$432 is similar to that achieved in Q2 2019
(US$ 430) suggesting that prices might have stabilised. The average
value is impacted by the increasing incidence of larger stones
although the main reason for the high value per carat remains the
fact that production is characterised by a preponderance of good
quality stones in the one to three carat range. So far this year,
the Company has sold approximately 100 stones with a value per
carat in excess of US$1,000, slightly over half of which were in
Q3.
Costs of production
August and September 2019 represent near steady state production
with the Company's current plant configuration. Whilst the cost
structure will change as plans are implemented to increase
production further, costs for these two months represent the best
current guide to the cost of production.
The total per tonne cost of production (including all costs
incurred by Kareevelei but not the UK plc costs) for August and
September 2019 was approximately ZAR 190 per tonne (US$13 per tonne
at an exchange rate of 1USD = ZAR15). At a grade of 4.3 (the
average grade for Q3 2019) this equates to a cost per carat of
approximately US$300, compared with the average revenue per carat
in Q3 of US$ 432.
The Company expects that, in addition to the cost per tonne
reductions arising from increased production, there are several
areas where significant cost savings can be made including, for
example, linking up to the electricity grid hence reducing
significantly the cost of powering the plant.
New Developments
The Board has recently approved the purchase of a third pan,
which will be introduced into the plant in November this year. This
will enable the three pans to be run at a higher level of
efficiency, which should improve the diamond recovery, as well as
adding additional processing capacity
With the additional processing capacity, management will, as the
mining plan develops, look to significantly increase throughput
with a limited capital expenditure requirement, enhancing the
potential for lowering operating costs per tonne.
Outlook
In Q4 2019, management will be concentrating on continuing to
operate at the levels achieved in August and September and
preparing for the rainy season by producing a significant stockpile
of crushed ore as discussed above.
The introduction of the third pan will allow Kareevlei to
increase production materially, however, in the short term it will
be subject to how successfully the mining and crushing operations
are able to ramp up in response to the increased plant
capacity.
Guidance
Following the results of the third quarter and the likelihood of
some benefit from the third Pan in Q4 the 2019 guidance has been
amended to the following levels:
2019 revised 2019 previous
Volume (tonnes) 310,000 - 335,000 280,000 - 335,000
Grade (cpht) 4.25 - 4.5 4.25 - 5.0
Carats 13,000 - 15,000 12,000- 16,500
Value per carat (USD) 400-450 340
Production guidance for 2020 will be amended once plans for
increasing production have been finalised. For reference, the
unamended guidance is shown below.
2020 unamended
Volume (tonnes) 380,000 - 430,000
Grade (cpht) 4.25 - 5.0
Carats 16,000 - 21,500
Value per carat (USD) 340
Guidelines for announcing individual diamonds
Given the increasing incidence of larger higher value stones the
Board has adopted a formal announcement policy reflecting the
practice to date. Accordingly, any individual stone over 20 carats
or with an initial indicative valuation of over USD100,000 will be
announced on recovery, although without the indicative valuation
amount. All individual stones sold for in excess of USD50,000 will
be announced following the results of the tender in addition to
updates on the sale values achieved for larger stones previously
announced on recovery.
Board Update
As previously announced, Teichmann Group has the right to
appoint a director to the Board although to date it has not elected
to exercise this right.
Shareholder conference call
BlueRock will be hosting a shareholder conference call on Friday
18 October 2019 at 2.00pm (BST) in line with its commitment to
maintaining positive engagement with its shareholders.
Shareholders are invited to submit questions via email in
advance of the call, which management will aim to respond to during
the call. Questions should be sent to St Brides Partners at
shareholderenquiries@stbridespartners.co.uk, which will be
compiling the questions on behalf of the Company.
To participate in the conference call, please dial 0808 109
0701, or +44 (0) 20 3003 2701 if you are calling from outside of
the UK and enter the participant pin 1569344# when prompted to do
so. Please note that all lines will be muted except for BlueRock's
management team.
The management team will strive to answer as many questions as
possible during the call, however, it should be noted that no new
information regarding the Company will be provided during the call.
The Company plans to make a recording of the call available on its
website.
If you have any problems accessing the call, please contact St
Brides Partners Ltd on shareholderenquiries@stbridespartners.co.uk
or call +44 (0) 20 7236 1177.
Market Abuse Regulation (MAR) Disclosure - Certain information
contained in this announcement would have been deemed inside
information for the purposes of Article 7 of Regulation (EU) No
596/2014 until the release of this announcement.
**ENDS**
For further information, please visit BRD's website
www.bluerockdiamonds.co.uk or contact:
BlueRock Diamonds PLC mhouston@bluerockdiamonds.co.uk
Mike Houston dfacey@bluerockdiamonds.co.uk
David Facey, FD
SP Angel (NOMAD and Broker) Tel: +44 (0)20 3470 0470
Stuart Gledhill / Caroline Rowe
---------------------------------
Turner Pope Investments (TPI) Limited Tel: +44 (0)203 657 0050
(Joint Broker)
Andy Thacker / Zoe Alexander
---------------------------------
St Brides Partners Ltd (Financial Tel: +44 (0)20 7236 1177
PR)
Juliet Earl
---------------------------------
Notes to editors:
BlueRock Diamonds is an AIM-listed diamond producer which
operates the Kareevlei Diamond Mine near Kimberley in South Africa
which produces diamonds of exceptional quality and ranks in the top
ten in the world in terms of average value per carat. The Kareevlei
licence area covers 3,000 hectares and hosts five known
diamondiferous kimberlite pipes. As at 3 September 2018, it was
estimated that the remaining Inferred Mineral Resource from the
three kimberlite pipes (KV1, KV2 and KV3) represents a potential
inground value of circa US$124 million at a current average run of
mine diamond value of US$362/carat.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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