TIDMBRD
RNS Number : 7936V
BlueRock Diamonds PLC
11 April 2023
BlueRock Diamonds PLC / AIM: BRD / Sector: Natural Resources
11 April 2023
BlueRock Diamonds PLC ('BlueRock' or the 'Company')
Corporate Update
BlueRock Diamonds (BRD), the AIM listed diamond producer, which
owns and operates the Kareevlei Diamond Mine in the Kimberley
region of South Africa, announces the following update regarding
(a) its principal operating subsidiary, Kareevlei Mining (PTY)
Limited ("Kareevlei"), being placed into Business Rescue on or
around 24 February 2023 and (b) the consequent impact on the
Company.
Kareevlei
As the Business Rescue Practitioners ("BRPs") of Kareevlei
control Kareevlei and its operations, the Board has been in
discussions with them on the status of the business and the likely
outcome of the business rescue process, as well as the impact of
this on the Company, given that the major assets of the Company are
the loan owed by Kareevlei and the shares the Company owns in
Kareevlei.
The first meeting of creditors held by the BRPs was on Monday
13(th) March 2023 where the BRPs gave feedback on the reasons why
Kareevlei was placed in business rescue by its board of directors.
The BRPs reported that the assets of Kareevlei are unlikely, in a
liquidation scenario, to realise sufficient proceeds to settle the
secured creditor, Teichmann South Africa ("TSA"), and that there is
unlikely to be any distribution to preferred and unsecured
creditors. The BRPs believe that Kareevlei can only be rescued if
its debt is extinguished or brought to a manageable level, capital
is invested to comply with the conditions of the mining license and
to upgrade the plant, working capital funding is obtained, and that
the mine is owner-managed and operated.
Post Commencement Financing ("PCF": being capital provided to
Kareevlei following the commencement of business rescue
proceedings) was secured from TSA, which exercised its security
over the Kareevlei bank account prior to Kareevlei going into
business rescue, for essential expenses only. Operations are
restricted to the processing plant which is drawing material from
the Run of Mine ("ROM") stockpile. There has been no mining
activity since the commencement of business rescue proceedings.
The BRPs exercised their rights to suspend the obligations of
Kareevlei. The impact on the Company is the immediate suspension of
the Management Agreement and Loan Agreements under which interest
accrues on outstanding balances. As a consequence, the Company has
no source of income from Kareevlei.
The BRPs asked the Company, as the majority and controlling
shareholder, to provide all or part of approximately ZAR 150
million to recapitalise the mine and fund working capital. The
Board has considered and explored the possibility of the Company
being able to raise sufficient further finance to fund Kareevlei
and has concluded that it is unlikely to be able to do so at the
current time. Accordingly, the Company has notified the BRPs that
it is unable to contribute any further funding to Kareevlei.
The Company has approached its loan note holders to ascertain
their response to a possible restructuring of the capital structure
of the Company and has not received a reply to date.
The BRPs, at the second meeting of creditors held on 24(th)
March 2023, reported that they were in discussions with three
parties that had expressed an interest in acquiring the Kareevlei
Diamond Mine, either through purchasing the shares in Kareevlei or
the assets and business of Kareevlei. The business rescue plan has
not been finalised as the outcome of these discussions is material
to the final assessment of the BRPs regarding the ability to either
rescue or liquidate Kareevlei.
Trading Update
Production for the period preceding the commencement of business
rescue proceedings was in line with management expectations, with
2,350 carats produced during the four weeks to 4(th) March 2023.
This included three diamonds, the final prices for which achieved
USD 393,888, USD 342,000 and USD 57,888, with total sales of USD
1.550 million.
Mining operations stopped immediately after business rescue
proceedings commenced and production has been from material on the
ROM stockpile. This production has been poor in grade and size of
stones. The ROM stockpile had material for 18 days' processing
plant requirements as at 31(st) March 2023. Significant waste
stripping is required for the mine to be able to supply acceptable
material to the plant, and the cost of this is included in the
funding requirement of ZAR 150 million calculated by the BRPs.
The BRPs have suspended non-essential activities to minimise the
amount of PCF which is required and are in discussions with those
parties that have expressed an interest in Kareevlei. Until these
discussions are concluded and a viable business rescue plan is
approved, activities at Kareevlei will be limited.
TSA continues to provide PCF using the funds in the bank account
over which security is held. TSA has removed some equipment from
the mine site and the resumption of mining, particularly the drill
and blast operations, to enable waste stripping to access ore to
feed the plant is critical to avoid closure of the mine.
Solvency and going concern
The Board had consulted with the Company's lawyers and an
insolvency practitioner regarding their responsibilities and the
options available to the Company given the significant uncertainty
after Kareevlei was placed into business rescue.
The Board has explored numerous options to minimise the
potential loss to stakeholders. In the absence, however, of any
distribution from Kareevlei or new capital being raised it is
unlikely that the Company can be considered to be a going concern.
The absence of certainty about Kareevlei in the near future, either
from the business rescue plan or a viable offer to purchase its
operations or assets, increases the uncertainty about the prospects
for the Company.
A further announcement will be made in due course.
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.
**ENDS**
For further information, please visit BlueRock's website
www.bluerockdiamonds.co.uk or contact:
BlueRock Diamonds
Victor Dingle, CEO v.dingle@bluerock.co.uk
SP Angel (NOMAD and Broker)
Stuart Gledhill / Harry Davies-Ball Tel: +44 (0)20 3470 0470
----------------------------------
St Brides Partners Ltd (Financial
PR) bluerock@stbridespartners.co.uk
Isabel de Salis / Paul Dulieu
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END
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