BlueRock Diamonds Targets Profitability in H2 2019 After Strong H1

Mining and Exploration
04/09/2019 17:50

London-based BlueRock Diamonds, which operates and owns 74% of the Kareevlei mine based in Kimberley, South Africa, increased its production and revenue during H1 2019 as compared to a year ago, reducing its H1 losses to GBP 381,027 ($458,064) from GBP 1.3 million ($1.6 million) a year ago. BlueRock points to April 2019 as the turning point, when the company installed a new operational management team and changed its mining plan. The company also enjoyed a 19% increase in the average price earned per carat, which rose to $405, with an upward trend in the average price per carat as production increases (Q1 2019 $371, Q2 2019 $430) aided by the increasing incidence of larger diamonds recovered.

BlueRock reported revenue of nearly $1.8 million for the six-month period, which was more than double that of H1 2018 ($821,812) on production of 4,936 carats, which also more than doubled that of H1 2018 (2,438 carats). Sales included a 24.9-carat diamond sold for $190,000 in June 2019, achieving $7,631 per carat. Five diamonds sold at tender for more than $50,000 during the year to date. The second quarter in particular yielded excellent results, with a 302% increase in carats mined at 3,516 carats (Q2 2018: 875) and a 188% increase in carats sold at 2,517 (Q2 2018: 875). This led to a 305% increase in tender revenue at $1,082,133 (Q2 2018: $267,274). In April, BlueRock appointed Gus Simbaganevi as CEO of Kareevlei, and took on Teichmann Group as a strategic investor in the company.

The junior miner said that iImprovements to the crushing circuit are expected to be completed in July, with further increases to production levels expected in August, and expressed confidence that the near-term monthly production target of 40,000 tonnes is achievable. Production in May totaled 29,000 tonnes, while June production was in excess of 34,000 tonnes due primarily to to operating disciplines imposed by new management. BlueRock's outlook and guidance remains unchanged for 2019, with expected recovery of 12,0000 to 16,000 carats at an average price of US$ 340/ct  in 2019 rising to 16,000 to 21,500 carats in 2020 at the same average price - which below the prices currently being achieved. Notably, improvements in its H1 results led BlueRock to say it expects to achieve profitability in H2 2019 through enhanced production.