BlueRock Diamonds PLC (LON:BRD) has raised £1.25mln to fast track growth plans and strengthen its balance sheet.
The South Africa-focused diamond miner said it raised the £1.235mln through an oversubscribed placing and subscription of around 3.53mln new shares at a price of 35p each, a 28% discount to its closing price on Wednesday.
WATCH: BlueRock Diamonds PLC operating well and keen to expand production says FD David Facey
Meanwhile, BlueRock said three of its directors, executive chairman Michael Houston, David Facey and Gus Simbanegavi, said they intend to subscribe for a further £5,000 each at the same price.
The firm said the proceeds will be used to enhance its earlier expansion plan to increase production volume to a run rate of 1mln tonnes, or 45,000 carats, per annum by the end of 2020, as its initial plans to increase production to 700,000 tonnes per annum were halted by the coronavirus pandemic.
BlueRock also said it will implement cost-cutting and efficiency measures by the end of the second half of 2021 to optimise its profitability.
Meanwhile, in an update for its second quarter the company said since recommencing operations in May its production has averaged 1,800 tonnes per day, up from 1,300 tonnes in the final quarter of 2019, although grades were lower reflecting mine development work.
However, BlueRock said grades were “increasing in line with expectations as deeper levels are being processed” and it has recently recovered several stones above 6 carats including 12.3 and 8.9 carat stones.
“Over the last few months we have taken a number of important steps to protect the business in what is an extremely challenging environment: we have brought production safely back on line; developed a new marketing channel; put in place a pre-sales financing structure; completed the combining of KV1 and KV2 into KV Main Pit; and further modified the current plant resulting in improved production throughput”, executive chairman Houston said in the statement.
"The mining to date has illustrated the potential for the overall resource to be increased both in area and depth and we anticipate announcing an updated resource statement in [the third quarter of 2020]…Given our expansion plans are fully developed, and with the support of existing and new investors, who I am delighted to welcome to our share register, we look forward to commencing work immediately and keeping the market fully informed of progress", he added.
BlueRock shares were 21.4% lower at 38.5p in early trading on Thursday.