BlueRock Diamonds PLC, the AIM listed diamond producer, announces an update on operations at its Kareevlei Diamond Mine (‘Kareevlei’) in the Kimberley region of South Africa.
During the first five months of 2022, Kareevlei experienced nearly double its normal annual rainfall (561mm/22 inches). May’s rain in particular, at over three times the long-term average, has had a significant impact on both mining development and processing against expectations.
Mining development fell 36% (400,000 tonnes) as compared to budget for April and May, which has limited the mine’s access to quality kimberlite and necessitated the use of lower grade and more difficult to handle material (clay content) in Kareevlei’s processing operations. Additionally, where BlueRock had hoped to ramp up production at its new 1Mtpa processing plant, the unforeseen lost days to rain and the lower-grade feed resulted in operations being down against budget over the period March to May by 48% on tonnes processed, 51% on grade and 74% on carats produced.
Accordingly, while South Africa is now experiencing belated drier weather conditions, the delayed roll out of the Company’s mining development plan will impact production output in Q2 and early Q3, and therefore the 2022 outlook. In addition, as a result of global economic conditions, the Company is facing increased costs of production due to higher diesel prices and increased costs of major suppliers.
As a result of fewer diamonds being produced and sold as well as increasing costs, BlueRock’s cash resources have been depleted during what continues to be a period of heavy investment in mining development. The Company has therefore entered into discussions with a major shareholder and providers of debt finance to support it through this period; further announcements will be made in due course.
BlueRock Executive Chairman, Mike Houston, said, “While it is of course disappointing to report the problems caused by the continuing wet weather at a time when we expected to be operating at near capacity, the safety of our personnel and equipment is our foremost obligation. As we finally move into drier weather, I am pleased to report operations are improving rapidly, which will enable us to take advantage of the buoyant market, with prices achieved for BlueRock’s unique stones averaging over c$600 per carat during 2022 – marking an uplift of 29% versus 2021 prices. While our reduced mining activity during the last few months will impact in the near term on our ability to achieve the consistent grade that we expected in 2022, our guidance for 2023 remains unchanged.
“Whilst we acknowledge that we can plan better for the wet season, no preparation can fully cover you in these extraordinary circumstances, however, management is confident that fundamentals remain sound for Kareevlei building up output to 1Mtpa and circa 43,000 carats production in 2023. This year, we are still on track to increase output by at least 50% and the plant has performed well in the intermittent periods of dry weather.”
While guidance for 2023 remains unchanged, the Company’s revised guidance for 2022 is as follows.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (‘MAR’). Upon the publication of this announcement via Regulatory Information Service (‘RIS’), this inside information is now considered to be in the public domain.
For further information, please visit BRD’s website www.bluerockdiamonds.co.uk or contact:
BlueRock Diamonds PLC
David Facey, FD
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