BlueRock Diamonds PLC (LON:BRD) said it is well placed to exploit the numerous deposits that have been identified in South Africa after achieving its main goals in 2017.
In the year to December 31, the owner and operator of the Kareevlei Diamond Mine in South Africa’s Kimberley region met its two primary targets– operational profitability and monthly processing volume of 25,000 tonnes.
Production surged 171% to 153,000 tonnes last year from the KV2 kimberlite pipe, which has an inferred grade of 4.5 carats per hundred tonnes (cpht).
High-quality diamonds were produced with an average value per carat of US$362. That puts BlueRock in the top 10 in the world and the second in South Africa in terms of value per carat.
"Our investment case is very simple: we have an exciting, strategically located asset, producing exceptional quality diamonds; we have a defined development plan, focused on increasing both production and the average grade of diamonds extracted; we are operating in a market with robust fundamentals; and we have a strong management team to drive the business forward," said non-executive chairman Paul Beck.
BlueRock expects to see higher grades as project progresses
KV1, the second pipe the group started mining in April, is located 40m from KV2 and has an inferred grade of 6.3 cpht., 40% higher than the inferred grade of KV2 (4.5cpht). It is expected to provide a material contribution in fiscal year 2018.
"This is an exciting step for us as we look forward to a potentially significant increase in grade," Beck said.
Last year was the first for BlueRock under its new management headed by chief executive Adam Waugh.
In December David Facey, who has experience as an Financial Conduct Authority and corporate financier, was appointed as finance director.
The new management team will now concentrate on making Kareevlei as profitable as possible.
It is well-funded to develop the project, having untaken two separate equity fundraisings last year of £366,000 in June £860,000 in August.
Waugh, who become chief executive in 2016, said the company is “well placed” to exploit numerous deposits that have been identified by larger operators but deemed to be “too small for them”.
“Whilst too small for the larger companies they represent a good opportunity for a smaller operator like BlueRock which has access to capital and expertise,” he said.
Diamond mining in South Africa is generally conducted either by large companies primarily interested in the largest deposits, or family style operations that focus on alluvial deposits, Waugh explained. “BlueRock is one of the few exceptions to this rule,” he said.
The group made a loss before tax of £1.18mln (2016: £495,493) on revenue of £945,924 (2016: £239,646). BlueRock said the loss reflected the "relative early stage of our operations in 2017".