BlueRock Diamonds PLC (LON:BRD) said it expects to complete the expansion project shortly at its Kareevlei diamond mine in South Africa.
It anticipates building up to full production in August enabling it to hit its full-year output guidance of 750,000 tonnes to 850,000 tonnes processed and between 30,000 to 39,000 carats produced.
The AIM-listed diamond producer has temporary suspended its plan to connect to the national grid, whilst it considers alternative power options that will move the operation towards lower carbon emissions. It said it remains committed to finding the right power solution and to implement it in 2022.
“Accordingly, by the end of the year, we expect BlueRock to be a very different company, with annual run rate revenues doubled to +US$16mln, and cost per unit cost reduced to c. US$220 per carat, thereby providing a healthy margin compared with our average sale price for 2019 (pre-COVID) of US$415 and the first five months of 2021 of US$424 per carat,” said chairman Michael Houston.
The update was given alongside the company’s financial results for 2020.
BlueRock said it lost approximately US$2.5mln (£1.8mln) in revenue due to COVID-19’s impact on both pricing and an enforced 46-day shutdown at Kareevlei in the second quarter.
Its pretax losses widened to £3.0mln in 2020, from £0.7mln the previous year, as revenue declined 12% to £3.6mln.
“2020 began optimistically for the company, having completed a fundraise in February 2020 to implement an expansion plan that would transform BlueRock,” said Houston. “The months that followed shook the world and had a material impact on BlueRock's operations.”
“2020 was a very difficult year for the diamond market. For a number of months there were no auctions either in South Africa or elsewhere.
“During the second half of the year, we sold diamonds to a private buyer. Initially we were obtaining prices in excess of US$300 per carat but towards the end of the year this fell to nearer US$200 per carat.
“I am delighted to report that in 2021 the market has recovered to pre-COVID levels, and we have achieved an average of US$424 per carat in the first five months of the year, through the South African auction house, which is higher than the pre-COVID price of US$415 achieved in 2019 for a similar product mix.
“At the time of writing the market remains buoyant with a tight supply of rough diamonds and a strong recovery in the retail sector,” he said.